Context:
The Annual Survey of Unincorporated Sector Enterprises (ASUSE) 2025 highlights that while employment in the informal sector is rising, productivity growth remains sluggish compared to overall GDP growth.
Key Highlights:
- Data and Trends
- Informal enterprises: 7.92 crore.
- Employment increased by 74.5 lakh → total ~12.8 crore workers.
- GVA per worker: ₹1.56 lakh (growth of only 4.5%).
- Earnings growth slowed to 3.9% (from 13% earlier).
- Informal sector growth lags behind ~9% GDP growth.
- Sector Characteristics
- Covers unincorporated, non-agricultural enterprises.
- Critical for employment generation but marked by low productivity.
- Stakeholders Involved
- Informal workers and enterprises
- Government (MSME Ministry, Labour Ministry)
- Policy institutions using ASUSE data
- Significance / Concerns
- Provides insights into India’s employment structure.
- Concerns:
- Low productivity and income stagnation.
- Limited formalization.
- Inefficiencies in value creation.
Relevant Prelims Points:
- Informal Sector: Not formally registered; lacks regulation.
- GVA (Gross Value Added): Value of goods/services produced.
- ASUSE: Conducted to assess informal sector performance.
- MSMEs classified based on investment and turnover.
Relevant Mains Points:
- Informal sector is:
- Backbone of employment generation.
- But suffers from low capital and technology access.
- Issues:
- Lack of social security.
- Limited access to credit and markets.
- Economic implication:
- Weak productivity affects overall economic efficiency.
- Need for:
- Formalization (GST, digitalization)
- Skill development and financial inclusion.
- Way Forward
- Promote formalization through incentives and ease of compliance.
- Improve access to credit and technology.
- Expand social security coverage.
- Strengthen MSME ecosystem and value chains.
UPSC Relevance:
- GS Paper 3: Indian Economy (Informal Sector, Employment)
- GS Paper 2: Governance (Policy for MSMEs)
- Prelims: GVA, Informal Sector, ASUSE