draft-report-informal-sector-17-march-2021.pdf - Niesbud

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Comprehensive Study for Preparation of a Policy/Scheme for Providing Support for Formalizing Informal Sector through

Entrepreneurship Promotion

Final Draft of Consulting Report Submitted to

NIESBUD An autonomous body under administrative control of the Ministry of Skill

Development and Entrepreneurship, Government of India

By

MDI GURGAON

17.03.2021

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Table of Contents ExecutiveSummary ................................................................................................................. 6

Chapter1-OrganizationofReport&MappingofChapterswithTermsofReference(ToR) ....................................................................................................................................... 13

1.1Introduction ....................................................................................................................................... 13 1.2MinistryofSkilldevelopmentandEntrepreneurship(MSDE)........................................................ 15 1.2.1.DirectorateGeneralofTraining(DGT) .............................................................................................. 15 1.2.2NationalSkillDevelopmentAgency(NSDA) ....................................................................................... 17 1.2.3NationalSkillDevelopmentCorporation(NSDC) ............................................................................... 17 1.2.4NationalSkillDevelopmentFund(NSDF) .......................................................................................... 18 1.2.5TheIndianInstituteofEntrepreneurship(IIE) ................................................................................... 18 1.2.6TheNationalInstituteforEntrepreneurshipandSmallBusinessDevelopment(NIESBUD) ............... 18 1.2.7SectorSkillCouncils(SSC) .................................................................................................................. 18 1.2.8Trainees/Beneficiaries ...................................................................................................................... 19 1.2.9CapacityDevelopers ........................................................................................................................... 19 1.3Conceptual/OperationalDefinitionsofmajorconceptsusedinthereport .................................. 19 1.3.1InformalSector .................................................................................................................................. 19 1.3.2FormalSector .................................................................................................................................... 21 1.3.3Formalization .................................................................................................................................... 21 1.3.4UnorganizedSector............................................................................................................................ 21 1.3.5CapacityBuilding ............................................................................................................................... 22 1.3.6Entrepreneurship ............................................................................................................................... 22 1.3.7EntrepreneurialSkills ........................................................................................................................ 22 1.4ApproachtoStudy .............................................................................................................................. 22 1.5BriefaboutApproachesofFormalization ........................................................................................ 23 1.6ScopeofthepresentstudyandBroadOrganizationofthereport ................................................. 25 1.6.1ConductingaComprehensiveStudy,throughtheexistingdatabases(alreadycommissionedStudies,PrivateReportsetc.)tounderstandtheInformalSector............................................................................. 25 1.6.2ExploringPotentialRoleofMSDE ...................................................................................................... 26 1.7Conclusion .......................................................................................................................................... 32

Chapter2-ReviewofliteratureofthestudiesonInformalsector ................................... 34 2.1Introduction ....................................................................................................................................... 34 2.2StudiesbyInternationalScholars/organizations .......................................................................... 34 2.3StudiesbyIndianScholars/OrganizationsintheIndianContext .................................................. 39 2.4SummarizationofMajorFindings&EvolutionofBroadThemesforFormalizationFramework

........................................................................................................................................................................ 44 2.5Conclusion .......................................................................................................................................... 48

Chapter3-MappingtheCurrentAvailableDatabasesfortheEstimation,ClassificationandPrioritizationoftheInformalSector ............................................................................ 51

3.1.Formal-InformalEnterpriseClassification ................................................................................... 51 3.1.1Introduction ....................................................................................................................................... 51 3.1.2Informal-FormalClassificationLandscapeinIndia ............................................................................ 52

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3.2SizeoftheFormalandInformalSectors .......................................................................................... 59 3.2.1Overview ............................................................................................................................................ 59 3.2.2Sectorwiseestimation ....................................................................................................................... 60 3.2.3EstimateofManufacturing,Tradeandotherservicesenterprisesaspertheircategories–RuralV/sUrbanandOAEV/sEstablishment. ............................................................................................................ 67 3.2.4StateWiseEstimation ........................................................................................................................ 68 3.2.5Discussion .......................................................................................................................................... 72 3.3PrioritizationofSectors .................................................................................................................... 73 3.3.1Overview ........................................................................................................................................... 73 3.3.2.EmployeeProductivityindifferentsectorsofinformalenterprises(GVAPW) .................................... 74 3.3.3Distributionofinformalenterprisesbasedontheireconomiccontribution(GVAPE) ......................... 76 3.3.4.Classificationofinformalenterprisesaspertheirinclusiveness ........................................................ 78 3.3.5Majorstatewiseprioritizationofsectors/subsectorsbasedonanefficientandcomprehensiveensemble-basedfeatureselectionmethodology .......................................................................................... 81 3.3.6WomenEntrepreneurDatabasedPriorityRankingusingEconomicCensusdata.............................. 84 3.4Conclusion .......................................................................................................................................... 89

Chapter4-Mappingthepoliciesandsupportprovidedtoinformalsector .................... 92 4.1.Introduction ....................................................................................................................................... 92 4.2GovernmentInitiativesforInformalSector ..................................................................................... 92 4.2.1FinancialCapitalandInsurancesupport ........................................................................................... 92 4.2.2KnowledgeCapitalSupport................................................................................................................ 95 4.2.3InfrastructureCapitalSupport........................................................................................................... 99 4.3SupportbyLargeScaleNGOs .......................................................................................................... 110 4.3.1FinancialCapitalandInsuranceSupport ......................................................................................... 110 4.3.2KnowledgeCapitalSupport.............................................................................................................. 111 4.3.3InfrastructureCapitalSupport......................................................................................................... 114 4.4SocialImpactEnterprises ................................................................................................................ 118 4.4.1FinancialCapital .............................................................................................................................. 118 4.4.2InfrastructuralandTechnologicalCapital ....................................................................................... 118 4.4.3KnowledgeCapital ........................................................................................................................... 119 4.4.4Others .............................................................................................................................................. 119 4.5PrivateSectorCSRActivities ........................................................................................................... 119 4.5.1FinancialCapitalInitiatives ............................................................................................................. 119 4.5.2Infrastructure&TechnologicalCapitalInitiatives ........................................................................... 120 4.5.3KnowledgeCapital ........................................................................................................................... 121 4.5.4.Others ............................................................................................................................................. 124 4.6TechnologyFirms ............................................................................................................................. 124 4.6.1FinancialCapitalInitiatives ............................................................................................................. 124 4.6.2Infrastructure&TechnologicalCapitalInitiatives ........................................................................... 124 4.6.3KnowledgeCapital ........................................................................................................................... 125 4.7GigEconomy ..................................................................................................................................... 126

Chapter5-InformalMicro-entrepreneurs:ChallengesandIssues ................................ 129 5.1Introduction ..................................................................................................................................... 129 5.2ReviewofCaseStudiesinthecontextofIndianInformalSector .................................................. 129 5.2.1InformalManufacturingSector ....................................................................................................... 129 5.2.2StreetFoodVendors ......................................................................................................................... 136

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5.2.3MarketVendors................................................................................................................................ 139 5.2.4ChallengesfacedbyIndianmicro-entrepreneurs ............................................................................. 142 5.3WorkingModeofPrivateOrganizations........................................................................................ 143 5.4InternationalBestPractices ........................................................................................................... 145 5.4.1TheSouthAfricanExperience .......................................................................................................... 145 5.4.2TheMexicanExperience ................................................................................................................... 146 5.4.3TheBrazilExperience ...................................................................................................................... 146 5.4.4TheKenyaExperience ...................................................................................................................... 148 5.5ConcludingRemarks ........................................................................................................................ 150

Chapter6-PolicyRecommendationsandFrameworkforMSDEtoSupportFormalizationofInformalEnterprisesthroughEntrepreneurship ............................... 153

6.1Introduction ..................................................................................................................................... 153 6.1.1ExistingLiterature ........................................................................................................................... 155 6.1.2PrioritySub-SectorstoFocusupon .................................................................................................. 156 6.1.3InsightsfromPrimaryData ............................................................................................................. 160 6.1.4ChallengesfacedduringFormalization ............................................................................................ 165 6.1.5Support/PoliciesandStakeholdersforFormalizationofInformalSector ........................................ 167 6.2.MinistryofSkillDevelopmentandEntrepreneurship(MoSDE)&SkillEcosystem .................... 170 6.2.1Introduction ..................................................................................................................................... 170 6.2.2MajorSchemes,Programs,InitiativesandProjects .......................................................................... 170 6.2.3NationalPolicyforSkillDevelopmentandEntrepreneurship2015 .................................................. 172 6.2.4Keybeneficiariestofocusforproposedformalizationframeworkandkeychallengesfacedbyinformalsector ......................................................................................................................................... 174 6.3FrameworksandApproachesforMoSDEforformalizationofinformalsector .......................... 176 6.3.1Frameworkofformalizationofinformalsectorthroughentrepreneurshippromotionandskillingecosystem ................................................................................................................................................. 177 6.3.2Frameworktowardsaddressingofchallengesofinformalsector .................................................... 183 6.3.3IllustrativeGovernanceStructureandWorkingPlan ....................................................................... 200 6.4Duediligenceprocessesforpartnershipsandstakeholderengagement .......................................... 202 6.5ConcludingRemarks ........................................................................................................................ 204

References ............................................................................................................................ 207

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Executive Summary

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ExecutiveSummaryThisreportisfocussedontheformalizationofinformaleconomybyprovidingsupporttotheinformalsectorthroughcapacitybuildingandentrepreneurship.Thestudywasadeskresearch based on secondary data drawn from difference sources viz. NSS 67th & 73rdRounddata,AnnualSurveyof IndustryUnitLeveldataof2010-11&2014-15,Academicstudiesnationalandinternationalinthecontextofinformalsector.Movingtowardsformaleconomyisatalltaskandmultiplestakeholdershavetakenmultipleinitiativestowardsthisend.In2002,ILOlaunchedtheDecentWorkAgendaprovidingsevenkeyavenuestowardsformalizationofaneconomy.Outofthesevenagendapoints,onewas ‘Entrepreneurship,Skills,Finance,ManagementandAccesstoMarkets’.Forfurtheringthisagenda,thisreportfocussedonthe‘spreadanddepth’ofinformallabourandenterprisesinIndia,highlightingthe challenges faced by them and proposing action points for MSDE to enable theirmovement towards Formal Sector. Thereafter, a Frameworkwas developed forMSDE toprovideentrepreneurialsupporttoinformalenterprises,especiallybyaligningthecurrentinitiativestakenbymultiplestakeholdersinInformalSectorandstrengtheningtheexistingsupport.Thereportconsistsof6chapters.

ChapterOnepresentstheorganizationofthereportandmappingofchapterswithrespectivepointsofthetermsofreference(ToR).Itessentiallysummarizesthemajorconstituentsofthereport.Itstartswithintroduction(Section1.1)tothestudywhichalsotalkedaboutthecharacteristicsoftheIndianinformalsector.ItisfollowedbySection1.2whichprovidesabriefonMSDE.Section1.3discussesaboutthedefinitionsofmajorconceptsthatarecentralto this study and serve as anchors for the discussions and propositions through theremainingchaptersofthisstudy.Section1.4discussesabouttheoverarchingapproachandmethodologyof thestudy.Section1.5discusses fewexistingapproachesof formalization.Section1.5formsoneofthebasisforevolutionoffinalrecommendationsinChapter6andalso helps the reader in understanding the connect and relevance of finalization ofconceptualdefinitioninSection1.3.Section1.5servesaspremiseoftheliteraturereviewdoneinChapter2andthesecondarydataconsolidationdoneinChapter3and4.Thiswouldalso form a theoretical lens to absorb the case studies given in Chapter 5. Section 1.6discussestheScopeofthepresentstudyandBroadOrganizationofthereportintermsofToR and the mapping of the expectation of the ToR with contents and deliverablesencompassedinthevariouschaptersofthereport(Table1.1).Thekeycontributionofthischapteristheconceptualizationofkeydefinitionswhichwillusedthroughoutthereport,theapproachandmethodologyofthereportandthemappingofToRwiththechaptersinthisreport.

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ChapterTwoThischapterpresentsthereviewofliteratureofthestudiesconductedintheinformalsectoraimedatformalizationofinformalsector.Itstartswithintroductiontothechapter (Section 2.1) and is followed by review of studies in informal sector andformalizationdonebyinternationalscholars/organizationswhereinpolicies(Section2.2).These policies can be classified in terms of their domain and the costs and benefits offormalization that arebeing targeted. Section2.3presents the reviewof studiesdonebyIndianscholars/organizationsinthecontextofIndia.Section2.4presentsthesummaryofmajorfindingsandevolutionofbroadthemesforformalizationframeworkandisfollowedbyconclusionofthechapter(Section2.5).

Itisreportedintheliteraturethatinformalitytakesvariousformsindifferentcountriesandnewformshademergeovertimewithinacountry.Therefore,therecanbeno“onesizefitsallpolicy”toregulateorimprovetheconditionsofinformalenterprisesandworkersinanycountryforlongerduration.Therearemanyperspectivesofinformalityanditstransitiontoformalization. These are capital view of formalization, labour view of formalization,technologicalperspective,andgeneralperceptionofcitizensworkingwithor in informalsector.Manystudiesfromdifferentcountriesarereviewedinthepartofthereport.

ThesestudiesincludetheperceptionofscholarsandexpertsforformalizationofinformalsectorMajorityofthemusedthephrasessuchas“formalizationmustbesimpleandeasy”,“formalization must be optimal. There is no scope for either over regulation or lack ofregulation“.Someofthesereportedthatitisweakeningthetraditionaltradeunionandnewformof informalunionsareemerged insomepartof theworldwhichoftenresults in toviolence. It is reported bymany experts and scholar that a new formof formalization ishappening inmany part of theworld that require intervention at different levels by thegovernments.InthecontextofIndianinformalenterprises,thefindingofeconomicstudiesrelated to formalization, impact of recent policy decisions of government specificallydemonetizationandGST,viewsof technologysavvystart-ups,etc.arereviewed.There isneedtobringawarenessamongmassesabouttangiblebenefitsoftheprocess,trainingofentrepreneursformakingthemawareofnewmethodologies,administrativeandproceduralreforms, taxrelated fearand incentives,reviewoflawsandregulations,easier inspectionandcompliance,commoninfrastructurefacilities,increaseefficiencyofpublicprocurement,monetaryincentive,sectoralApproach,andextensionofsocialprotectionetc.

ChapterThreepresentsthemappingofcurrentavailabledatabasestoestimatetheinformalenterprisesanddetailedclassificationsof informalenterprisesundervarioussectorsandsubsectors.This chapteralso includes theprioritisationofmajor sectorsandsub-sectors

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basedonvitalparameterssuchasGVA,employment,inclusionandgeography.Thechapterisdividedintothreebroadsections.Section3.1exploresthecurrentavailabledatabasesandother available reports to discuss the extent of Informal Sector in India. In this section,mappingof currentavailabledatabases (NSSO, ILO,NAS,NCEUS,CSO,EconomicSurveysMSDE, Reports ofMOSPI etc.) for providing an in-depth overview on extent of informalsector and for elaborating and defining the unorganized and informal sector andidentificationofkeycharacteristics.Section3.2depictsthepictureofthesizedistributionofIndia’s non-agricultural enterprise structure, both formal and informal, and presents apercentage break-up between the formal and informal enterprises under each sector.Section 3.3 encompasses the prioritisation of sectors and subsectors. This prioritisationmostlyusedNSSOdata.FirstSetofPriorityencompassfocusonM15(Manufactureofothernon-metallic mineral products), M2 (Manufacture of food products), M10 (Printing andreproductionofrecordedmedia),M5(Manufactureoftextiles),M14(Manufactureofrubberand plastics products), M17 (Manufacture of fabricated metal products), M24 (Othermanufacturing),M6(Manufactureofwearingapparel)frommanufacturingsector,T3(Otherwholesale trade), T4 (Other retail trade) from Trade sector and S13 (Education), S14(HumanHealth and SocialWork), S1 (Accommodation), S2 (Food service activities), S11(Professional, Scientific andTechnical activities) in Services sector. Similarly second andthird set of priorities are given in the chapter in details and statewise calculations anddetailingsupportedwithsecondarydataintheAnnexures1and2.Subsectionsection3.3.6does prioritisation of sectors using economic census data and with focus on womenentrepreneurs.Finally,Section3.4offerssomeconcludingremarks.

Informal enterprises constitute for millions of unregulated, unlicensed, and untaxedmicroenterprises thatarereferredtoas the“informalsector”.The informal“enterprises”includesmallenterprisesrangingfromwasterecyclingunits,streetvendors,pavementfoodstalls,saleofpiratedbooks,anddigitalproductstohome-basedmanufacturingenterprises.Thesesmallbusinessesormicroenterprisestypicallyoperatedatsmallerscalesofbusiness,withlowlevelsoflabour,littleuseoftechnology,lowphysicalandhumancapital,andlowincomes.Comparedtoformalenterprises,informalenterpriseshavefewerorlessvaluablefactors ofproduction other than their own labour: such as capital, land, and technology.Second, theyalsohave lessbargainingpowertodemand their shareof valueadded.Thevalueoftheirproductionisoftencapturedbyemployers,intermediariesalongthesupplychain, andespecially the lead firmsat the topof the supply chain.Third,definitionsandmeasuresofproductivityvaryfromsectortosector.And,therearefewdirectmeasuresofthe productivity of the informal enterprises. However, the informal enterprises canpotentially contribute to reduction of poverty and inequality, thereby enabling inclusivegrowthfrombelow.Thischapterguidesw.r.tprioritizationofsubsectorswhichwasasource

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ofinputforthenextchapter–Chapter4.ThiswasalsoasourceofinputforChapter6(TheHowpartoftheformalizationprocess).

