Lok Sabha Question No. 283 (STARRED), answered on 2024-12-16
Subject: Formal and Informal Economy Data
Ministry: FINANCE
Asked by: Dr. Thirumaavalavan Tholkappiyan

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA

## STARRED QUESTION NO. 283 TO BE ANSWERED ON 16.12.2024

## FORMAL AND INFORMAL ECONOMY DATA

*283. Dr. Thirumaavalavan Tholkappiyan:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government has separate data for Formal and Informal economy in the country;
- (b) if so, the details of their contribution to the Indian Economy;
- (c) whether the Government has any plan to bring 100% of the economic activities under Formal Economy; and
- (d) if so, the details thereof?

## ANSWER

THE MINISTER OF FINANCE (SMT NIRMALA SITHARAMAN)

(a) to (d): A statement is laid on the Table of the House.

## STATEMENT REFERRED TO IN REPLY TO THE LOK SABHA STARRED QUESTION NO. 283 RAISED BY DR. THIRUMAAVALAVAN THOLKAPPIYAN

## FOR 16 th  DECEMBER, 2024

## ON

## 'FORMAL AND INFORMAL ECONOMY DATA'

(a)  and  (b):  Yes  sir.  The  periodic  labour  force  survey  (PLFS)  conducted  by  the  National  Sample Survey Office (NSSO),  provides information on employment  in  informal sector defined as unincorporated  enterprises  owned  by  households  (i.e.,  proprietary  and  partnership enterprises). According  to  the  PLFS  Annual  Report,  2023-24,  73.2  per  cent  of  all  workers  engaged  in  nonagriculture sector were in the informal sector during July 2023 to June 2024.

The Annual Survey of Unincorporated Sector Enterprises (ASUSE), conducted by NSSO, is a survey of  unincorporated  non-agricultural  establishments  belonging  to  three  sectors  viz.,  Manufacturing, Trade  and  Other  Services.  Ownership-wise,  this  Survey  covers  unincorporated  non-agricultural establishments pertaining to proprietorship, partnership (excluding limited liability partnerships), selfhelp groups, cooperatives, societies/trusts etc. As per this Survey results for 2022-23 (survey period: October 2022 to September 2023) there are about 6.5 crore number of establishments in the sector, employing about 11 crore workers, with an annual Gross Value Added (GVA) per establishment (for market establishments) of ₹ 2,38,168.

Further, the National Accounts Statistics (NAS) makes a distinction between output and value added in the public sector, private corporate sector, and household sector. The household sector in the NAS includes  proprietor-ship  and  partnership  enterprises  not  maintaining  proper  accounts,  including agricultural operations, and non-profit institutions serving households. As per the latest data available from the NAS for the year 2022-23, the household sector accounted for 26.8 per cent of the total GVA at current prices through their non-agricultural activities. In addition, the household sector contributed to 17.4 per cent of the total GVA through agriculture and allied sectors.

(c) and (d):  Several efforts are being made by the government to formalise the economic activities and employment. These include:

(i) Registration  drive  for  MSMEs :  On  11  January  2023,  a  project  aimed  at  the  formalization  of informal micro-enterprises has been initiated through the Udyam Assist Platform (UAP) to facilitate the  registration  of  informal  micro-enterprises  that  do  not  possess  a  Permanent  Account  Number.  A total of over 2.44 crore MSMEs have been registered on the UAP as of 11 December 2024, having an employment of 2.93 crore. Formalization entails bestowing an identity, which can be used further for availing of benefits such as of Priority Sector Lending benefits.

(ii ) The tax reform in the form of the Goods and Service Tax (GST), has resulted in formalization of economy and consequently information flow would eventually augment both indirect tax collections and direct tax collections. With end-to-end digitization of all processes, the GST is creating more jobs in formal sector and eliminating transactions which are not recorded earlier in the books of accounts and thus, were outside the tax net so far. GST is designed to bring about better tax compliance and transparency in tax system.

(iii) Employees' Provident Fund Organisation (EPFO) data covers the low-paid workers in medium and large formal sector establishments. Over the period September 2017 to August 2024, more than 7 crore members joined the EPFO fold indicating the extent of formalisation of the job market and the coverage of social security benefits to the organised sector workforce.

(iv) Enrolment of informal sector on e-Shram : The eShram portal (eshram.gov.in) was launched on 26 August 2021 for creation of a comprehensive National Database of Unorganised Workers (NDUW) to register and support the unorganised workers by providing them a Universal Account Number (UAN). Further, in keeping with the vision of the Budget Announcement recently on developing eShram as a One-Stop-Solution for unorganized labour to have access to various social sector schemes, Ministry of Labour and Employment launched the eShram- 'One-Stop-Solution' on 21 October 2024. eShram'One-Stop-Solution' entails integration of different Social Security/ Welfare schemes at single portal i.e.,  eShram.  This  enables  unorganised  workers  registered  on  eShram  to  access  social  security schemes and see benefits availed by them so far, through eShram. So far, 12 schemes of different Central  Ministries  /  Departments  have  already  been  integrated/  mapped  with  the  eShram  including Pradhan  Mantri  Surakhsa  Bima  Yojana,  Pradhan  Mantri  Jeevan  Jyoti  Bima  Yojana  ,  Ayushman Bharat - Pradhan Mantri Jan Arogya Yojana, Prime Minister Street Vendors AtmaNirbhar Nidhi, PM Awas  Yojana-  Urban,  PM  Awas  Yojana-  Gramin,  Mahatma  Gandhi  National  Rural  Employment Guarantee Act.

As  on  11 December  2024,  over  30.46  crore  unorganised  workers  have  already  registered  on  the eShram portal.