MEASURING THE UNORGANIZED SECTOR IN INDIA

Small, informal enterprises play an important role in shaping the growth of a developing economy undergoing a process of structural reforms. The informal sector as defined in the resolution of the 15th International Conference of Labour Statisticians (ICLS), January 1993, consists of unincorporated household enterprises which differ from formal enterprises in terms of technology, economies of scale, use of labor intensive processes, and virtual absence of well maintained accounts. Although the informal sector has been characterized as above, no clear-cut operational definition of informal sector is available for the purpose of data collection. In India and in other developing countries in Asia and the Pacific, however, the “unorganized” segment of the economy closely approximates the ICLS concept of the informal sector. The unorganized segment is labor intensive and provides employment to a sizable section of the population. This paper examines the problems of measuring the unorganized sector and explains the approach taken by the Indian Central Statistical Office. The size of the informal sector is examined in terms of the employment it generates and its contribution to value added.