ChapterFourpresentsasummatedviewofthesupport/policiesprovidedtoinformalsectorbyvariousstakeholderssuchasCentralandStateGovernments/Ministries,largescaleNGOs,SocialImpactEnterprises,PrivateSectorCSRActivities,TechnologyFirmsetc.Thesupportincludes measures like skilling, reskilling & upskilling development training of theentrepreneurs,recognitionofpriorlearning(RPL),easeofdoingbusiness,financialsupport,newandimprovedtechnologyimplementation,oranyothermeasurewhichwillhelptheseunitstowardscapacitybuildingandpromotingthemtohaveaformaleconomytouchpoint,betterlivelihoodandaugmentedearnings/employability.Chapterfourisdividedintosevensections.Section4.1istheintroduction.Section4.2envisagesthegovernmentpoliciesthatareworking towards informal sectorwitha sub-classificationon thebasisofkey impactareassuchasFinancialcapital/support,infrastructuressupport,technologicalsupportandother relevant support. Similarly, Section 4.3 is about large scale NGOs with a sub-classificationonthebasisofkeyimpactareas,Section4.4isaboutSocialImpactEnterpriseswithasub-classificationonthebasisofkeyimpactareas,Section4.5isaboutPrivateSectorCSRActivitieswithasub-classificationonthebasisofkeyimpactareasandSection4.6isaboutsupportfromTechnologyFirmswithasub-classificationonthebasisofkeyimpactareas.ThereafterthesupportandinitiativesofgigeconomyhavebeencoveredinSection4.7.

ChapterFivereportsvariouscasestudiesfromthecontextofinformalsector,Indianaswellasglobal.Thesecaseshavebeendrawnfromvariousliteraturetounderstandandexplorethechallengefacedbymicro-entrepreneurs,thatmightincludegapsintermsofaccessinggovernmentpolicies, formal/informal training,access tocapital,markets,monitoringandroleplayedbytechnologyplatforms(ifany)etc.Thesecaseshavebeenborrowedfromtherespectivesourcesandhavebeenacknowledgedwhilementioningexcerptfromarespectivestudy.Thesaidchapterisdividedintosixsections.

Section 5.1 is the introductory sectionwhich is followed by Section 5.2 that presents acomparativeanalysisbetweenformalandinformalenterprisestounderstandnotonlytheworkingmode of a private organisation but also the characteristics informal enterprisespossesswhichmightbedetrimentaltotheirexistenceandsubsequentgrowth.Section5.3dealswithcasestudiesoninformalsectorfromthecontextofIndia.InthissectionvariousIndiancases from informal sectorhavebeencollated.The select cases representvariousinformaleconomicactivitiesbeingcarriedoutinIndiaandwhichrangesfromstreetvendorstohandloomweaverstohardcoremanufacturingactivities.Various inferenceshavebeendrawnandreportedinthesaidsection.Someofthecommonalitiesfoundinthesaidcase

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studies, are no formal training, lack of awareness about the same, access tomarket andcapital and largely barriers and harassment at multiple levels. Section 5.4 reportsinternationalbestpracticeswherein formalisationof informalsectorhasbeenattempted.MostofthesecaseshadaclearindicationaboutGovt.interventions.Thesaidinterventionsprimarily revolve around tax reforms, certification and accreditation and training andeducation as well as credit support. Section 5.5 collates and presents the problem andchallengesfacedbymicro-entrepreneursingeneralandalsospecifictotheIndiancontextespecially issues in terms of access to finance capital, infrastructure capital, knowledgecapital, lowproductivity,lowqualityproductsandlessvalueadditionperemployees,lowprofitabilityetc.Thissectionstartswithgeneralproblemsof informalsector in Indiaandalsoinselectdevelopingcountriesandisfollowedbythechallengesofaccesstofinancialcapital being faced by informal enterprises. Further it highlights the challenges ofinfrastructurecapitalincludingfeaturesofinfrastructurecapital.Itisfollowedbychallengesof knowledge capital wherein data with respect to education level of the workers andvocational training provided to informal sectorworkers, is presented. The challenges ofproductivityalongwithsupportdatafromselectedcountriesispresentedandissuesrelatedproductivity, low quality of products and less value addition per employees are alsodiscussed. Section 5.6 presents the concluding remarks of the chapter. The chapterconcludeswithanotionthatthegradualandincrementalreformscanfetchbetterresultswith respect to formalisation of Indian informal sector vis-à-vis radical and numerousstructuralchangesininformalsector.

ChapterSixaddressesthe ‘how’partof the formalizationof informalenterprisesstartingwithconnectofvariousprecedingchaptersasapremiseforthecurrentchapter.ThisfirstsectionofthechapterincludessummaryoftheextantliteraturefromChapter2,prioritysub-sectorsidentifiedfromchapter3,insightsfromprimarydata(alimitedsample-independentprimarystudythatwasdonefordelvingdeeperintounderstandingofchallengesofinformalsectorsandwayforwardtowardsformalization),summaryofchallengesandissuesfacedbytheinformalsector(fromchapter5)andsummaryofsupport/policiesandstakeholdersforformalizationofinformalsector(fromChapter4).ThisisfollowedbyabriefaboutexistingecosystemofMSDE,majorschemes,programs, initiativesandprojectsofMSDE,NationalPolicy for Skill Development and Entrepreneurship 2015, beneficiaries for the proposedformalization initiatives and possible approach themes for MSDE’s intervention andmapping with existing MSDE’s initiatives (including the National Policy for SkillDevelopment and Entrepreneurship 2015). The next section presents the SuggestedFramework, Approaches, Actions Points andWorking Plan for MSDE for the process offormalization come into the picture. The suggested framework has two parts to it viz.frameworktowardsformalizationofinformalsectorthroughentrepreneurshippromotion(Section6.3.1)andskillingroutes forenterpriseaswellaslabourpartof the framework.

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Secondpartbeing framework forefficientaddressingof challenges faced informal sector(Section 6.3.2).Section 6.4 outlines the Due diligence processes for partnerships andstakeholderengagementfollowedbytheconclusion.Thekeycontributionofthechapterarethe proposed framework and the operational strategy to address and facilitate theformalization of informal enterprises into formal economy through entrepreneurshippromotion.

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Organization of Report & Mapping of Chapters with Terms of Reference (ToR)

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Chapter1-OrganizationofReport&MappingofChapterswithTermsofReference(ToR)

1.1Introduction

InformalsectorinIndiahasbeencontributingtotheoveralleconomyhistorically.ItiswidelyagreedthatIndiastandsatthecuspofthreevitaltransitions,ifitistotransformitselffromanemergingtoadevelopedmarketeconomy.Theseareruraltourban,farmtofactory,andinformaltoformal1.AsperthelatestreportofInternationalLabourOrganisation(ILO),shareofinformalsectorandofnon-agriculturalinformalsector(viz.manufacturing,constructionand trade) in total employment has been 88.2% and 78.1% respectively in India (ILO(2018)).TheterminformalsectorisoftenusedinterchangeablywithunorganizedsectorinIndiaanditsinterpretationisalsoconsistentwiththatofILO(ChenandVanek(2013)).Itconsistsofallunincorporated(notcoveredunderthefactoriesactandthesocialsecuritylegislationslikeEmployeesStateInsuranceActandProvidentFundAct)privateenterprisesowned by individuals or households engaged in the sale and production of goods andservicesoperatedonaproprietaryorpartnershipbasisandwithlessthantentotalworkers.Theoverwhelmingportionofworkersofthepoorandvulnerablegroups(between94%and98%)areinformalworkers,whiletheyconstitutemuchsmallerproportionoftheworkforceinthemiddleclassorhigherincomegroups(NCEUSReport(2009)).

Theinformalsector,reportedlyhasbeenlessproductivevis-a-visformalsectorastheformalsectorisdrivenbysize,capitalintensiveproduction,accesstocapital,self-selectionbymoreproductive employers for formal activities, technology, taxation and usage of productivepublic distribution in developing countries including India (Esfahani and Salehi-Isfahani(1989)). The Indian informal sector can be characterized with low wages, seasonalunemployment,absenceofbargainingskills,lackofaccesstocreditandinabilitytoaccessgovernmentschemesandinabilitytotakeadvantageofpolicies.Manystudiessuggestthatinformalsectorentrepreneurs’facedifficultiesingainingaccesstocreditandithasbeenoneoftheirmainhandicapsvis-a-vistheformalsector(Kumar(2001)).Therehasbeenalotofgovernmentinterventionthroughvariouspolicyreformshowevernotmuchimpactcouldbeseenatthegroundlevel.

AccordingtoVenkataratnam(2001)andKapoor(2007),effectivestructuresforintegratingthegovernmentinterventionsandtheintendedrecipientsandbeneficiarieshavenotbeenimplementedduetothedifficultyinbalancingsocio-economiccomplexityofadevelopingcountryandtheapparentshifttowardmarketbasedeconomy.Chauduriet.al.(2006)foundthattheliberalizationoftheIndianeconomyin1991-92hadasignificantnegativeimpactontheinformalsector.Siggel(2010)reasonedoutthreefoldfactorsforthesaiddeviationfrom

1https://www.livemint.com/Opinion/ZmfWEAVMWQ5U1lqv7YDfYI/The-challenge-of-formalizing-the-Indian-economy.html

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the desired impact of policy reforms for informal sector viz. ineffective reach of tradeliberalization; increased international competitivenessof several industries in the formalsectorthroughtheirsubstantialcostreduction;andsubcontractingrestrictingincreaseinlaborsupplyintheinformalsector.

It ispertinent to say that India’s informaleconomyrequiresa shift toward formalizationwhichnotonlyprovidegrowthtotheoveralleconomybutalsototheworkersintheinformalsectorwithapossible routeoutofpoverty (Siggel (2010)).Given the spreadof informalsector in India, which ismarredwith low productivity and poorwages, it is crucial forGovernmentpoliciesandprogramstoaimatinformalenterpriseswhichcansupportthemto move towards formalization. At its 104th Session (2015), the International LaborConferencealsoadoptedtheRecommendationconcerningthetransitionfromtheinformalto the formal economywherein one of the objectives, was to facilitate the transition ofworkers and economic units from the informal to the formal economy,while respectingworkers’fundamentalrightsandensuringopportunitiesforincomesecurity,livelihoodsandentrepreneurship(ILO(2015)).

Inviewof theabove, thepresentstudyendeavourstoexplore informalsector in India interms of various studies existing in the extant literature, numbers and data available incurrentdatabases,existingpoliciesandschemes inplace for furtheringthe formalizationeffortssothatprioritysectorsforMSDE’sfocusofeffortsandpolicy/scheme/frameworkforMSDE’s considerationandpossible implementation forProvidingsupport for formalizingInformalSectorthroughEntrepreneurshipPromotion.

Themainaimofthischapteristointroducebriefbackgroundaboutinformalsectorandtospecifically conceptualize/operationalize thedefinitionsof informalsector, formalsector,formalization,capacitybuildingandentrepreneurship.ThiswillbefollowedbymappingofTermsof Referencewith various chaptersof the report. The chapter is divided in to sixsectionincludingSection1.1.ofintroduction.Section1.2presentsabriefofMSDE.ThisisfollowedbySection1.3whereintheconceptual/operationaldefinition(s)ofinformalsector,formal sector, formalization, capacity building, entrepreneurship promotion andentrepreneurshipasreferredtointhereportarelisted.Approachtothestudyisbriefedinsection1.4.Itisfollowedbydescriptionofdifferentapproachestoformalizationascitedintheliteratureinsection1.5.Section1.6encompassesthescopeofthepresentstudyasgivenin theTerms of Reference of theRFP alongwith itsmappingwith the various Chapters(Chapter2to7)ofthepresentreport.Thissectionalsogivesanoverarchingviewofthebriefoutlineofthereport.

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1.2MinistryofSkilldevelopmentandEntrepreneurship(MSDE)

“TheMinistry is responsible for co-ordination of all skill development efforts across thecountry,removalofdisconnectbetweendemandandsupplyofskilledmanpower,buildingthevocationalandtechnicaltrainingframework,skillup-gradation,buildingofnewskills,and innovative thinking not only for existing jobs but also jobs that are to be created”(Source:https://www.msde.gov.in).“TheMinistryaimstoSkillonalargeScalewithSpeedand high Standards in order to achieve its vision of a 'Skilled India'” (Source:https://www.msde.gov.in)

“Itisaidedintheseinitiativesbyitsfunctionalarms–DirectorateGeneralofTraining(DGT),NationalSkillDevelopmentAgency(NSDA),NationalSkillDevelopmentCorporation(NSDC),National Skill Development Fund (NSDF), Indian Institute of Entrepreneurship (IIE),NationalInstituteofEntrepreneurshipandSmallBusinessDevelopment(NIESBUD),and37Sector Skill Councils (SSCs)2 aswell as 187 training partners registeredwithNSDC. TheMinistry also intends to work with the existing network of skill development centres,universitiesandotheralliances in the field.Further, collaborationswith relevantCentralMinistries, Stategovernments, internationalorganizations, industryandNGOshavebeeninitiated for multi-level engagement and more impactful implementation of skilldevelopmentefforts”(Source:https://www.msde.gov.in).

“The present Government has taken multiple initiatives in this direction, with severalGovernmentMinistries/Departmentssupportingentrepreneurshipthroughoneortheotherscheme.However,entrepreneurshipsupport in truesensedoesn’tgetpercolatedtoruralareasduetolackofaccessoftheseschemes.Toovercomethesechallenges,theMinistryofSkill Development andEntrepreneurship (MSDE) is expected towork towards providingnecessarygrowthsupporttoinformalenterprisestoenablethemtomovetowardsformalsectorandthuscontributepositivelytowardsIndia’sgrowthstory”(Source:RFPDocumentof the present study). As per the ministry sources, MSDE is guided with two policyframeworks, i.e., National Skill Development Policy 2009, and National Policy on SkillDevelopmentandEntrepreneurship,2015(Source:https://www.msde.gov.in).

1.2.1.DirectorateGeneralofTraining(DGT)

“TheDirectorateGeneralofTrainingconsistsoftheDirectorateofTrainingandDirectorateofApprenticeTraining.This includesanetworkof IndustrialTraining Institutes (ITIs) inStates; National Skills Training Institutes (NSTIs), National Skills Training Institutes forWomen(NSTI-W)andothercentralinstitutes.AnumberoftrainingProgrammescateringtostudents, trainers and industry requirements are being run through this network. Thebuildingblocksforvocationaltraininginthecountry-IndustrialTrainingInstitutes-playavitalroleintheeconomybyprovidingskilledmanpowerindifferentsectorswithvarying

2 https://www.msde.gov.in/ssc.html

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levelsof expertise. ITIsareaffiliatedbyNationalCouncil forVocationalTraining (NCVT).DGT also operationalizes the amended Apprentices Act, 1961” (Source:https://dgt.gov.in/About_DGT)

MajorfunctionsoftheDGTare:• Toframeoverallpolicies,normsandstandardsforvocationaltraining.• Todiversify,updateandexpandtraining facilities in termsofcraftsmenandcrafts

instructortraining.• Toorganizeandconductspecializedtrainingandresearchatthespeciallyestablished

trainingInstitutes.• Toimplement,regulateandincreasethescopeoftrainingofapprenticesunderthe

ApprenticesAct,1961.• ToorganizevocationaltrainingProgrammesforwomen.• Toprovidevocationalguidanceandemploymentcounselling.• Assistscheduledcastes/scheduledtribesandpersonswithdisabilitiesbyenhancing

theircapabilitiesforwageemploymentandself-employment”.

The Craftsmen Training Scheme (CTS): “The scheme for training of skilled craftsmen isimplementedthroughGovt.andPvt.IndustrialTrainingInstitutes(ITIs)whichareundertheadministrative and financial control of State Governments or Union TerritoryAdministrations.Durationofthesetrainingcoursesvariesfrom6Months-2Yearsduration,NSQFcompliantcoursesin138Tradeswhichincludes74Engineeringtrades,59TradesintheNon-EngineeringSectorand05coursesforPersonswithDisabilities(PwD)/Divyangjan.Currently,23.15Lakhpersonsareundergoingtrainingin14,491ITIs(bothGovt.&Pvt.)”(Source:https://dgt.gov.in/About_DGT).Accordingtoanotherstatistics23,14,000personsaregoingundertrainingin14,917ITIs.Thenumberofapprenticesare197,053(Source:https://dgt.gov.in/).

TheschemesofDGTincludeSchemeforTraining-craftstrainingscheme(CTS),flexiMOU,dualsystemof training,AdvancedVocationalTrainingScheme (AVTS),ApprenticeshipTraining;Training for Trainers - Crafts Instructor Training Scheme (CITS): Scheme for creation/improvement of training infrastructure- Enhancing Skill Development Infrastructure inNorth Eastern States(ESDI), Skill Development in 47 Districts Affected by Left WingExtremism(LWE), Upgradation of 1396 Govt. ITIs through PPP, Skills Strengthening forIndustrialValueEnhancement (STRIVE),UpgradationofGovernment ITIs intoModel ITI,GradingofITI's,andVocationalTrainingImprovementProject;andschemeforSchemeofPolytechnics.DGTconductsexamination forCITSandpublishes itsresultson itswebsite.DGT has signed different MOU with its partners from industry to achieve the overallobjectivesoftheministry.

MOUsSigned:IthassignedMOUswithIBM,NIOS,SAP,CISCO,NASSCOM,and(Accenture+Cisco+Quest) Alliance. In addition,MoU for strategic partnership on skill development

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betweenMSDEandDassaultAviation,andNSTI,RDSDEMumbaiandHPCLMumbaiunderCSR is signed. Further, a letter of understanding between DGT& Reliance Jio Infocommlimitedissigned.

