Informal Economy, Pg11

Key Highlights:

• The Annual Survey of Unincorporated Sector Enterprises (ASUSE) 2025 reveals growth in India's informal sector, with the number of enterprises increasing to 7.92 crore.
• Employment in the informal sector rose by 74.5 lakh to reach approximately 12.8 crore workers in the January-December 2025 period.
• Gross Value Added (GVA) per worker in the informal sector increased by only 4.5% to Rs 1.56 lakh in 2025, indicating sluggish productivity.
• Earnings per hired worker in the informal sector saw a modest increase of 3.9%, a significant drop from the 13% increase between 2023 and 2024.

Detailed Insights:

• The ASUSE aims to map changes within India's informal sector, specifically unincorporated non-agricultural enterprises, providing crucial insights into this segment of the economy.
• While the number of informal sector establishments increased by almost 8%, and employment grew by 6.2%, the muted growth in GVA suggests underlying inefficiencies.
• The slower growth in GVA per establishment (2.85%) and earnings per worker (3.9%) compared to previous years highlights a potential stagnation in economic value creation within the informal sector.
• The informal sector's growth lagging behind India's overall GDP growth of nearly 9% underscores the need for policies promoting formalization and addressing challenges faced by informal firms.
• ASUSE data is vital for estimating India's GDP and informing policy decisions, particularly for ministries and departments focused on MSMEs and related sectors.

Key Concepts Involved:

• Informal Sector: Unincorporated, non-agricultural enterprises that are not formally registered or regulated.
• Gross Value Added (GVA): A measure of the value of goods and services produced in an area, industry or sector of an economy.
• MSME: Micro, Small, and Medium Enterprises, which are classified based on investment and turnover criteria.