Phase IFoundation
Background
Overview
The informal economy is a critical aspect of India's economic structure, impacting employment, poverty, and policy effectiveness. Accurate measurement is vital for evidence-based policymaking and understanding the true state of the economy, especially given its large share in India.
The informal economy, also known as the unincorporated sector, comprises economic activities that are not regulated or protected by the state, often characterized by small-scale operations, self-employment, and lack of formal registration. Accurate measurement of this sector is crucial for comprehensive national income accounting, as it constitutes a significant portion of economic activity and employment in developing countries like India.