1.2.2NationalSkillDevelopmentAgency(NSDA)

NationalSkillDevelopmentAgency(NSDA)isanautonomousbodyunderMinistryofSkillDevelopment and Entrepreneurship that anchors the National Skill QualificationsFrameworkandalliedqualityassurancemechanismsforsynergizingskillinitiativesinthecountry(Source:https://www.nsda.gov.in/nsda-about-us.html)

TheNationalSkillsQualificationsFramework(NSQF)organizesqualificationsaccordingtoaseriesoflevelsofknowledge,skillsandaptitude.Theselevelsaredefinedintermsoflearningoutcomeswhichthelearnermustpossessregardlessofwhethertheywereacquiredthroughformal, non-formal or informal learning. In that sense, the NSQF is a quality assuranceframework. It is, therefore, anationally integratededucationandcompetencybased skillframeworkthatwillprovideformultiplepathways,horizontalaswellasvertical,bothwithinvocational educationandvocational trainingandamongvocational education, vocationaltraining, general education and technical education, thus linking one level of learning toanother higher level. In addition, it maintains the National Labour Market InformationSystem(LMIS).

As per the dashboard of LMIS, the ecosystem consists of 20350 courses, 45401 trainingcenter,6343trainingproviders,95050trainers,57675assessors,623assessmentbodies,442 certified bodies. According to another statistics, it has data of 9944385 certifiedcandidates. Another functions of NSDA is provide The National Quality AssuranceFramework (NQAF) aims to improve the quality of all education and training/skillsProgrammesinIndia,andNationalSkillResearchDivision(NSRD).WedidnothaveaccesstoLMIS.ItisnotpossibletoknowtypeofdataisstoredwithLMIS.

1.2.3NationalSkillDevelopmentCorporation(NSDC)

“NSDCaimstopromoteskilldevelopmentbycatalyzingcreationoflarge,qualityandfor-profitvocational institutions.Further, theorganizationprovides fundingtobuildscalableandprofitablevocationaltraininginitiatives.Itsmandateisalsotoenablesupportsystemwhich focusesonqualityassurance, informationsystemsandtrainthetraineracademieseither directly or through partnerships. NSDC acts as a catalyst in skill development byprovidingfundingtoenterprises,companiesandorganizationsthatprovideskilltraining.Italso develops appropriate models to enhance, support and coordinate private sectorinitiatives.AsperitsdataasonJuly31,2019,ithad462trainingpartners,11000trainingcenters,2100 jobroles,38SSCs. Ithaspresence in29statesand6unionterritories,andtrained1.12crorepersons.Ithasplaced50.68lakhstrainedpersons.ItsschemesincludePradhanMantriKaushalVikasYojana (PMKVY),PradhanMantriKaushalKendra,Udaan,

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International Skill Training, and Technical Intern Training Program (TITP)” (Source:https://nsdcindia.org/)

1.2.4NationalSkillDevelopmentFund(NSDF)

TheNationalSkillDevelopmentFundwassetup in2009bytheGovernmentof India forraisingfundsbothfromGovernmentandnon-Governmentsectorsforskilldevelopmentinthe country.TheFund is contributedbyvariousGovernmentsources, andotherdonors/contributorstoenhance,stimulateanddeveloptheskillsofIndianyouthbyvarioussectorspecificprograms.ApublicTrustsetupbytheGovernmentofIndiaisthecustodianoftheFund.TheTrustacceptsdonation,contribution incashorkind fromtheContributors forfurtheranceofobjectivesoftheFund.TheFundisoperatedandmanagedbytheBoardofTrustees. The Chief Executive Officer of the Trust is responsible for day-to-dayadministrationandmanagementoftheTrust.

1.2.5TheIndianInstituteofEntrepreneurship(IIE)

“Indian Institute of Entrepreneurship (IIE) is an autonomous organization under theMinistry of Skill Development & Entrepreneurship. The main aim of the Institute is toprovidetraining,researchandconsultancyactivitiesinSmallandMicroEnterprises(SME),withspecialfocusonentrepreneurshipdevelopment”(Source:http://iie.nic.in/)

1.2.6TheNationalInstituteforEntrepreneurshipandSmallBusinessDevelopment(NIESBUD)

ItisanorganizationoftheMSDE,engagedintraining,consultancy,research,etc.inordertopromote entrepreneurship and Skill Development. The major activities of the InstituteincludeTrainingofTrainers,ManagementDevelopmentProgrammes,Entrepreneurship3-cum-Skill Development Programmes, Entrepreneurship4 Development Programmes andClusterIntervention.

1.2.7SectorSkillCouncils(SSC)

SectorSkillCouncilsaresetupasautonomous industry-ledbodiesbyNSDC.TheycreateOccupationalStandardsandQualificationbodies,developcompetencyframework,conductTraintheTrainerPrograms,conductskillgapstudiesandAssessandCertifytraineesonthecurriculum aligned to National Occupational Standards developed by them (Source:https://www.msde.gov.in/ssc.html. As on date, 37 Sector Skill Councils (SSCs) areoperational.Intotal,thereare39SSCs.Thereareover600CorporateRepresentativesintheGoverningCouncilsoftheseSSCs.

3 Entrepreneurship is the process of designing, launching and running a new business, which is often initially a small business. The people who create these businesses are called entrepreneurs. 4 An entrepreneur is an individual who starts and runs a business with limited resources and planning, and is responsible for all the risks and rewards of his or her business venture. The business idea usually encompasses a new product or service rather than an existing business model.

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1.2.8Trainees/Beneficiaries

MSDEhas largenumberof traineesasevident fromthedatagivenat theMSDEwebsite.Thesebeneficiariesbelongtodifferentcategories.Thedetailsareavailableinvariousreportsofgovernmentandreportspublishedbytheotherorganizationsandexperts.ThetraineesofMSDEare(i)whohadnotattendedtheschoolandcolleges(maybeatargetpopulationofJSSs),(ii)dropoutsfromuniversities,colleges,andschools,(iii)studentswhocannotaffordthecostofhighereducationandforcedtobearresponsibilitiesofthefamiliesunderforcedcircumstancesbutreadytodosomething,(iv)citizenswhoarewillingtolearnandalsohadwilltostarttheirownbusinessoranyotheractivitytoenhanceearnings,(v)citizenshavingtheirinformalunitsandplanningtotaketheseunitstothenextleveletc.

1.2.9CapacityDevelopers

MSDEhasalargegroupofcapacitydevelopersincludingmastertrainer,trainers,mentors,assessors,contentdeveloper,qualitymonitor,etc.ThesecapacitydevelopersarepartnerofMSDEasan individualorasanorganization.Thedetailsof thesecapacitydevelopersareavailablewithwebsite ofMSDE ormembers of its ecosystem. These are very importantcomponentofecosystemofMSDE.

TheinformationaboutMSDEanditsstakeholdersalongwithresearchdoneinthefirstfivechapters of this report combined with existing policy for entrepreneurship and skilldevelopmentwillpaveway fora frameworkandworkingplan for transitionof informalenterprisestotheformaleconomyusingentrepreneurship.

Fromaresearchstudyperspective,sometentativeconstructs thatwere lookedbyus fordelvingdeeperinsideintothephenomenaoftransmutationofinformaleconomybusinessandentrepreneursintoformaleconomybusinessandentrepreneursaregiveninthenextsection.

1.3 Conceptual/Operational Definitions of major concepts used in thereport

There are various descriptions and definitions of informal sector, formal sector,formalization,capacitybuildingandentrepreneurshipavailableintheliterature.Theaimofthissub-sectionistoenlistsomeoftheavailableconceptualdefinitionsinliteraturefortheaforementioned concepts and to finally present the definition(s) that will be used fordescribing and defining the concepts of informal sector, formal sector, formalization,capacitybuildingandentrepreneurshipinthepresentreport.

1.3.1InformalSector

Theterminformalsectorisusedinterchangeablywithunorganizedsector(Source:ChenandVanek,(2013)).Sincetheveryonset,theconceptanddefinitionofinformalsectorhasbeena subject of debate both at the national and international levels. Hart (1970) first

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introduced this sectoras unregulatedeconomicenterprises.Followed by InternationalLabourOffice(1972)camewithanofficialdefinitionbasedoncertaincharacteristicsofthe enterprises.Even thoughmost of the international studies have used theterm“informalsector”, Central Statistical Organization (CSO) in India introduces thissector as “unorganized sector” in itsreportonNationalAccountsStatistics.An explicitdefinition of the informal sector in the Indian context distinguishing betweenunorganizedandinformalsectorisprovidedbyNationalSampleSurveyOrganization(2000)5.

Definition1:According to NSSO, the informal sector incorporatestheunincorporatedproprietiesorpartnershipenterprisesoftheAnnualSurveyofIndustries(ASI).Intheunorganized sector, in addition to the unincorporated proprieties or partnershipenterprises,enterprisesrunbycooperativesocieties,trusts,privateandlimitedcompaniesarealsoincluded.Theinformalsectorcan,therefore,beconsideredasasub-setoftheunorganizedsector.

Definition2:Itconsistsofallunincorporated(notcoveredunderthefactoriesactandthesocial security legislations like Employees State Insurance Act and Provident Fund Act)privateenterprisesownedbyindividualsorhouseholdsengagedinthesaleandproductionofgoodsandservicesoperatedonaproprietaryorpartnershipbasisandwithlessthantentotalworkers(Source:NCEUSReport(2009),page357).

Definition3: “Productionunitsof the informal sectorweredefinedby the15th ICLSasasubsetofunincorporatedenterprisesownedbyhouseholds, i.e.asasubsetofproductionunitswhicharenotconstitutedasseparatelegalentitiesindependentlyofthehouseholdsorhouseholdmemberswhoownthem,andforwhichnocompletesetsofaccounts(includingbalancesheetsofassetsandliabilities)areavailablewhichwouldpermitacleardistinctionoftheproductionactivitiesoftheenterprisesfromtheotheractivitiesoftheirownersandtheidentificationofanyflowsofincomeandcapitalbetweentheenterprisesandtheowner”(HussmannsandMehran(1994)).

Definition4:Theinformalsector,alsoknownastheundergroundeconomy,blackeconomy,shadoweconomy,orgreyeconomy,ispartofacountry’seconomythatisnotrecognizedasnormalincomesources6.

Ifoneweretolookatthemajorfeaturesoftheaforementionedfivedefinitionsthenwewould conclude that Informal Sector Unitsmainly comprise of enterprises notmandatorily coveredunder any of the legislations (acts, laws and rules) of thecountrysuchassocialprotection/welfare,companyregistrationlegislation,labourlegislationorunderthetaxnet;andexcludingillicitactivities.Thisisthedefinition

5 Distinction between Informal and Unorganized Sector: A Study of Total Factor Productivity Growth for Manufacturing Sector in India. Available from:https://www.researchgate.net/publication/268366658_Distinction_between_Informal_and_Unorganized_Sector_A_Study_of_Total_Factor_Productivity_Growth_for_Manufacturing_Sector_in_India [accessed May 26 2020] 6 https://marketbusinessnews.com/financial-glossary/informal-sector-definition-meaning/

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thatILOinitspoint204in104th InternationalLabourConferenceinJune2015envisaged7.

1.3.2FormalSector

Definition 1: According to IGI global, formal sector encompasses all economic activitiesoperatingwithintheofficiallegalframeworkthatarepayingtaxesonallgeneratedincomes8.

Definition 2: Additional viewpoints about definitions of formal sector, comprehenddistinction between formal and informal sector as (a) whether a worker has a formalcontract;(b)whetheraworkerisaregular/salariedworker(asopposedtoself-employedorcasual);(c)whetherafirmisregisteredwithanybranchofthegovernment;(d)whetherthefirmpaystaxes;and(e)whetheraworkerreceivessocialsecurity9.

Definition3:SociologyGroupdefinesFormalsectoras-“Formalsectorasactivitieswhich are taxed andmonitoredby the government and the activities involved areincluded in the Gross Domestic Product(GDP)” (Source:https://www.sociologygroup.com/formal-informal-sector-differences/)

1.3.3Formalization

Definition1:Broadlytherearetwoviewsonthedebateonformalizingtheinformaleconomy: Capital viewconsiders inclusionofenterprises in the formal taxandfinancialsystems;andlabourviewconsidersinclusionofworkersinthesocialprotectionsystem2.Thisisthebroadworldviewthathasbeenusedasananchorforconceptualizationoftheconceptofformalizationinthereport.

Definition2:Also, formalizationhasbeenconceptualizedbroadlyas theprocessofbringingmorebusinessfirmsandhouseholdsunderthetaxandregulatorynets—whether of corporate tax, personal income tax,GST, provident fund contributions,labourlaws,environmentalregulationsoranyotherregulations10.Thisisthebroadworldviewthathasbeenusedasananchorforoperationalizationofformalizationinthereport.

1.3.4UnorganizedSector

Definition1:Unorganisedsectorisdefinedasthatsetofeconomicactivitiescharacterizedbyrelativeeaseof entry, relianceon indigenousresources, smallscaleofoperations, labour

7 The recommendation defined the term “informal economy” as: “all economic activities by workers and economic units that are—in law or in practice—not covered or insufficiently covered by formal arrangements; and does not cover illicit activities...”. This definition of economic activities and units would cover informal workers and enterprises under any of the legislations such as access to social protection, labour legislation or under the tax net. Formalization of the Informal Economy: Perspectives of Capital and Labour. Available from: https://www.researchgate.net/publication/327731542_Formalization_of_the_Informal_Economy_Perspectives_of_Capital_and_Labour [accessed May 26 2020]. 8 https://www.igi-global.com/dictionary/formal-economy/68313 9https://www.news18.com/news/business/economic-survey-for-the-first-time-estimates-size-of-formal-and-informal-sector-in-india-1645105.html 10 https://www.livemint.com/Opinion/ZmfWEAVMWQ5U1lqv7YDfYI/The-challenge-of-formalizing-the-Indian-economy.html

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intensiveoperations,relianceonskillsacquiredoutsidetheformaleducationalsystemandunregulatedcompetitivemarket(ILO,1983)11

Definition2:AccordingtoNCEUSReport,2007-"Theunorganizedsectorconsistsofallunincorporatedprivateenterprisesownedbyindividualsorhouseholdsengagedin the sale and production of goods and services operated on a proprietary orpartnershipbasisandwithlessthantentotalworkers"12.

1.3.5CapacityBuilding

Definition: Capacity, according to OECD/DAC ―...is understood as the ability of people,organisationsandsocietyasawholetomanagetheiraffairssuccessfully‖.TheAgenda21ofthe United Nations Conference on Environment and Development (UNCED), CapacityBuildingwasdefinedinthefollowingway:―CapacityBuildingencompassesthecountry’shuman,scientific,technological,organizational,institutionalandresourcecapabilities13.

1.3.6Entrepreneurship

Definition: Entrepreneurship refers to the capacityandwillingness tostart,maintainandcontinuously improve a productive and gainful business venture whilst innovativelymanagingassociatedrisks.Beinginvolvedinalivelihoodactivityforsubsistencepurposesisnotanactofentrepreneurship14

1.3.7EntrepreneurialSkills

Definition:Entrepreneurialskillssuchasinnovativeness,problemsolvingskills,risktaking,customercare,selling(counting,addingandsubtracting–sortingoutchange),confidenceandcommunicationskills10.

1.4ApproachtoStudy

Theoverarchingmethodologyforthisstudyencompassesthefollowingsteps:

Systematic analysisof available secondary informationanddatabases for informal sectorclassification and estimation in India. This involved the following sub-phases: DataCollection,data reduction,datadisplay, anddrawingconclusions;with constant iterationbetween the analytical stages. Data reduction involves selecting, focusing, simplifying,abstracting, and transforming the data in the field notes or transcripts into summaries,coding,testingthemes,etc.Thissorts,discards,andorganizesthedatasothatconclusionscanbedrawn.

11 https://shodhganga.inflibnet.ac.in/bitstream/10603/219828/10/10_chapter%203.pdf 12 http://www.publishingindia.com/GetBrochure.aspx?query=UERGQnJvY2h1cmVzfC8xMTg1LnBkZnwvMTE4NS5wZGY= 13 https://openei.org/w/images/8/80/Best_Practices_in_Capacity_Building_Approaches.pdf 14 https://unevoc.unesco.org/e-forum/INFORMAL_SECTOR_STUDY.pdf

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Collectionofsecondaryinformation:Collectionofinformationthatisalreadyavailablefromthearchivesanddatastoresfromidentifiedexternalinstitutionsandorganizationsisdone.

Collectionofprimaryinformation:Collectionofprimaryinformationwasdonewithaviewtofill the information gaps to some extent that were arising due to limited secondaryinformation availability/access. Herein it is pertinent to be reiterated that this study isprimarilybasedonsecondarydata.

Providingaccesstoinformation:Thispartofapproachofthestudyisaboutthedisseminationofthefindingsofstudy.Disseminationincludesgovernmentorganizationmayhaveaccesstothecompiledinformationandallowingcivilsocieties/citizens/entrepreneurs/informalsector to benefit from this additional amount of knowledge. This can be done using astakeholderworkshopinlightofthefinaldraftreportofthisstudytohaveaparticipativeconfirmationofthefindingsandsuggestionsofthereport.Thishelpedintheevolutionoftheproposed frameworkof formalizationof informal sector through entrepreneurshippromotion(asgiveninChapter6).

To add rigor and value to this study, this detailed researchwork has employed a pluralresearchdesign(combinationofexploratory,descriptiveandconclusive).Thepurposeistoportraytheaccuratesituationswithrespecttothepoliciesandpolicyinstrumentsconcernedandtheprojectdeliverables.

