Informal Sector Inclusion in GDP

The informal sector, characterized by unregistered, unregulated, and often undocumented economic activities, plays a pervasive and critical role in the Indian economy. While it provides livelihoods for a vast majority of the workforce, its informal nature presents challenges for accurate data collection and its full integration into formal GDP calculations, often leading to an underestimation of its true contribution and limiting policy effectiveness.

Recent Developments

  • The informal sector is estimated to contribute a significant portion to India's GDP, with estimates ranging from 45% (as per a 2021 SBI Research report) to nearly 50% (Economic Survey 2022-23 and ILO estimates).
  • In terms ....
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Indian Economy