informal sector: Informal sector shows resilience, sees recovery from pandemic: study

The second wave of the pandemic hit the informal sector hard, reducing the number of units and workers, but after the July quarter of 2021, the segment gradually recovered, as per an official survey, reported TOI.

The results of the annual survey of enterprises in the unincorporated sector (ASUSE) showed the resilience of the informal sector – small entities such as hairdressers, bicycle repair shops – to the shock related to the pandemic. The total number of enterprises in the sector increased from 5.8 crore in 2021-22 to 6.5 crore in 2022-23, an increase of almost 5.9%.

According to the statistics office, which released the fact sheet, the second wave of the pandemic seriously affected the ASUSE 2021-22 survey period, especially April-June, which affected the overall annual aggregate estimates.

Among the sectors, the number of other service enterprises increased by 15.1%, indicating strong sector expansion, while the number of manufacturing entities increased by 2.2%, reflecting the gradual opening of the sector after the pandemic, the survey results showed.

“The study shows that average annual earnings for informal workers increased between 2021-22 and 2022-23, indicating improved wage conditions in the sector and underlining that effective economic policies to counter the effects of the pandemic have helped the economic recovery,” said Rajesh Shukla, MD and CEO, People Research on India’s Consumer Economy (PRICE), an economic think tank.

Gross value added (GVA), a key indicator of economic performance, recorded annual growth of 9.8%, mainly driven by the manufacturing and other service sectors. While the gross value added of the manufacturing industry increased by 19.1%, in the case of other services it increased by 18.9%. About 11 crore workers were employed in the unincorporated non-farm sector from October 2022 to September 2023, up from 9.8 crore in 2021-22, an increase of 7.8%, indicating strong growth labor market. The maximum annual employment growth during this period amounted to 13.4% in the other services category, followed by 6.3% in the manufacturing sector. Most workers in the unincorporated non-farm sector are informal workers and the study found that the average annual earnings of these workers increased by 4.3% to Rs 1,10,982 in 2022-23 from Rs 1,06,381 in 2021-2022.(With TOI inputs)