1.5BriefaboutApproachesofFormalization

Theobjectivesof includingthissectionis tobrieflyexplaintheapproachofformalizationbasedonthesecondarydataavailableintheliterature.

Itisevidentfrommanystudiesthattwosectorofeconomyhavedependencyoneachother.Hassan et al (2010) studied some aspect of formal and informal sectorwithin a generalequilibriumframeworkofadevelopingeconomywithaforeignownedfactorofproduction.They raised questions whether the informal-formal sector relationship is procyclical/complementary–expansionorcontractioninonenecessarilyimpliesanexpansionorcontractionintheother–whentheinformalsectorissubjecttoatechnologicalshock.Theyalsodiscussedtheissuesthatderiveanecessaryandsufficientconditionunderwhichapositiveshocktotheinformalsectorresultsinacontractioninboththesizeoftheurbanformalsectorandtheinformalsector.Theresultsoftheirstudyindicatedthattheinformal-formalsectorrelationshipisprocyclical,itneverthelesscallsintoquestiontheconventionalwisdom on the benefits of intervention in the informal sector of developing economies,particularlywheremultinationalcorporationssub-contractcertainlaborintensivestagesofproductiontotheinformalsector.

Unni(2018)mentionedthattherearetwoviewsonthedebateofformalizingtheinformaleconomy.Theseare(i)capitalviewwhichconsidersinclusionofenterprisesintheformaltaxandfinancialsystems;and(ii)labourviewwhichconsidersinclusionofworkersinthesocial

24

protection system. Unni (2018) further mentioned that those argue about inclusion ofinformalunits in thetaxnetorrecommendtransactingthroughformalbankingchannelsconstitutes formality are more concerned with inclusion of enterprises in formalaccountableandtraceablesystems.ShealsomentionedthatinarecentResearchConferenceontheInformalEconomyinHarvardUniversity,participantsarguedthatthecapitalviewofformalizationisnotformalizationbutjust“Normalization”,allenterprisesandworkersareincluded in the same “net”. From the lens of labour formalization iswhenworkers areincluded in the social security systems. She advocated like many others countries theperspectivefromthelabourviewbetakenintoaccountforformalization.Itwillcoverwiderconsiderations such as redistribution of wealth, tackling poverty, inequality andvulnerability.

WIEGO15mentioned that formalizationof the informaleconomycan takedifferent formssuch as registration, taxation, organization and representation, legal frameworks, socialprotection,businessincentives/support,andmore.Formalizationmeansdifferentthingstodifferentcategoriesoftheinformalworkforce.Whatisneededonpartofregulatorsisanapproach to formalization of the informal economy that is comprehensive in design butcontext-specificinpractice.Theapproachtoformalizationinbitmoredetailisgivenintheformofschemesandsubschemeofformalizationofenterprisesaslistedbelow:

(i) “RegistrationandTaxation16:o Thereisaneedforsimplifiedregistrationproceduresinthecontextofmicro

entrepreneurso Progressiveregistrationfees

(ii) Appropriatelegalandregulatoryframeworks,including:o Enforceablecommercialcontractso Privatepropertyrightso Useofpublicspacefordoingthebusiness

(iii) Benefitsofoperatingformally:o Accesstofinanceandmarketinformationthroughdifferentchannelsincluding

governmentchannels.o Accesstopublicinfrastructureandserviceso Enforceablecommercialcontractso Limitedliability.Asperthepresentregulationfortheproprietorship&

partnershipthereisunlimitedliabilityo Clearbankruptcyanddefaultruleso Accesstogovernmentsubsidiesandincentives,includingprocurementbidsand

15 https://www.wiego.org/rethinking-formalization 16 A tax or tax system is considered progressive if the tax burden as a percentage of income increases as the level of income increases. The degree of progressivity or regressivity can be measured by the ratio of tax burden at the lowest income level to the tax burden at the highest income level.

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exportpromotionpackageso Membershipinformalbusinessassociationsevenstatusoftheunitisinformal.o Accesstoformalsystemofsocialsecurityshouldbeextendedtoinformalunits”

Informalizingaspecificgroupsofinformalworkers,policymakersandpractitionersshouldchooseappropriateelementsfromthisframeworkandtailortheinterventionstomeetlocalcircumstances/requirements.

1.6ScopeofthepresentstudyandBroadOrganizationofthereport

1.6.1ConductingaComprehensiveStudy,throughtheexistingdatabases(alreadycommissionedStudies,PrivateReportsetc.)tounderstandtheInformalSector

Activities

A1. PerformingaliteraturereviewoftheStudiesconductedintheInformalSectoraimedatformalization.

A2. Mapping the current available database (national as well as state level) such asNCEUS, Economic Survey, MOSPI, NSSO, data available with various relevantMinistriesandotheravailableReports toprovidean in-depthReportonextentofInformalSectorinIndia.(Theanalysiswouldcoverextentof InformalSectorinallStatesandUnionTerritories,providingapercentagebreak-upbetweenformalandinformalenterprisesundereachSector).

A3. Mapping all the Policies and Support provided to Informal Sector by variousstakeholders suchasCentral andStateGovernments/Ministries, large scaleNGOs,Social ImpactEnterprises,PrivateSectorCSRActivities,TechnologyFirmsetc.andidentifying agencieswhich are carrying out the related ground level support andimplementationactivities.

A4. ReviewingCaseStudies,workingmodeofprivateorganizations,internationalbestpracticesetc. tounderstandthechallenge facedbymicro-entrepreneurs, includinggapsintermsofaccessinggovernmentpolicies,formal/informaltraining,accesstocapital,markets,monitoringandroleplayedbytechnologyplatforms(ifany)etc.

Outcomes

O1. EstimationofinformalenterprisesanddetailedclassificationofinformalenterprisesundervariousSectorsandSub-sectors.

O2. Classification of informal enterprises leading to identification of priority sectors(based on various parameters like employment, economic contribution,inclusiveness,geographyetc.)andstates/departments/industryassociationsetc.forMSDEtofocuson.

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O3. IdentificationofChallenges(KeyIssues) facedbymicro-entrepreneurs,especiallyissuesintermsofaccesstofinancecapital,infrastructurecapital,knowledgecapitaletc.

1.6.2ExploringPotentialRoleofMSDEDiscussing the results of comprehensive desktop research with a Panel of Experts in‘StakeholderWorkshop’withaviewtoidentifyareasofinterventionforMSDEinordertosupport conversion of informal enterprises to formal ones. The Panel will consist ofrepresentativeofstakeholdersintheentrepreneurialspace,suchasenablingagenciesandincubators, impact investors, NGOs, key sector experts, technology firms and financialinstitutionsprovidingsupporttomicro-enterprisesintheinformalsectoraswellaspolicymakingbodies.

Activities

A1. Developing a framework of approach based on possible synergies across thestakeholdersintheeco-systemforfacilitatingformulationofPolicybyMSDE.

A2. ConductingStakeholderWorkshopsaswellas individual interviewstodiscusstheimplicationsofdesktopresearchconducted.

A3. DeliberatinganddiscussingvariousapproachesthatcouldbeadoptedbyMSDEtosupportconversionofinformalenterprisestoformalones.

Outcomes

O1. Validation of action points with the identified stakeholders to create aroadmap/guidelinesforMSDEtoprovidenecessarysupporttoenablemovementofinformal enterprises towards the formal sector through exploring variousapproachesandsolutions,includingdisruptivedigitaltechnologysolutionsasthekeyanchorpoint.ThiswouldalsoincludethepotentialroleofMSDEandthesupportitmayprovidetoinformalenterprisesintermsofskills,training,accesstomarketsandcapital,mentoringandcapacitybuilding.

O2. Providing a solution/working plan in order to align all support schemes gearedtowardsinformalsectortoremoveduplicityandincreaseimpact.

O3. Proposing an operational framework to MSDE for implementation by clearlyidentifyingmission, vision, due diligence processes for partnerships, yearly plans,governancemodel,digitalplatformandsupporteco-systems(compliancehandling,paymentsolutions,B2B,B2CandG2Bnetworkingetc.),convergenceetc.

Giventheaforementionedactivitiesandoutcomes,theresearchteamatMDI,envisagedthepresentreportinamannersuchthatthereispointtopointmappingofthescope(includingvariousactivitiesandoutcomesofthepresentstudy)asgivenintheTermsofReferenceof

27

theRFPalongwiththevariousChapters(Chapter2to7)ofthepresentreport.ThesamehasalsobeendescribedinTable1.1.

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Table1.1MappingofthescopeofthepresentstudyasgivenintheToRoftheRFPthevariousChaptersofthepresentreport

ChapterS.No.(Asper theReport)

Chapter Title (Asperthereport)

Scope of theStudy&S.No.asperToR

S.No. asper ToRfor therespectiveActivity/Outcome

ActivitytitleasperToR

Outcome title as perToR

2

Literature Reviewsof Studiesconducted in theinformalsector

3.1Conducting aComprehensive Study,through theexistingdatabases(alreadycommissionedStudies,PrivateReports etc.)to understandthe InformalSector

3.1.1.1

Performing aliterature review ofthe Studiesconducted in theInformal Sectoraimed atformalization.

-

3

Mapping thecurrent availabledatabases plusmapping theextentofInformalSector

3.1.1.2

Mappingthecurrentavailable database(national aswell asstate level) such asNCEUS, EconomicSurvey, MOSPI,NSSO,dataavailablewith variousrelevant Ministriesand other availableReports to providean in-depthReporton extent ofInformal Sector inIndia. (The analysiswould cover extentofInformalSectorinallStatesandUnionTerritories,providing apercentage break-up between formaland informalenterprises undereachSector).

-

4

Mapping thepolicies & supportfrom stakeholdersand agenciesworkingonground

3.1.1.3

Mapping all thePoliciesandSupportprovided toInformal Sector byvariousstakeholders suchasCentralandStateGovernments/Ministries, large scaleNGOs,SocialImpactEnterprises, PrivateSector CSR

-

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Activities,Technology Firmsetc. and identifyingagencies which arecarrying out therelatedgroundlevelsupport andimplementationactivities.

5

Reviewing CaseStudies andIdentification ofChallengesfacedbytheinformalsector

3.1.1.4

Reviewing CaseStudies, workingmode of privateorganizations,international bestpractices etc. tounderstand thechallenge faced bymicro-entrepreneurs,including gaps interms of accessinggovernmentpolicies,formal/informaltraining, access tocapital, markets,monitoringandroleplayed bytechnologyplatforms (if any)etc.

-

3

Mapping thecurrent availabledatabases plusmapping theextentofInformalSector

3.1.2.1 -

Estimationof informalenterprises anddetailed classificationofinformalenterprisesunder various SectorsandSub-sectors.

3Identification ofPrioritySectors

3.1.2.2 -

Classification ofinformal enterprisesleading toidentification ofprioritysectors(basedonvariousparameterslike employment,economiccontribution,inclusiveness,

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geography etc.) andstates/departments/industry associationsetc. forMSDE to focuson.

5

Reviewing CaseStudies andIdentification ofChallengesfacedbytheinformalsector

3.1.2.3 -

Identification ofChallenges (KeyIssues)facedbymicro-entrepreneurs,especially issues interms of access tofinance capital,infrastructure capital,knowledgecapitaletc.

6

Roadmap/Guidelines for MSDE tosupportFormalization ofInformalSector

3.2 ExploringPotential RoleofMSDE

3.2.2.1

Developing aframework ofapproach based onpossible synergiesacross thestakeholders in theeco- system forfacilitatingformulation ofPolicybyMSDE.

-

DependsonProposedStake-HolderWorkshop

3.2.2.2

ConductingStakeholderWorkshops as wellas individualinterviews todiscuss theimplications ofdesktop researchconducted.

--

6 +Results ofProposedStakeHolderWorkshop

3.2.2.3

Deliberating anddiscussing variousapproaches thatcouldbeadoptedbyMSDE to supportconversion ofinformalenterprises toformalones.

-

6Roadmap/Guidelines for MSDE tosupport

3.2.3.1 -

Validation of actionpoints with theidentifiedstakeholdersto create a

31







Formalization ofInformalSector

roadmap/guidelinesfor MSDE to providenecessary support toenable movement ofinformal enterprisestowards the formalsector throughexploring variousapproaches andsolutions, includingdisruptive digitaltechnology solutionsas the key anchorpoint. Thiswould alsoinclude the potentialrole of MSDE and thesupportitmayprovidetoinformalenterprisesin terms of skills,training, access tomarkets and capital,mentoring andcapacitybuilding.

6


3.2.3.2

Providing a solution/working plan in orderto align all supportschemes gearedtowards informalsector to removeduplicity and increaseimpact.

6


3.2.3.3 -

Proposing anoperationalframework to MSDEfor implementationbyclearly identifyingmission, vision, duediligenceprocessesforpartnerships, yearlyplans, governancemodel,digitalplatformand support eco-systems (compliancehandling, paymentsolutions, B2B, B2Cand G2B networkingetc.),convergenceetc.

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1.7Conclusion

Thissectionessentiallysummarizesthemajorconstituentsofthischapter.Section1.1wasthe introduction to the study which also talked about Section 1.3 discussed about thedefinitionsofmajor concepts that are central to this studywith the finalized definitionswhichwillbeanchoredto–fordiscussionsandpropositionsthroughoutthisstudy.Section1.4discussedabouttheapproachandmethodologyofthestudy.Section1.5discussedfewapproaches of formalization. Section 1.5 forms one of the basis for evolution of finalrecommendationsinChapter6andalsohelpsthereaderinunderstandingtheconnectandrelevanceof finalizationofconceptualdefinition inSection1.3.Also,oncesection1.5hasbeen read through the readerwould be able to appreciate the literature reviewdone inChapter2andthesecondarydataconsolidationdoneinChapter3and4.ThiswouldalsoformatheoreticallenstoabsorbthecasestudiesgiveninChapter5.Section1.6discussedtheScopeofthepresentstudyandBroadOrganizationofthereportintermsofToRandthemappingoftheexpectationoftheToRwithcontentsanddeliverablesencompassedinthevariouschaptersofthereport.

33

Review of literature of the studies on Informal sector

34

Chapter2-ReviewofliteratureofthestudiesonInformalsector

2.1Introduction

Informalitytakesvariousformsindifferentcontexts,andnewformsofinformalityemergeovertime(withinacountry).Therearemanyperspectivesofinformalitysuchasthecapitalviewofformalization,labourviewofformalization,technologicalperspective,andageneralperceptionofcitizensworkingwithorintheinformalsectorofaneconomy.Thischapterpresents a review of extant literature in the informal sector aimed at formalization. Inaddition,thischapteralsopresentsnewtrendsastheyemergedinrecentyearsacrossselecteconomiesintheworld,e.g.India.

Thechapterisprimarilydividedintofivesections,includingtheintroductionsection.Thesecond section (2.2) discusses the studies and suggestions provided by internationalscholarsandexpertsforformalizinginformalsector.Someofthestudiesalsomentionedthata new form of formalization is happening in many parts of the world, and it requiresintervention at different levels by the governments. Section 2.3 presents the efforts andsuggestionsofthescholarsandexpertsinthecontextofIndianinformalenterprises;itisfollowed by Summarization of Major Findings and Evolution of Broad Themes forFormalization Framework in section 2.4. Section 2.5 encompasses the conclusion of thechapter.

2.2StudiesbyInternationalScholars/organizations

In international extant literaturemanydifferentpolicieshavealreadybeen implementedthroughouttheworldtosupporttheformalizationofinformalenterprises.Thesepoliciescanbeclassifiedintermsoftheirdomainandthecostsandbenefitsofformalizationthatarebeing targeted. In 2011, the Donor Committee for Enterprise Development suggested aclassificationintoninedifferentbusinessenvironmentdomains(DCED,2011)17:

1. Business registration and licensing; adapting business registration and licensingregimes to simplify the administrative processes of registration (for example, onestopshopintegratingallproceduresnecessaryforbusinessregistration).

2. Simplificationoftaxationpolicyandadministration,inordertoeasetaxcompliance(for example, by introducing more transparent and simplified tax reporting, anddifferentiating tax schemes formicro enterprises, farmers and currently informalenterprises).

3. Landownershipandtitling;reforming incompletecadastersandonerousorcostlylandregistrationsystemsandenablingfemaleownershipoflandandassets,inorder

17 DCED (August 2011), “How Business Environment Reform can promote formalization”, annex to: “Supporting Business Environment Reform, Practical Guidance for Development Agencies”, Donor Committee for Enterprise Development.

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toenableenterprisestoworkfromapermanentlocationandtoraisecapitalthroughland-basedcollateral.

4. Labourandlabour-relatedissues;giventheneedforregulationtoguaranteeaproperfunctioning of the labour market, basic social protection for workers and skillsdevelopment, the costs of complying with these regulations should be as low aspossible.

5. Judicial reform; reducing transaction costs, improving the quality of governancemethodsandimprovingaccesstojusticeinbureaucraticadministration.

6. Intellectualproperty rights; improvingtheenforcementof existing laws regardingtrademarksandotherpropertyrights, inordertoprovideeconomicopportunitiesunderlegaloperation.

7. Improvedaccesstofinancialservices;increasetheaccessofpoorwomenandmentothefullrangeoffinancialservices,inordertoreducethecostsofraisingcapital.

8. Access to information about business regulation and rules; awareness (andunderstanding) of existing business regulations and rules is a prerequisite forenterprisestoregister.

9. Incentives for reform and communicating these to informal enterprises.Formalization should introduce the benefits of compliance with the legal andregulatory framework.Microandsmallenterprisesshouldsee formalizationasanopportunityforgreateraccesstomarketsandgrowth.

