The Global Economic Crisis and the Informal Economy in India

FOCUS

The National Commission for Enterprises in the Unorganised Sector (NCEUS) was set up in 2004 by the United Progressive Alliance (UPA) government as an advisory body and a watchdog for the informal sector. This note by the NCEUS, titled ‘The Global Economic Crisis and the Informal Economy in India: Need for urgent measures and fiscal stimulus to protect incomes in the informal economy’, was presented to Prime Minister Manmohan Singh on November 28, 2008. In it, the NCEUS said that the global economic crisis (which began with the collapse of major U.S. financial institutions in 2007-08) was taking a toll on the Indian economy. The brunt of the damage, however, would be borne by informal sector workers, especially agricultural labourers. The Commission therefore made recommendations to financially support unorganised sector enterprises and the social security of informal workers. 

    FACTOIDS

  1. Of India’s total workforce of 457 million in 2004-05, 92 per cent or 420 million work in the informal economy.

  2. Agriculture contributes 19 per cent to GDP, with small and marginal farmers producing 50 per cent of the agricultural output.

  3. As many as 89 million agricultural labourers constitute the bottom-most layer of workers in agriculture, and a majority of them are from the scheduled castes (SCs) and scheduled tribes (STs). They are the poorest workers in the Indian economy.

  4. The NCEUS found that the National Rural Employment Guarantee Programme (NREGP), mandated to provide 100 days of employment to the poor in rural India, averaged only 25 days because of implementation bottlenecks.

  5. In this note, the Commission made the following recommendations: increase pro-poor public investment in infrastructure; improve the implementation of NREGP; introduce an urban employment guarantee programme; develop more self-employment programmes and strengthen microfinance systems; institute special credit for marginal and small farmers; facilitate access to credit for micro-enterprises; initiate skill development programmes for the unorganised sector; introduce minimum social security for informal workers at the national level; and increase investment in pubilc education and health for the poor, especially in rural areas.


    Focus and Factoids by Anupam Krishnamurthy.

AUTHOR

National Commission for Enterprises in the Unorganised Sector, New Delhi

The Commission had the following members: Dr. Arjun K. Sengupta, Dr. K.P. Kannan, Dr. R.S. Srivastava, V.K. Malhotra, Dr. T.S. Papola and B.N. Yugandhar.

COPYRIGHT

National Commission for Enterprises in the Unorganised Sector, New Delhi

PUBLICATION DATE

26 Nov, 2008

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