Governmentitself(beinganimportantclientinvariousmarketsforproductsandservices)could be added as a tenth domain. For example, a percentage of public orders could bereservedfor formalmicroandsmallenterprises(MSEs),whichcouldencourage informalMSEstoformalize(IshengomaandKappel,2006)18.Together,thevariouscombinationsofdomain and targeted costs and benefits could be used to develop a detailed typology ofpoliciestoformalizeinformalenterprises.

Table2.1Typologyofformalizationpolicies,bydomainandthetargetedcostsandbenefitsofformalization.(Source:Panteia,2014)

Targetedcostsandbenefitsofformalization

S.No Domain Entrycosts

Taxes,feesandsocial

contributions

Compliancecosts

Permanentlocation

Accesstobusiness

developmentservices

Accesstonew

markets

1Businessregistrationandlicensing

X X X

2Tax policy andadministration

X X

18 Ishengoma, E. and R. Kappel (2006), “Formalization of informal enterprises: economic growth and poverty”, Eschborn: Economic Reform and Private Sector Development Section, GTZ.

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Targetedcostsandbenefitsofformalization

S.No Domain Entrycosts

Taxes,feesandsocial

contributions

Compliancecosts

Permanentlocation

Accesstobusiness

developmentservices

Accesstonew

markets

3Landownership andtitling

X X

4Labour andlabour-relatedissues

X X

5 Judicialreform X

6Intellectualpropertyrights

X

7

Improvedaccess tofinancialservices

X

8

Access toinformationabout businessregulation andrules

X X X X

9

Incentives forreform andcommunicatingthese toinformalenterprises

X X X X

10Government asclient

X

UNCATD19isapublicationthatemphasizestheneedsofformalizingtheinformalsectorsincethemajorityoftheworld’sactivepopulationworksintheinformaleconomy.AccordingtoUNCATD,1.8billionpeopleworkininformaljobscomparedto1.2millionwhobenefitfromformal contractsand social securityprotection.Thisnumber isprojected togrow to twothirdsoftheworkforceby2020.Itwassuggestedthatformalizationshouldbesimpleanddesirable.Thereisaneed to:

(i) Explaintheformalizationtothemasses;i.e.whatminimumconditionsshouldasmallbusinesssatisfytohavelegalexistenceandtooperatelegitimately?Itmustalsoincludeadaptedinformationandtargeteddisseminationoftheinformation.

(ii) Makeformalizationeasy;i.e.proceduresshouldbemadeassimpleaspossiblewithinthe framework of existing laws or by amending them. New legal schemes for self-employed.

(iii) Makeformalizationdesirable;i.e.establishinggoodregulationsandsimpleprocessesmay not be enough. There needs to be communication about the benefits of

19 The year of publication for this document is not mentioned in the source (https://businessfacilitation.org/assets/documents/pdf/formalizing-the-informal-sector.pdf)

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formalization. This will help reinforce benefits and enforce compliance when it ispartneredwithotherempoweringservices.

One Example of failure of a simplified tax system in Argentina: In 2004, Argentinaimplementedanewsimplifiedtaxsystemforsmallbusinesses.Aftertwoyearsofthislaw,thoughsimplified,only44,000newtaxpayershadenrolledtobecomepartof the formalsector. This means the success rate of the simplified tax system did not encourage theinformalsector.

Chen(2006)observedthelinkbetweeninformalandformaleconomiesandalsopresentedthreeformsofformalization.Shepointedoutthatfewinformalenterprises,exceptperhapssomesurvivalactivities,operated intotal isolation fromformal firms.Mostof these firmssourcedrawmaterialsfromand/orsuppliedfinishedgoodstoformalfirmseitherdirectlyorthroughintermediate(ofteninformal)firms.Thesourcingandsupplyingofgoodsorservicescouldtakeplacethroughtheseecosystemmembers.Thesewereindividualtransactions,butthey were more likely to take place through a sub-sector network of commercialrelationshipsoravaluechainofsub-contractedrelationships.Shediscussedthreeformsofregulations, i.e. over regulation, deregulation, and lack of regulation. She suggested thattherewasaneedforoptimalregulationinthecaseofaninformalsector.Shesuggestedanapproachwhereinrelationsandlinkagesbetweenformalandinformaleconomiesmightbeexploredforthepurposeofformalization.

AnyidohoandSteel(2016)explainedthecostsandbenefitsofinformalandformallinkagesin the contextofmarketandstreetvendors inAccra,Ghana.Theyanalyseddata from15focusgroupsandconducteda surveyof150vendors fromboth the centre cityandnon-centrallocationsofAccra.Theiranalysiswasperformedintermsofvendors’relationshipstothevaluechain,non-governmentalinstitutions,thegovernment,andthemacroeconomy.Theymentionedthatagovernmentandamacroeconomyexertastrong,mostlynegativeinfluenceoninformaloperators.However,thatwasoffsettosomeextentwiththesupportfrom membership-based organizations and NGOs. Access to loans from microfinanceinstitutionswasviewedbothasapositiveandnegativeinfluenceonvendors’work.Althoughtherewere fewvisibledirectlinkagesbetween informaloperatorsandformal firms, theywere,tosomeextent,mutuallyinterdependentasretailersandsuppliersinthevaluechain.Takingadvantageofthepotentialsynergyininformal-formalsectorlinkageswouldrequirethegovernmentandotheractorstobecomemoreproactivetowardfacilitating,ratherthandenying,infrastructure,supportservices,andadequatespaceforinformaltraders.

ILO (2016) presented a roadmap for fighting undeclared work. In its report, the ILORecommendation No. 204 on the transition from the informal to the formal economy,adopted at the International Labour Conference in June 2015 was discussed. Itsrecommendationaffirmedthatthetransitiontotheformaleconomywasessentialtoachievean inclusive development and to realize decentwork for all. The ILO recommendations

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emphasized that it was essential to improve working and living conditions, to promotesustainable small and medium enterprises, and to achieve fair competition and fiscalconsolidation at a national level. These recommendationswould help to achieve greaterinclusivenessandcohesioninoursocietiesandtobetterdesignthe“FutureofWork”thatwewishedtoshapeforoursocieties.

Basedonthesetof25policyrecommendationsfromtheDiagnosticReportonUndeclaredWorkinGreece,theILO(2016)analysisidentifiedcriticalelements,challenges,andbarrierswhichare coming in theway toaholistic integrated strategicapproach towards tacklingundeclaredworkinGreece.

Thesecriticalelementsare:

(i) “Thefirstcriticalelementistheneedforidentifyingandsettingup(assigningorreforming)the tripartite social dialogue body bearing, on a permanent basis, and drawing on theappropriatelegalprovisions,theresponsibilityforpolicydesign,overviewandassessmentoftheholisticintegratedstrategicapproachtowardstacklingundeclaredworkinGreece(includingthepresentroadmap)”.

(ii) “The second critical element is equally important and relates to technical need forinteroperabilityofdatabasesfortheexchangeofdatabetweentheMinistryofLabour,theMinistryofFinanceandGSPR.Itisacriticalprerequisitefortheholisticintegratedstrategicapproach”.

Inaddition,technicalinteroperabilityofthedatabases,theoperatorsofthesedatabases,shouldbecomeabletocooperateandcoordinatebetweenthemtoallowtheproductiveuseof the data bases in the design and implementation of the holistic integrated strategicapproachtowardstacklingundeclaredworkinGreece.TheILOReportsuggesteda3-yearroadmaptoimplementthestrategy.

Sandra(2018)presentedtheexperienceofhowthePhilippinesapproachedformalizationofinformal employment. He took into account three dimensions of formalization: (i)formalizationofeconomicunits,(ii)formalizationofjobs,and(iii)productivejobcreationin the formal economy. In addition, Sandra (2018) presented different barriers to theformalizationof jobsandsamplemeasures to facilitate the transitionof informal jobs toformaljobs.Healsodiscussedcountry-levelactionplanningforGreeceandVietnam.

Mukorera(2019)analysedtheimpactofgrowthconstraintsonthewillingnesstoformalizeby informalmedium and small enterprises (MSEs). The author analysed 20 internal andexternalgrowthinhibitingfactorsthatusedthePrincipalComponentAnalysis(PCA),andalogisticmodelwasestimatedonadichotomousvariableofwilling/unwillingtoformalize.

Mukorera (2019) concluded that willingness/unwillingness to formalize by informalentrepreneurs in Zimbabwe was significantly related to institutional imperfections andasymmetry of bureaucracy associated with the registration process, lack of access totechnology,marketandfinancialconstraints,andalackofentrepreneurialandmanagement

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skills.Formalization ispossibleby improvingthebureaucracyof theregistrationprocessand access to technology may possibly increase the odds of the informal operatorsformalizingtheirbusinesses.Inaddition,improvementinmarketandfinancialconstraintsand entrepreneurial and managerial skills would decrease the odds of a willingness toformalize.

Bashe(2012)studiedtheformalizationofinformalenterprisesinthecontextofSouthAfrica.Hisfindingswerecentredaroundroleofagovernmentintermsofmakingpoliciesandlawgoverning informalsector,roleofeducation inthesuccessofenterprises, interconnectednatureof the InformalSectorEconomywith formalsectoreconomy, theroleofaccess tofinanceforgrowthofexistingenterprises,andtheroleofhistoricalpoliticalsegregation.Healsopresentedrecommendationsformembersofanecosystemofinformaleconomy.

2.3StudiesbyIndianScholars/OrganizationsintheIndianContext

Kathuriaetal. (2013) investigatedunits’ (firms’) recorddata for the informalandformalmanufacturingsectorscombinedfromfourrepeatedcross-sectionsduringthetimeperiodof1989–2005fortheIndianeconomy.Theyappliedastochasticfrontieranalysistothesefirmstocalculatetheabsoluteandrelativetechnicalefficiency,correctingfortheselectionbias in the firm’sdecision tobe inasegment.Theyuseda techniqueproposedbyGreen(2010).Theirselectionresultsindicatedthatthelikelihoodofthefirmbeingintheformalsectorwasrelatedtoitssize,lessstringentlabourregulation,theavailabilityofthepowersupply,andprioritysectorlending.Afteraccountingforselectionbias,theyfoundthatformalfirmsweresignificantlymoreefficient than informal firms, irrespectiveof their locations.These finding suggested that a government should relax its regulations; it would helpinformalfirmstoberelocatedasformalones.

Bairagya(2013) testedthehypothesisofwhetherornot the informal firmsoperatingoncontractswithformalfirms/agencies/contractorsweremoreefficientintermsoftechnicalefficiency vis-à-vis other firms. To test the hypothesis, the analysis of the efficiencyperformanceoftheinformalenterprisesinIndiaacrossenterprisesoftwostates(selectedonthebasisoflevelofdevelopment)usedatwostageDataEnvelopmentAnalysis (DEA)technique. The research used the large enterprise (sample size was large) level data ofNationalSampleSurveyOrganisation.Itwasobservedthat,inthedevelopedstate(Delhi),firmsoncontractswerelessefficient,whiletheyweremoreefficientinthelessdevelopedstate(Orissa).Theresultsfurtherrevealedthattheenforcementofregulationsmadethefirmsmoreinefficient.Thefindingsdidnotsupportthatformalizationwasneeded;however,thisisanexceptionalstudy.

KerswellandPratap(2015)concludedthattheautomobilesectoremergedasanimportantgrowthengineoftheIndianeconomy.TheNorthernautomobileclusterinHaryanawasaveryimportantclusterfortheautomobilesector.Itwasalsoacentreofindustrialunrestattimes. This article questioned informality in India’s automobile sector through the

40

applicationofcommoditychainanalysistoexplainwhyIndia’sautomobilesectorwasbesetbyinformality, lowwages,and insecureworkingconditions.Theyillustratedhow leadingfirmsinIndia’sautomobileindustry,withtheconvenienceoftheIndianstate,exploitedtheautomobilecommoditychaintomarginalizebothsubordinate firmsandthecontractandcasual workers who now make up the majority of the industry’s workforce. The verystructureofIndia’sautomobileindustrylockedmanyworkersandfirmsintoinsecurework,whereproductivitygainswereeatenupbyleading firms, further reducing themarginsoflowerlevelsuppliersandthewagesofworkers.ThisstudyofautomobilesectorinHaryanaattemptedtoexplainwhythiswasthecase.ThefindingsconcludedthatIndia’sindustrialrelationsregimehadlongceasedtoreflecttheactualbalanceofpowerbetweenlabourandcapital, institutionalizingnoncompliancewiththelabourlaws,andprovidingthebasisfortheindustry’sinformalization.

Padmanabhan(2016)quotedNandanNilekanias:

Aggregationbyplatforms(providedbyaggregatorssuchasAmazon,Flipkart,Uber,Ola,etc.)is thewayof jobscreationand itwillhappen.Thisplatformaggregationwillalso leadtoformalisationofIndianeconomy.India’scarrentaleconomyislargelyinformal.ButonceataxidriverbecomespartofOla,theninfacthebecomespartoftheformaleconomy.Heisabletousedata,getaloan,buyacarandstartpayingtaxes.ItwillresultintoformalisationofafewhundredmillionsofIndiansandwillspurgrowth

HealsoreportedaconversationwithoneofIndia’stope-commerceretailersthatsharedtwofactsinaninformalinteractionwithMint.Theretailermentionedthatmostofthemerchantsofnon-electronicitemssoldontheirsitecamefromTier-IIcitiesandbeyond;secondly,usingthetransactiondataofthesemerchants,thecompanyhadbeguntocreateacredithistoryandextendworkingcapitalloanstothem(whichotherwisewouldbealmostimpossibleforthemtoobtainfromtheformalbankingsector).

Vijayabaskar(2016)pointedoutthatthestatesimultaneouslyinformalizedlabourcontractswhileseekingtoformalisetheiraccesstothefinancialsystem.Hebelievedthatformalizationcouldcreatemoreproblemsinthepresentdaycontext.Hediscussedthenegativeimpactofdemonetization. He had also mentioned that access to formal credit, as studies haverepeatedlyshown,theinabilityofthoseworkingintheinformaleconomytoaccessformalcredit,wasnotonlyduetolackofbankinginfrastructurebutalsoprovidingthecollateraltoaccesstheformalcredithadbeenamajorfactor.Eveninsomecases,thegovernmentsthatprovidedguaranteesofcollateralbankswerenotextendingloanstoformalsector(SMEsinthiscase).Thismeanstherewereconstraintsingettingformalcredit.

Vijetal.(2017)reportedthat,inordertoincreasetheregisteredenterprisesandpromotemoreinclusivegrowth,thegovernmentmightconsiderthefollowingpoliciesinrelationtoinformal and formal sector of the economy. But, these policies are more related to theformalizationofaninformalsectoroftheeconomyinIndia.

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(i) AwarenessandTraining(ii) AdministrativeandProceduralReforms(iii) Taxrelatedincentives(iv) Reviewoflawsandregulations(v) EasierInspectionandCompliance(vi) Commoninfrastructurefacilities(vii) Publicprocurement(viii) MonetaryIncentive(ix) SectoralApproach(x) Extensionofsocialprotection

Sahoo (2017)discussed thesocio-economic profile of the InformalManufacturingSector(IMS)intheCuttackdistrict,whichwasfamousforuniquefiligree,ivory,andbrassworks,textilesofsilk,andcottonclothes—earningthemanationalreputation.Hereportedthatalarge number of IMS establishments were operating in this district, and he studied thepersonalcharacteristicssuchaseducationlevels,skills,andearningsofthoseworkerswhoworkundertheIMSintheCuttackdistrict.Thoughthisstudyisnotdirectlyrelatedtotheformalizationoftheinformalsector,itmaybehelpfulinidentifyingclustersorsegmentsforformalization.

Unni(2018)mentionedthatthedebateonformalizingtheinformaleconomycanbeseenfromthelensofcapitalorthelensoflabour.Shealsomentionedthatthecapitalviewwasonlynormalizingtheenterprises,whilethelabour viewwas actually formalizing,with aninclusionofworkersintheformalsystems.TheIndiandebateonformalizationtoovercometheformal/informaldividehadmainlytakenthecapitalview.Thischoicewillhampertheprocess of formalization. It means a government should follow the labour view offormalization.

PortaandShleifer(2014)examinedthetwocontrastingassessmentsoftheinformalsector:oneregardedinformalfirms“asanuntappedreservoirofentrepreneurialenergyheldbackbygovernmentregulations”;andtheotherreferredtothemas“parasitescompetingunfairlywith law abiding formal firms” and, therefore, should to be held down. However, theyconcludedinfavourofathirdperspectivewhichwouldseeinformalityasaby-productofpovertywith formaland informal firmsbeingfundamentallydifferent fromeachother. Itmeanstoformalizeinformalsectorreductionofpovertyisapre-requisite.

Knawar(2018)reportedthat thetechnologystart-upswithmodernbusinessmodelsandefficientdistributionsystemwoulddrivetheactualchangeatthegrassrootslevel.Itwouldworkas catalyst to the government and the banking sector efforts in regulating and increating the financial infrastructure that could support the informalsector.Helisted thefollowingthemesandchallengesthatwouldshapetheIndianeconomy’spathtoformalizationand,ultimately,toadecadeofrapideconomicgrowth.HementionedthatthesearetheviewsoftheFintechstart-up:

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(i) Formalizationoftheemployer-employeerelationship(ii) Digitisationofsupplychains(iii) ComplianceanddigitaladoptionbyunorganisedMSMEs(iv) Strongerprotectionandbenefitsforinformallabourviaformalcontracts(v) Moderncreditinanewdata-richdigitaleconomy(vi) Theroleoftechstart-upsinmakingtransitionsmoreequitable

Kumaraswamy,V.(2019)mentionedthatformalizationwasshrinkingtheeconomyofthecountrywhichwas contrary to the general belief. He alsomentioned that formalizationaimedtobringmoreoftheunorganisedsectorintotheformalfoldbymeansofGST,makingituneconomical forotherstodealwith it,andcertainlyensuringregistrationunder lawsgoverningmanufacturingandincometax.Estimatesofdifferentsourcespeggedtheformalsector at 45-50%and expected it to rise to 70-75%within a span of five years. It wouldprovide same level playing field to formal and informal enterprises (migrated toformalization),butitmayhavehadadverseeffectsontheeconomyasawholeasevidentfromtherecentdata.Thequestionis,whichistherightsolution?

Khatarpal(2018)reportedthatinformalworkwassettoincreaseinIndiawiththeriseofoutsourcingandcontractualisationofjobs;againthisiscontrarytotheexpectations.

BWOnlineBureau(2019)alsoreportedthatthecurrentandimminentpoliciesandreformsto catalyse the push from informal to the formal sector; over seven million jobs wereformalized between 2015 and2018, and 19.9 million workforce growth (formal sector)

duringthesamespan.AccordingtotherecentreportsinBusinessBhaskaron21stJanuary2020,thegovernmentispreparinga450millionworkerdatabase.Newsalsomentionedthatbeauticians, electricians,plumbers, fitness trainers, etc.needed to registerunderGST forconducting their businesses. The departmentforpromotionofindustryandinternationaltrademadeitmandatoryforUrbanClap,Housejoy,andBro4utobegiventoworkerswhohadGSTaccounts.Thereisacondition,iftheirincomewaslessthan40lakhs,theydidnotneedtofileforGST.Thiswasaccomplishedtoprovidesocialsecurityto95%ofinformalworkers(Source:DainikBhaskar,Faridabad,Monday,January21,2020-dainikbhaskar.com).

Sharma et al. (2019) reported an overwhelming part of workers in India remaining‘informal’,contractual,unorganized,orsimplynothavinganychanneltobeformal—whileastrategyforformalizationispivotaltoaddressthemostbasicofdevelopmentalissues.Inthiscontext, understanding the root causes of informality becomes important to createstrategies.Theyconcludedthattechnologybecomesimportanttoscaleandcanacceleratean intendedtransitiontowards financial inclusion.Theybroughtoutonestrategy for thefinancialinclusionofthestaticworkersintheinformaleconomywhichisbasedonasocio-technicaltransitioninvolvingdistributedledgertechnology.

JhaandBag(2019)establishedthatcompetitionandthelackofawarenesswerethemostdominantreasonsforwhyinformalfirmswerehesitantinmovingtowardsformalization.

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Basedontheirfinding,theysuggestedthat,forsuccessfultransitiontowardsformalization,a“newpact”betweentheworkers,enterprises,andgovernmentsneededtobedeveloped.Itshouldbebasedonthebuildingcapacity,productivitygains,enablingbusinessenvironment,empowerment,andentitlementstosocialandeconomicrights.

Bhattacharya(2019)quoteddemonetizationasaboldexperimenttogivepushtothedigitalpayment technologies and to reduce the dependency on cash. It was expected to lead aformalizationoftheinformaleconomy,asmoreandmoretransactionswouldcomeoutofthe shadow economy because of the reduced cost of transactions aided by digitaltechnologiesaccessibleondevisessuchassmartphones.Afteragapof2years’dependencyoncashhadcomeback.

Hefurthermentionedthat,ifonelooksatinformalityasaproblemofgovernance,thenoneshouldgo fordigitalsolutionsasawayofformalizingtheinformaleconomy.Ontheotherhand, given the overwhelming statistical picture of informality across the developingsocieties,ifone(specificallyagovernment)understood informality as amode of creatingemploymentandlivelihoodsformajorityoftheworkforce,thenwewouldlikelyadvocateforadifferentsetofdigitalsolutionstotheproblemsoftheinformaleconomy.Inanycase,ICTsolutionscangoalongwayinhelpingeliminatingpovertyintheinformaleconomy,butnotifitisatoolforadventuristpoliciestargetedatdissolving(i.e.,formalizing)theinformaleconomyasanundesirableelementofoureconomy.

Kalyani(2016)reportedthat“informalsectorreferstoeconomicactivities,i.e.productionand distribution of goods and services by the operating units of the households whichessentiallydifferfromtheformalsectorintermsoftechnology,economiesofscale,useoflabourintensiveprocesses,andvirtualabsenceofthewellmaintainedaccounts.Itembracesa widely dispersedmultitude of operating units with high rates of birth and death andsubstantialmobility.

Kalyai(2016)furtherreportedthatthissectorwasinformalinthesensethattheyarenotbeenregulatedbythegovernmentunderanystatute.But,becauseofitscontributiontotheeconomy,whichisquitevisibleanditsstrengthinabsorbingahugeportionofunemployedpersonstowhomtheStateisunabletoprovideadequateemployment.Itbecomesthedutyof the policy makers to devise policies that can take care of the problems faced by theinformalsectorunitsandworkforce.Italsonecessitatesmonitoringthesizeandstructureofthissectoranditsperformanceovertimeforframingappropriatepolicies.Kalyani(2016)attempted to know industry wise distribution of Net Domestic Product (NDP) in theorganizedandunorganizedsectorsandtoalsoattempttoacquirethestatusofregisteredandunregisteredenterpriseinthecountry”.

Some recent news items are also very important from the point of view of an informaleconomy. The Business Bhaskar said that online market places will give work to theprofessionalswhoarehavingGSTnumbers.Inaddition,itsaidbeauticians,plumbers,and

44

fitnesstrainersmayrequireGSTregistration(Agency,2020).Asperanotherpost,6,238.061newaccountswereaddedunderEPFOduringtheApril–Novemberperiodof2019whichasurrogateforexpansionofformaleconomy(Bureau,2020).

2.4SummarizationofMajorFindings&EvolutionofBroadThemes forFormalizationFramework

Table 2.2. summarises the major highlights of the past research studies quoted in thischapter in three broad categories viz. findings, problems andmeasures with respect offormalizationofinformalenterprises/units/economy.

Table2.2SummaryofFindings,ProblemsandMeasuresasinferredfromextantliterature

Study MainFindings Constraints/Problems RemedialMeasuresUNCATD: How toformalize the informalsector? makeformalization easy anddesirable. Retrieved onSeptember 12, 2019fromhttps://businessfacilitation.org/assets/documents/pdf/formalizing-the-informal-sector.pdf.

Informality manifestsitself inmanyways, butespecially in land andhousing ownership,businessoperationsandlabour

There is a widespreadmisconception that theinformal economy issomehowillegal,orevencriminal.

(i) Explain theformalization to themasses, (ii) Makeformalization easy, (iii)Make formalizationdesirable

Chen, M.A. (2006).Rethinking the InformalEconomy:LinkageswiththeFormalEconomyandthe Formal RegulatoryEnvironment. RetrievedonAugust31,2019fromhttps://www.un.org/en/ecosoc/meetings/2006/forum/Statements/Chen%27s%20Paper.pdf

Significant gaps inearnings within theinformal economy: onaverage,employershavethe highest earnings;followed by theiremployees and othermore “regular” informalwage workers; ownaccount operators;“casual” informal wageworkers; and industrialoutworkers.Also,acrossthe world, men tend tobe over-represented inthetopsegment;womentend to be over-represented in thebottom segments; andthe shares of men andwomen in theintermediate segmentstend to vary acrosssectorsandcountries.

Men tend to embodymorehumancapitaldueto educationaldiscrimination againstgirls

Informal enterpriseswant to receive thebenefits of operatingformally in return forformalization, including:enforceable commercialcontracts; legalownershipoftheirplaceofbusinessandmeansofproduction; tax breaksand incentive packagesto increase theircompetitiveness;membership in tradeassociations; andstatutory socialprotection.

Anyidoho,N.A.andSteel,F.A. (2016). Perceptionsof Costs and Benefits of

Informal Economyoperates in a dualismmanner with Formal

Thediscussionsinfocusgroupsindicatedthatthenegative perception of

Potential synergy ininformal-formal sectorlinkages would require

45

Informal-formallinkages: Market andStreetVendors inAccra,Ghana. Retrieved onSeptember 01, 2019fromhttps://www.wiego.org/publications/perceptions-costs-and-benefits-informal-formal-linkages- market-and-street-vendorsaccra.

economyhavingfacetsofindependence anddependenceatthesametime oneach other. Theinformalvendorsappearto bear the brunt of thecosts and risks ofinflation, currencydepreciation, andstagnating real wages—which often impairstheirabilitytoformalize

government authoritieswas related to non-fulfilment of theirobligation to providemarket infrastructurefor vendors, theimposition of perceivedhigh levies, taxes andfees, “harassment” ofvendors, demolition ofkiosks, and the city’sunwillingnesstoprovideenough publicity aboutnewly built markets toattract the public tothem.

the government andother actors to becomemore proactive towardfacilitating, rather thandenying, infrastructure,support services, andadequate space forinformaltraders.

ILO(2016).Roadmapforfighting undeclaredwork. Retrieved onSeptember 01, 2019fromhttps://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/genericdocument/wcms_533853.pdf

Provides a set of policyrecommendations thatreflects the ILO’s visionof a balanced approachcombining incentiveswith compliancemeasures, as enshrinedin the ILORecommendationn.204

Transitionofundeclaredwork into formaleconomy is one of themajor constraintstowardsformalizationofinformalunits

Inter-ministerialreformsandactionswithconsent, participationand collaboration ofvarious ministries forachieving the aim offormalization. Also,enabling inter-operability of dataacross variousministries.

Mukorera, S.Z.E. (2019).Willingnesstoformalize:A case study of theinformal micro andsmall- scale enterprisesin Zimbabwe. Journal ofDevelopmentalEntrepreneurship Vol.24, No. 01:https://doi.org/10.1142/S1084946719500018RetrievedonAugust31,2019 fromhttps://www.worldscientific.com/doi/10.1142/S1084946719500018

The logistic resultsindicated that a onepercentincrease/improvementin removal of theRegulation cluster (thatis, access to businessnetworks, improvementin business registrationprocessandreductioninproblems withauthorities) mayincrease the odds ofwillingness to formalizeby informalentrepreneurs

Willingness/unwillingness to formalize byinformal entrepreneursin Zimbabwe wassignificantly related toinstitutionalimperfections andasymmetry ofbureaucracy associatedwith the registrationprocess,lackofaccesstotechnology, market andfinancial constraints,and a lack ofentrepreneurial andmanagementskills

Formalizationispossibleby improving thebureaucracy of theregistrationprocessandaccess to technologymay possibly increasetheoddsoftheinformaloperators formalizingtheir businesses. Inaddition, improvementin market and financialconstraints andentrepreneurial andmanagerial skills woulddecrease the odds of awillingnesstoformalize.

Bashe, A. (2012). Theformalization of theinformal sectoreconomy: Panacea orChimera? Master’sThesis submitted toGordon Institute ofBusiness Science,University of Pretoria.RetrievedonAugust21,2019 fromhttps://pdfs.semanticsc

His findings werecentredaroundroleofagovernment in terms ofmakingpoliciesand lawgoverning informalsector,roleofeducationin the success ofenterprises,interconnectednatureofthe Informal SectorEconomy with formalsectoreconomy,therole

Access to finance andeducation are majorproblems that constrainformalization

Theentrepreneursintheinformalsectoreconomymust organizethemselves into forumsand associations toincreasetheirbargainingpower. They must thenuse this bargainingpower tonegotiatewithgovernment onpotentially increasingtheir education levels,

46

holar.org/ad75/5f16b25582450233d9c82036eeaf5695f797.pdf

of access to finance forgrowth of existingenterprises,andtheroleof historical politicalsegregation

skills and proficiency inexchange forformalization.

Kathuria, V., Rajesh RajS.N., Sen, K. (2013).Efficiency comparisonbetween formal andinformalfirms-evidencefrom IndianManufacturing. TheJournal of IndustrialStatistics,2(1):1-23.

Results of this studyindicated that thelikelihood of the firmbeing in the formalsectorwasrelatedtoitssize, less stringentlabour regulation, theavailabilityofthepowersupply, and prioritysector lending. Afteraccounting for selectionbias, they found thatformal firms weresignificantly moreefficient than informalfirms, irrespective oftheirlocations.

Limited firm levelgranulardatawhichcanenable comparisonbetween formal andinformalunits

Relaxation ofgovernment regulationsthat make thetransmutation ofenterprises frominformaltoformalsectordifficult anddiscouraging

Bairagya,I.(2013).Sub-contracting andefficiencyoftheinformalsector in India. TheJournal of DevelopingAreas,47(2):341-361

It was observed that, inthe developed state(Delhi), firms oncontracts were lessefficient,whiletheyweremoreefficientinthelessdevelopedstate(Orissa).

The results furtherrevealed that theenforcement ofregulations made thefirmsmoreinefficient incertaincontexts

Addressing regionalvariances in terms oflabour productivity,market access, sub-contracting prevalence,household basedenterprises and cost ofregulation forformalizationiscritical

Kerswell, T. and Pratap,S. (2015). Informality inAutomobile ValueChains in India. TheJournal of Labor andSociety,18:533–553

The findings concludedthat India’s industrialrelations regime hadlongceasedtoreflecttheactual balance of powerbetween labour andcapital,institutionalizingnoncompliancewith thelabour laws, andproviding the basis forthe industry’sinformalization

Informality, low wages,and insecure workingconditions are majorproblems faced byinformal sector in thecontextofthestudy

-

Porta,R.LaandShleifer,A. (2014). Informalityand Development, June.NBER Working PaperSeries. Retrieved onAugust 21, 2019 fromhttps://www.nber.org/papers/w20205.pdf

Examined the twocontrasting assessmentsof the informal sector:one regarded informalfirms “as an untappedreservoir ofentrepreneurial energyheld back bygovernmentregulations”; and theotherreferredtothemas“parasites competing

Although avoidance oftaxes and regulations isan important reason forinformality, theproductivity of informalfirmsistoolowforthemto thrive in the formalsector. Loweringregistration costsneither brings manyinformal firms into theformal sector, nor

To formalize informalsector reduction ofpoverty is a pre-requisite

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unfairlywithlawabidingformalfirms”

unleashes economicgrowth.

Jha,S.andBag,D.(2019),"Why do informalservice enterprisesremain informal? ARIDIT approach",Journal of SmallBusinessandEnterpriseDevelopment, 26(3):381-396.https://doi.org/10.1108/JSBED-01-2018-0009

Authorsestablishedthatcompetitionandthelackof awareness were themost dominant reasonsfor why informal firmswerehesitant inmovingtowardsformalization.

Economic uncertainty,State and local taxes,Regulatory burdens,Cost of technology,Decline in customer,Competition,Perceived level ofcorruption,Lack of capital,Costoftrainingworkers,Cost of employee,Lackofawareness

Based on their finding,they suggested that, forsuccessful transitiontowardsformalization,a“new pact” between theworkers, enterprises,and governmentsneededtobedeveloped.Itshouldbebasedonthebuilding capacity,productivity gains,enabling businessenvironment,empowerment, andentitlements to socialandeconomicrights.

Summaryofthehighlightedterms:landandhousingownership,businessoperationsandlabour,explain,easy,desirable,gapsinearnings,men,benefits,dualism,synergyininformal-formalsector,pro-active,combiningincentiveswithcompliancemeasures,undeclaredwork, Inter-ministerial reformsandactionswithconsent,participationandcollaboration,increase/improvementinremovaloftheRegulation,institutionalimperfections, lackofaccesstotechnology,marketandfinancialconstraints,andalackofentrepreneurialskills,interconnectednatureoftheInformalSector,Accesstofinanceandeducation,organizethemselvesintoforumsandassociations,Relaxationofgovernmentregulations,enforcementofregulations,labourproductivity,marketaccess,sub-contractingprevalence,“newpact”betweentheworkers,enterprises,andgovernmentsneeded.

Onthebasisofliteraturereview,followingtheoreticalunderpinningsemerge:

• State intervention is required to enhance the productivity growthof the informalenterprises in theundeveloped regions through technological transfers, educationand training of the informal sector’s workers which, in turn, will enhance thecompetitivenessoftheenterprises.

• Lack ofmarket and competition from larger unitsmake the informal firmsmoreinefficient in both developed and developing regions. Thus, a promotional policyneedstobeimplementedforbettermarketingfacilitiesfortheinformalenterprises.

• Sub-contractingmakestheinformalfirmsmoreefficientinunderdevelopedregionbut not necessarily in developed regions20. Thus, policy should focus onstrengtheningthelinkagesbetweentheformalandinformalsectors.

• Firms producing their products within the household premises are relativelyinefficientthantheonesoperatingoutsidethehouseholdpremises.Sincehousehold

20 https://www.jstor.org/stable/23612296?seq=1

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premises are traditional in nature producingmainly consumergoods and enjoy arelativelylowshareofmarketsurplus,apromotionalpolicyneedstobeimplementedin terms of credit for start-up and expansion capital and skill formation of theseenterprises.

• Somestudiesalsopointtoafindingthatinformalenterprisesareinefficientduetoextracostofregulation.SincetheinformalsectoristhelastresortoftheworkingpoorinthedevelopingcountrylikeIndia,anydiscouragementoftheproductionoftheseenterpriseswillleadtohighunemployment,povertyandincomeinequality.Thus,theregulationsshouldbeimposedinsuchawaythatitshouldnotbeburdensomeoftheenterprises.

AsperBashe(2012)therearethreepossibilitieswithrespecttoformalizationofinformalenterprisesassuggestedbyTheseare:(i)formalizetheinformalsectoreconomy,(ii)leavetheinformalsectoreconomyasitisinitscurrentstate,and(iii)neitherformalizeitnorleaveitasis,butrathercreateanenvironmentthat isconducivetobothtypesof theeconomywherebotheconomiescanthrivetogetherandavoidcompetition.

Thefirstoptionlookslikeadistantpossibilityifgeneratingmorerevenueistheagendaofthe government in any country or countries wherein informal economy is contributingsignificantlytoGDP.Manystudiesinferredthatthiswillresultintheeconomyshrinking.Thesecondoptionisnotdesirable;itwillhamperthegrowthofanycountry.Itwillalsobringinnotion of ineffectiveness of ruling classes or elected member which will make theircontinuancedifficultorimpossible.Itwillgivebirthtoaneworganizationstylewhichwillresultinconfrontationorviolenceandmaybeareplacementoftradeunionswithnocontrolinthehandofgovernmentagenciesascanbeseeninmanycasessuchassandmafia,watermafia,vegetablemarketsmafia,spacemafia(controlofplacesofbeggarswhattotalkaboutentrepreneurs).Thethirdoptionlooksthemostfeasible.First,createsegmentsofinformalenterpriseswithanobjectivetoformalizewitheasyandsimpleprocesseswithnoorbare-minimumtaxationsothatbothsectorsgrowandtheirbondbecomesstrongertobenefittheeconomies.

2.5Conclusion

Section2.2discussedtherelevantstudiesininternationalcontextsfollowedbytheSection2.3discussingtherelevantextantliteratureinIndiancontext.Theimportanceofwritingtheemergentwords/themesintheboxedformatinSection2.4posttable2.2,isincontinuationandsynchwiththeapproach/methodologyofstudymentionedinsection1.4ofthechapter1of thereport. If lookeduponcarefully theseemergentphrases/themes from theextantliteraturepavespath–notonlyforfurthersecondaryanalysisbutalsoforguidingtheHOWpartofformalization(coveredmainlyinChapter6ofthisreport).Thechallengesofinformalsectoremergingfromthischapterandthosethatemergefromchapter5coalescetoguidethe challenges that need to be addressed towards formalization. The ways and means

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discussedinthesummarysection2.4alongwithfindingsandChapter4guidetheemergenceofframeworkofformalizinginformalsectoraspositedinChapter6.Forestimationandforprioritizing the sectors for MSDE and other ministries and stakeholders to focus upon,chapter3hasbeenwritten.

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Mapping the Current Available Databases for the Estimation, Classification and Prioritization of the Informal Sector

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Chapter3-MappingtheCurrentAvailableDatabasesfortheEstimation,ClassificationandPrioritizationofthe

InformalSector

ChapterThreepresentsthemappingofcurrentavailabledatabasestoestimatetheinformalenterprisesanddetailedclassificationsof informalenterprisesundervarioussectorsandsubsectors.This chapteralso includes theprioritisationofmajor sectorsandsub-sectorsbasedonvitalparameterssuchasGVA,employment,inclusionandgeography.Thechapterisdividedintothreesections.Section3.1exploresthecurrentavailabledatabasesandotheravailablereportstodiscusstheextentofInformalSectorinIndia.Inthissection,mappingofcurrentavailabledatabases(NSSO,ILO,NAS,NCEUS,CSO,EconomicSurveysMSDE,Reportsof MOSPI etc.) for providing an in-depth overview on extent of informal sector and forelaborating and defining the unorganized and informal sector and identification of keycharacteristics. Section 3.2 depicts the picture of the size distribution of India’s non-agricultural enterprise structure, both formal and informal, and presents a percentagebreak-up between the formal and informal enterprises under each sector. Section 3.3encompasses theprioritisationof sectorsandsubsectors.ThisprioritisationmostlyusedNSSOdata.Sub-section3.3.6doesprioritisationofsectorsusingeconomiccensusdataandwithfocusonwomenentrepreneurs.Finally,Section3.4offersconcludingremarks.

3.1.Formal-InformalEnterpriseClassification

3.1.1Introduction

Today, the question iswhether informal is the new normal that re-emergeswith a newurgency.Theevidenceindicatesthatpolicymakersshouldmaintainafocusonformalizationasamedium-tolong-termstrategyforoptimaloutcomesintermsofproductivityandthereductionofpovertyandinequality(LaPortaandScheleifer,2008;Kanbur,2014;IMF,2017;McMillanetal.,2017).Informalenterprisesarevariouslyidentifiedas“employers”(Chen,2012;GindlingandNewhouse,2014)or“topperformers”(Grimmetal.,2012)andastheinformalsector(Maloney,2004;IMF,2017).Abasicdistinctionbetweencharacteristicsofenterprises(whichemphasisetheinformalsector)andemploymentrelationships(whichgobeyondthissectortoincludeinformalworkintheformalsector,privatehouseholds,andforworkers’ own use) is reflected in the evolution of international conceptualisation ofinformality.

In 1993, the International Conference of Labour Statisticians (ICLS) adopted a definitionbasedonthecharacteristicsoftheenterprisesthatmadeuptheinformalsectorenterprises,whichmaybeunregisteredorsmall.Subsequently,in2002,ICLSexpandedtheconceptofinformalitytoincludethenatureofemployment(ILOandWIEGO,2017b),namelywhetherornotworkershad legal and socialprotections,be it inenterprises—whether formalor

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informal—orhouseholds(ILO,2003).Inthecontextofstatisticaldefinitionsofinformality,accordingtoChen(2012),theinformalsectorreferredtotheproductionandemploymentthat takesplace in informalsmallorunregisteredenterprises;andthe informaleconomyreferstoallunits,activities,andworkerssodefinedandtheoutputfromthem.Assuch,theinformal sector is comprised of all economic activity that remains outside of the officialinstitutionalframework.InIndia,informalenterpriseshavepersistedovertheyears.Labourregulations, in more ways than one, have implicitly supported this informalization or‘contractualisation’ofclassifyingtheworkforce.

3.1.2Informal-FormalClassificationLandscapeinIndia

3.1.2.1Overview

Themicro-andsmall-sizedfirmsaswellasinformalsectorfirmsdominatetheenterpriseclassification landscape in India. In informal enterprises, the work takes place outsideformal, public, and/or private systems and is beyond the reach of typical regulations orpolicies.

Regardingthe internationaldefinitionandclassificationofinformalemployment in India,the National Commission for Enterprises in the Unorganised Sector defined informalemploymenttoincludeindividualsthatwere“…workingintheunorganisedenterprisesorhouseholds,excludingregularworkerswithsocialsecuritybenefits,andtheworkersintheformalsectorwithoutanyemployment/socialsecuritybenefitsprovidedbytheemployers"(NCEUS,2008,p.27,para2.7.3).Therefore,informalitycouldexistinformalenterprisesorinformalenterprises,whereinformalenterprisesaredefinedbasedontheirsize/scopeforregulation.The‘informalsector’or‘informalenterprises’includesallinformalproprietaryandpartnershipenterprises,asdefinedbytheNationalSampleSurveyOrganisation(NSSO,1999). Within this classification, household-level enterprises are also included—that is‘productionunitsthatareownedandoperatedbysingleindividualsworkingontheirownaccountasself-employedpersons,eitheraloneorwiththehelpofunpaidfamilymembers.However, these types of informal enterprisesare relatively overlooked (Kweka and Fox,2011),yettheylie‘attheintersectionofformalandinformalenterpriseperspectives.

It is believed that adopting an expanded approach of classificationwill enable themicroenterprises that account for the majority of informal activities. Since the choice andimplementation of policy and its financingwill vary depending on the relative size andcompositionoftheinformalenterpriseswithinthecountry,thisparadigmofclassificationiscritical.Therearetwomainapproachestoclassifyinformalenterprisesonthebasisofsizeandcomposition.

• One approach is to classify informal enterprises on the basis of levels of informalenterprise activity using indirect proxies, such as: small enterprises, electricity

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demand, levels of cash deposits or money transactions, and income-expenditurediscrepancies.

• Another approach is to classify and measure informal enterprise employmentdirectly through surveys (Williams, 2015, p. 120; Medina and Schneider, 2017).However,dataontheseproxyindicatorsisoftenlacking,whiledatacollectedthroughsurveys may be subject to various country-level differences, despite a sharedconceptualunderpinningandtheestablishmentofinternationally-agreedstatisticaldefinitions(ILO,2013).

Furthermore,giventhesizeofIndia,dependencyonsurveysofunorganisedinformalsectorisinevitable.Theadministrativedataontheseenterprisesisalsonotavailablefromothersourcesgiventhesizeandcharacteristicsoftheinformalsector.Thefrequencyofsurveysofunorganisedenterprisesandemploymentarearoundfiveyears.However,wehaveadoptedaholisticapproachinordertoseethetruerepresentationofdifferentfirmsizecategories,bothorganizedaswellasunorganized.

3.1.2.2Onthebasisofregistrationwithacts/authorities

Wehaveattemptedtomergethedataonallof India’sregistered,aswellasunorganised,enterprises.WeexaminedbothformalandinformalsectorenterprisesbyanalysingboththeASIdataandtheNationalSampleSurvey(NSS)data.Otherthanthesetwodatasources,thereare two other databases on industries: the MSME Census data and the Centre for theMonitoringoftheIndianEconomy(CMIE)Prowessdatabase.Wehavenotusedthelattertwoforthisstudy.ThisisbecausethelastMSMEcensus,whichisavailable,isthe4thMSMEcensus2005-06,andthedatawaspublishedin2011.Afterthat,thereisnoavailableMSMEcensus data. Additionally, the CMIE Prowess database is mainly for companies that areregisteredinthesharemarket.Therefore,weonlyusedtheNSSunorganizedsurveyrounds’data for unorganized or informal sector firms. It is also pertinent here to mention thatunorganisedorinformalsectorfirmsarenotcoveredbytheASI,whereastheNSSOSurveysofUnorganizedManufacturingEnterprisescoversthose.Also,theNSSunorganizedsurveysare follow-upstothedifferentEconomicCensuses.TheNSSusestheEconomicCensusastheir sampling frame, hencewhy it is used in this study.We havemainly used the NSSunorganizedsurveyrounds’unitleveldata(73rdin2015-16and67thin2010-11).TheNSSisusedforunorganizedsectordata;fororganizedsector,ASIdatabases(2010-11and2014-15-unit leveldata)arereferred.However,ASIdoesnotclassify firmsbythecategories—Micro, Small, and Medium—but NSSO’s unorganized sector survey does. An additionalsourceusedistwoyearsoftheCSO’sAnnualSurveyofIndustries,for2010-11and2014-15,the latter one being the latest for which unit-level data are available. In them, onlyoperational enterpriseswere taken into consideration. ASImostly coversmanufacturingunitsandmanufacturingprocess(verysmallinnumber).Also,thisstudyreferencessourceslikevariousIndustry-specificacts/authoritiesunderwhichtheenterpriseswereregistered

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in2010-11and2015-16.Table3.1summarizestheindustry-specificacts/authoritiesunderwhichenterpriseswereregisteredin2010-11and2015-16.

Table.3.1:depictingIndustry-specificacts/authoritiesunderwhichenterprisesregisteredin2010-11&2015-16

2010-11 2015-16

Cinematographact Cinematographact

CoirBoard

DevelopmentCommissionerofHandicraft/handloomDevelopmentCommissionerofHandicraft/handloom

DirectorateGeneralofForeignTrade/otherexportpromotionagencies

DirectorateGeneralofForeignTrade/otherexportpromotionagencies

Directorateofeducation/AICTE/NCTE Directorateofeducation/AICTE/NCTE

DistrictSupplyandMarketingSociety DistrictSupplyandMarketingSociety

IndianCharitableAct IndianCharitableAct

JuteCommissioner

KhadiandVillageIndustriesCommission/Board KhadiandVillageIndustriesCommission/Board

Moneylender’sAct Moneylender’sAct(includingtheStatevariants)

Others Others

PollutionControlBoard

PublicTrustAct PollutionControlBoard

SilkBoard

SmallIndustriesDevelopmentBankofIndia(SIDBI)

SmallIndustriesServicesInstitutes/othersmallindustriesregistrationagencies

SocietiesRegistrationAct,1860(includingtheStatevariants

SocietiesRegistrationAct,1860(includingtheStatevariants)

Statedirectorateofindustries Statedirectorateofindustries

StateFinancialCorporation/IndustrialCooperativeBanks/IndustrialDevelopmentBanks

StateFinancialCorporation/IndustrialCooperativeBanks/IndustrialDevelopmentBanks/SIDBI

StateTradingCorporationofIndiaLimited(STC)

TechnicalConsultancyServicesOrganisations/CouncilforTechnologicalUpgradation

TechnicalConsultancyServicesOrganisations/CouncilforTechnologicalUpgradation

Commodityboards(Coirboard,SilkBoard,Jutecommissioner,etc.)

EmployeesProvidentFundOrganisation(EPFO)

FoodsafetyandStandardsAct,2006

IndianTrustAct/PublicTrustAct(includingtheStatevariants)

SaletaxSource: 73rd roundNSSOUnincorporatedNon-AgriculturalEnterprises (Excluding Construction) survey 2015-16-unitleveldata&67thNSSUnincorporatedNon-AgriculturalEnterprises(ExcludingConstruction)survey2010-11-unitleveldata

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TheobservedactsorauthoritiesunderwhichinformalsectorfirmsareregisteredareshowninthefollowingTable3.2.TherearesomeinclusionsandexclusionsofactsandauthoritiesbetweenthesetwopointsoftimebetweentheNSSrounds(Table3.2).

Table.3.2:RegistrationAct/authoritiesofunorganizedfirmsParticulars(Acts) NumberofEnterprises 2010 2015-16ShopsandEstablishmentAct 3772223 4270136MunicipalCorporation/Panchayats/LocalBody 9904106 12678481ProvidentFundAct 72974 91159EmployeesStateInsuranceCorporationAct 64720 61390Vat/SalesTaxAct 1830626 2383199RegisteredwithSEBI/StockExchange? 13039anyotherindustry-specificAct/Authority* 1181990 95150Totalregistered 16826639 19592554Totalunregistered 40846606 43799421Total 57673245 63391974

Source: 73rd roundNSSOUnincorporatedNon-AgriculturalEnterprises (Excluding Construction) survey 2015-16-unitleveldata&67thNSSUnincorporatedNon-AgriculturalEnterprises(ExcludingConstruction)survey2010-11-unitleveldata

Itisalsoobservedthatregistrationundertheseactsorauthoritiesforinformalsectorfirmsis a mere formality and is not particularly effective. It is also not synonymous toformalization.Theseactsorauthoritiesonlyregisterabout30%oftheunorganisedfirms.FormalizationundertheFactoryActregistrationtendstoassuresocialsecuritybenefitsandotherbenefitsinthefirms.But,registrationsundertheseotheractsorauthoritiesareonlyforsimpleregistrations,thefirmsremainthesameasbefore.Somesmallincentivesforanystate/central government exhibitions or fairs include early access of benefits from anygovernment schemes, and availing credit from banks can be gained by these types ofregistrationsfrominformalfirms.

3.1.2.3Onthebasisofmicro,smallandmediumandservicesandmanufacturing

Inadditiontothecontentabove,wenotedthat theMinistryofMicro,SmallandMediumEnterprises the government of India classifies enterprises as Micro, Small and MediumEnterprisesaspertheMSMEDAct(2006).Thesearefurthercategorisedintotwosectors,namely Manufacturing and Service. Where manufacturing enterprises are defined andclassifiedastheenterprisesengagedinthemanufactureorproductionofgoodspertainingtoanyindustryspecifiedinthefirstscheduletotheindustries(DevelopmentandRegulationAct,1951)oremployingplantandmachineryintheprocessofvalueadditiontothefinalproduct having a distinct name or character or use. Here, the size of ManufacturingEnterprise isdefined intermsof investment inPlantandMachinery.TheothertypesareServiceEnterprisethataredefinedandclassifiedprovidingorrenderingservicesandaredefined in termsof investment in equipment.The limitation for investment in plant andmachinery/equipmentformanufacturing/serviceenterprisesareshowninTable3.3a.

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Table.3.3a:Micro,SmallandMediumEnterprisesClassification:Limitforinvestmentinplantandmachinery

EnterpriseType ManufacturingSector ServiceSector

Investmentinplant&machinery Investmentinplant&machineryMediumEnterprises Morethan5crorerupeesbutdoesn’t

exceed10crorerupeesMorethan2crorerupeesbutdoesn’texceed5crorerupees

SmallEnterprises Morethan25lakhrupeesbutdoesn’texceed5crorerupees

Morethan10lakhrupeesbutdoesn’texceed2crorerupees

MicroEnterprises Doesnotexceed25lakhrupees Doesnotexceed10lakhrupeesSource:TheMSMEDAct,2006,MinistryofMSMEs

However,witheffectfrom01.07.2020;Asperreviseddefinition,anenterpriseshallnowbeclassifiedasamicro,smallormediumenterpriseonthebasisoflimitforinvestmentinplantandmachineryequipmentandTurnoverasshownintable3.3b.

Table.3.3b:Micro,SmallandMediumEnterprisesClassification:LimitforinvestmentinplantandmachineryequipmentandTurnoverRevisedClassificationapplicablew.e.f1stJuly2020

CompositeCriteria:InvestmentinPlant&Machinery/equipmentandAnnualTurnoverClassification Micro Small MediumManufacturingEnterprisesandEnterprisesrenderingServices

InvestmentinPlantandMachineryorEquipment:NotmorethanRs.1croreandAnnualTurnover;notmorethanRs.5crore



Source:GazetteofIndia,dated01June2020.Source:https://msme.gov.in/sites/default/files/MSME_gazette_of_india.pdf

3.1.2.4UnorganizedvsInformalandOtherSourcesofClassification

Sometimes, there is a confusion about enterprises in the formal/registered andinformal/unorganisedsectors.Theunorganisedsectorreferstothoseinformalenterprisesthatdonotmaintainanyregularaccounts.ThefirstIndianNationalCommissiononLabour(1966-69) classified the unorganised sector as those units that have not been able toorganisethemselves inpursuitof theircommoninterestduetocertainconstraints likeacasual nature of employment, ignorance and illiteracy, and small and/or scatteredestablishmentsizes.Similarly,thereportonDefinitionalandStatisticalIssuesRelatingtotheInformalEconomy(2008)recommendedthattheInformalSectorbedefinedandclassifiedas the unorganized sector consisting of all informal, private enterprises owned byindividualsorhouseholdsengagedinthesaleandproductionofgoodsandservicesthatareoperatedonaproprietaryorpartnershipbasisandwithlessthan10totalworkers.

On the other hand, the formal sector is comprised of enterprises where statistics areavailable from thebudgetdocumentsorreportsetc. Likewise, theDirectorateGeneralofEmployment andTraining (DGET) has also used varying definitions and classification ofinformal/unorganiseddependingonthespecificrequirementsofeachorganisation.Inthecase of services, enterprises that are neither run by the government nor included in thepublicsectorareclassifiedasun-organised.TheNationalCommissionforEnterprisesinthe

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Un-organisedSector(NCEUS)adoptedasimilarapproachforthisclassification.However,the National Accounts Statistics (NAS) classifies the unorganised sector not only by theinformal proprieties or partnership enterprises, but it also includes enterprises run bycooperative societies, trust, private, and limited companies. Alternatively, the organisedsector is classified by utilising the sole criterion of availability of production statisticsthroughadministrativesourcesorregularsurveys.Furthermore,the5thand6theconomiccensusesaregoodexamplesforclassifyingbothformalandinformalsectorenterprises.The6theconomiccensus(2013)triedtocollectvarioususefulcharacteristics,likeemploymentsize(i.e.establishmentsemployinglessthan10workers),forclassifyinganenterpriseasaninformalsectorenterprise.Assuch,economiccensuseshavebroadlyclassifiedbothformaland informalsectorenterprises.Morespecifically,establishmentsemploying less than10workerswere classified as an informal sector enterprise. However, the vision of the 7thcensusistocomprehensivelycoverandclassifythenon-farmeconomicactivitiescarriedoutby units registered/licensed or by self-employed/own account establishments notregistered/licensedinIndia.

In the context of labour, both formal and informal sector enterprises are classified anddividedintotwoclasses:(a)organisedlabourthatisstronglyprotectedbylawandhastheirownauriferoustradeunions,and(b)unorganisedlabourthatisunprotectedandmoreoftenremainsuncoveredbyprotectivelegislations.

In addition, the Small Industries Development Organizations (SIDO) group conducts thecensusofsmall-scaleindustries.Thiscensuscoversandclassifiesunitssuchasthesmall-scaleindustries,ancillaryunits,andsmall-scaleservileandbusinessenterprises(SSSBEs).However, it does not include definitions and elaborations of informal enterpriseclassifications. There seems to be a need for a categorical inclusion and definition andclassificationofinformalenterprises.

TheunitsunderthepurviewofKhadiandVillageIndustriesCommission(KVIC),SilkBoard,Handicrafts Board, Textile Commissioner, etc. also do not seem to define and includeinformal enterprises classifications. While in the case of manufacturing industries,registration under the Factories Act (1948) or Beedi and Cigar Workers (Conditions ofEmployment)Act (1966) is the criterion for classificationand inclusion in theorganisedsector. Ownership by theGovernment or GovernmentUndertakings or Corporate bodiesconstitutedundertheCompaniesActislargelythecriterionofclassificationinthecaseofAgriculture,Construction,Trade,Hotels,Restaurants, etc. In the caseof forestry, it is theproductionofindustrialandfuelwoodasreportedbytheStateForestDepartments;inthecaseofminingandquarrying,allmajormineralsasreportedbytheIndianBureauofMinesconstitute the organised sector. In the education sector, all recognized institutions,irrespective of ownership, are in the organised sector. In the compilation of NationalAccounts,thetermunorganisedsectorisuseddifferentlyandconsistsofresidualenterprisesthatarenotincludedintheorganisedsector.

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Similarly, the Unorganised Workers Social Security Act (2008) has also defined theunorganisedsectorandunorganisedworkers.However,thescopeoftheterm‘unorganisedworkers’isnotclassifiedandextended/widenedinordertoincludetoagriculturallabourersand unorganised labourers in the organised sector. The application of such varyingclassifying criteriamakes it impossible to have comparable statistics across the sectors,either for the organised or for the un-organised sectors. Furthermore, the nationalcommission,afterdeliberatingonanumberofalternatives,adoptedthefollowingapproach,“allunincorporatedprivateenterprisesownedbyindividualsorhouseholdsengagedintheproductionandsaleofgoodsandservicesandoperatedonaproprietaryorapartnershipbasisgoodsandservicesandoperatedonaproprietaryorapartnershipbasisandemployinglessthan10persons”21.Althoughthisdefinitionandclassificationapproachdoesnotmakeanydistinctionbetweenagriculturalandnon-agriculturaltypesofinformalenterprises,itseemsthattheconceptofenterpriseisgenerallybeingusedinIndiaonlyinthecontextofthenon-agriculturalsector.

In India, the ‘informal sector’ or ‘informal enterprises’ include and are classified as allinformalproprietaryandpartnershipenterprises,asdefinedbytheNationalSampleSurveyOrganisation (NSSO,1999).The informalsector, in this case, encompasses theunitswithgroupsofworkerswhocannotbedefinedbydefinitionbutcouldbedescribedandclassifiedasthosewhohavenotbeenabletoorganizeinpursuitofacommonobjectivebecauseofconstraints. The informal sector/unorganised sector also classifies and includes theenterpriseswhicharepersonalaccountenterprisesandoperatedbytheaccountworkersthemselves or unorganised enterprises employing hired workers. They are essentiallyproprietary and partnership enterprises. Therefore, the term informal non-agriculturalenterprisesthatclassifiesandincludesbothmarketproducersandnon-marketproducersas used byNSSO seems to bemore appropriate approach to for classifying the informalenterprises.

Inordertoaddressthisabovediscussedconfusionaboutenterprisesinformal/registeredsector and informal enterprises, we observe and clarify that the informal sector is notentirelyoverlappingwithwhat iscalledtheunregisteredsector.AsperNSSunorganisedsurveyrounds,thereareenterpriseswhichcanbesmallregisteredenterprisesunderShopsandEstablishmentAct,ortheMunicipalcorporation/Panchayat/localbody,VAT/salestax,EmployeeProvidentFundAct,theEmployeesStateInsuranceCorp.Act,and/orregisteredwithSEBI/stockexchangesandanyother specific actorauthorities. So, theunorganisedsectorconsistsofmostlyunregisteredenterprisesandsomeregisteredenterprisesundersomespecificactorauthoritiesotherthantheFactoriesAct(whichiscapturedundertheASI).FirmscapturedundertheASI,ontheotherhand,areallregistered/formalfirmsunderSections2m(i)and2m(ii)ofthe1948FactoriesActandfirmsregisteredinthe1966Bidiand

21 http://sri.nic.in/unorganised-sector

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CigarWorkersAct—particularly,(i)thosefirmsthatuseelectricityandhiremorethan10workers, and (ii) those that do not use electricity but nevertheless employ 20 ormoreworkers.Therefore,itisevidentthatthereisnooverlappingordouble-countingbetweenNSSandASIdatasets.IntheIndiancontext,theenterpriseswithlessthan10workersareconsideredasunorganizedsectorunits,whilethosewithmorethan10workersareregardedasorganized.Table3.4presentsthetotaluniverseofIndia’snon-agriculturalenterprises.Intermsoflevelofinformality,thetableshowsthatthereare63millionenterprisesinformal(unorganized)andformal(organized)together.Itisalsoobservedthatapproximately30%enterprisesareregisteredinbothyears(2015-16and2010-11)underanyactorauthority.Thereisnochangeintheshareofregisteredenterprisesininformalsectorovertheyears.Similarly,itisalsoevidentthat99.7%ofenterprisesareintheunorganizedsector,andthisshareisconstantoverthesetwopointsoftime,i.e.2015-16and2010-11.Ofthese,twothirdsare not registered anywhere. It is also observed that only 0.3% is the total ratio ofregistered/formal sector firms, whereas the informal sector is much bigger than theregisteredsector.

Table.3.4:ClassificationoftotalNumberofEnterprisesinorganisedandunorganisedsectorin2010-11&2015-16

Particulars NumberofEnterprises(Nos.)

Share(%)

2010-11 2015-16 2010-11

2015-16

Unorganized(NSS)

Registeredunderanyact/authority 16,826,639 19,592,554 29.1 30.8

Unregistered 40,846,606 43,799,421 70.6 68.9Total 57,673245 63,391974 99.7 99.7

RegisteredunderFactoriesact,companiesactorother(ASI)*/Formal

167.964 173,640 0.3 0.3

Total 57,841,209 63,565,614 100 100Source:AnnualsurveyofIndustryUnit leveldataof2014-15, AnnualsurveyofIndustryUnit leveldataof2010-11, 73rd round NSSO Unincorporated Non-Agricultural Enterprises (Excluding Construction) survey2015-16unit leveldata&67thNSSUnincorporatedNon-AgriculturalEnterprises(ExcludingConstruction)survey2010-11unitleveldata*sincestillnowASI2015-16dataisnotavailable,wehaveusedASI2014

3.2SizeoftheFormalandInformalSectors

3.2.1Overview

Inordertoanalysethesizeoftheformalandinformalsectors,pleaserefertoTable3.5whichispresentedbelow.Withinunorganizedunits,thenumberofsmallenterprisesin2010-11and2015-16increasedquitesharply,bothamongtheregisteredaswellastheunregisteredunorganizedsectors.But,theirshareisstillmarginalin2015-16asitwasin2010-11:from0.1to0.6%ofallunorganizedenterprises.Outof63millionMSMEs,only0.38millionwereconsidered small and medium. Also, between 2010-11 and 2015-16, the number ofregistered(underFactoriesAct)unitsthatweresmallhadactuallyreducedslightly,asdidthemedium-sizedenterprises.However,thesmallfirmsamongtheunregisteredexceeded

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innumbersfrom1,682to51,072overthesameperiod.Similarly,itwasobservedthattheunorganizedsmallunits(registeredunderanyAct/authority)alsoincreasedfrom38,414to279,794.

The reason for this increase in number over just five years, we argue, was due to theincreasednumberof actsunderwhich registrationwaspermittedbetween2010-11and2015-16. (See table Table.3.1 and Table 3.2 for list of additional Acts under whichregistrationwaspermitted).Themediumenterpriseshadsimilarexperiences.IfweexaminetheregisteredfirmsundertheFactoriesAct(columns8and9)ofTable3.5,therewassomegrowth,butheretoothegrowthinnumberoffirmswasaccountedforbymicrofirms,notthe small ormedium categories. If anything, small andmedium firms actually shrank innumberoverthat five-yearperiod.Thenumberof large firmsgrewonlya little. It isalsoobservedthattherewasanoverallgrowthinthenumberofenterprises(Micro)butnotthesmallormediumtypes.Thenumberoflargefirms,again,grewonlyalittle.

Table.3.5:SizewisetotalnumberofenterprisesinIndiain2010-11&2015-16TypeofUnits/Enterprises

Unorganized/InformalEnterprises(NSS) RegisteredunderFactoriesact,companiesactorother/Formal(ASI)

Total Share(%)

Registeredunderanyact/authority

Unregistered Total

2010-11 2015-16 2010-11 2015-16 2010-11 2015-16 2010-11

2014-15*

2010-11 2015-16*

2010-11

2015-16*

(A)1 (B)2 (C)3 (D)4 (E)5 6(F)=(B)+(D)

7G=(C)+(E)

8H 9I 10J=F+H K=G+I L M

Micro 16,787,999

19,304,556

40,844,924

43,746,969

57,632,923

63,051,524

38,136 45,947 57,671,059

63,097,471

99.7 99.3

Small 38,414 279,794 1682 51,072 40,097 330,866 43,171 42,349 83267 373215 0.1 0.6

Medium 142 5,064 0 218 142 5,282 62,638 59,448 62,780 64,730 0.1 0.1

Large 83 3,092 0 25 83 3,117 24,019 25,895 24102 29012 0.0 0.0

Total 16,826,639

19,592,505

40,846,606

43,798,285

57,673,245

63,390,789

167,964

173,640

57,841,209

63,564,429

100 100

Source:AnnualsurveyofIndustryUnitleveldataof2014-15,AnnualsurveyofIndustryUnitleveldataof2010-11,73rdroundNSSOUnincorporatedNon-AgriculturalEnterprises(ExcludingConstruction)survey2015-16unitleveldata&67thNSS Unincorporated Non-agricultural Enterprises (Excluding Construction) survey 2010-11 unit level data *since onpresentdayASI2015-16unitleveldataisnotavailable,wehaveusedASI2014-15

3.2.2Sectorwiseestimation

Sincethisstudy’sfocusisontheinformalsector,weutilisedtheNSSenterprisesurveysthatexamined the unorganized sector. The NSSO classifies and defines the informal sectorenterprises aswell as all the informal proprietary and partnership enterprises. TheNSSenterprise surveys in the past have classified informal non-agricultural enterprises asmanufacturing,services,andtrade. In theNSS’s55thround, thesubjectof informalsectorenterprises was covered where the informal sector was classified as proprietary andpartnershipenterprises.While, thecoverageofactivities in55throundwasonly fornon-agriculturalsector,thecoverageofactivitiesinthe61st,66th,67th,and68throundswereinthe non-agricultural sector (manufacturing, trade, and other services, excluding

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construction)andalsointheAGEGC.Specifically,theNSS’s68throundresultsshowedahighproportionofinformalsectorenterpriseswerethereinboththeruralandurbanareas.

Inaddition,theinformalsectorintheIndianeconomy(asper73rdNSSround)classifiedalargenumberofenterprisesofvaryingsizesandspreadasinformalsector;theclassificationincludes:(i) informalunorganisedmanufacturingunits, (ii)enterprisesengaged incottonginning,cleaningandbalingwhicharenotcoveredbytheAnnualSurveyofIndustries(ASI),and(iii)unitsengagedintrading,non-captiveelectricitygenerationandtransmissionandotherservicesactivities.Theownershipcategoriesofenterprisesthatwereundercoverageof theNSS’s73rdroundwereproprietaryandpartnershipenterprises,Trusts,Non-ProfitInstitutions(NPIs),SelfHelpGroups(SHG),etc.TheNSSSurveyshaveshownthatthemostgrowing classified categories of Indian economy like manufacturing, trade, and otherservicesweredominatedbyinformalunits.

These informal enterprises thatwere based on the typeof activitiesof enterpriseswerebroadly classified as manufacturing enterprises, Trading enterprises, and servicingenterprises.Amanufacturinginformalenterpriseisdefinedasaunitengagedinthephysicalorchemicaltransformationofmaterials,substances,orcomponentsintonewproducts.Itcoversunitsworkingforotherconcernsonmaterialssuppliedbythem.Italsoincludestheunits primarily engaged inmaintenance and repair of industrial, commercial, and otherrelatedmachineryandequipment,whichwere, ingeneral, classified in the sameclassofmanufacturing as those specialising in manufacturing the goods the activity of cottonginning,cleaning,andbaling.Non-captiveelectricitygenerationandtransmissionwerealsoconsideredundermanufacturing.However,atradinginformalenterprisewasconsideredanundertakingengagedintrade;wheretradeisdefinedtobeanactofpurchaseofgoodsandtheirdisposalbywayofsalewithoutanyintermediatephysicaltransformationofthegoods.Thus,allthetradingactivities,likewholesaleandretail(perennial,casual,orseasonal)andtheactivitiesofintermediarieswhodonotactuallypurchaseorsellgoodsbutonlyarrangetheirpurchaseandsaleandearnremunerationbywayofbrokerageandcommission.Thepurchaseandsaleagents,brokers,andauctioneerswerealsoconsideredasbeingapartoftrade. Similarly, the third category of an informal servicing enterprise or service sectorenterprise is defined as an entity engaged in activities carried out for the benefit of aconsumingunitandtypicallyconsistsofchangesintheconditionofconsumingunitsrealizedbytheactivitiesofservicingunitatthedemandoftheconsumingunit.

In addition to this, informal servicing enterprise or units that include services liketransporting, cleaning, repairing, transporting people, providing accommodations,providingmedicalorsurgicaltreatments,improvingappearance,providingtheinsurance,financial intermediation,protection,guarantees,providingeducation, information,advice,entertainment,orsimilarservicesareincluded.Therefore,inviewoftheabove,weclassifythe informal non-agricultural enterprises in to three sectors: Manufacturing, Trade, andOther Services (excluding construction). Table 3.6 represents the type of informal

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enterprises classification where the activities have been classified into following broadheads: Manufacturing, Non-captive electricity generation and transmission, Trade, andOtherServices.

Table.3.6:ClassificationbasedontypesofactivitiesofInformalEnterprisesCategory:Manufacturing

ManufactureofFoodProductsManufactureofBeverages

ManufactureofTobaccoProductsManufactureofTextiles

ManufactureofWearingApparelManufactureofLeatherandRelatedProducts

ManufactureofWoodandofProductsofWoodandCork,exceptFurniture;ManufactureofArticlesofStrawandPlaitingMaterials

ManufactureofPaperandPaperProductsPrintingandReproductionofRecordedMedia

ManufactureofCokeandRefinedPetroleumProductsManufactureofChemicalsandChemicalProducts

ManufactureofPharmaceuticals,MedicinalChemicalandBotanicalProductsManufactureofRubberandPlasticsProducts

ManufactureofOtherNon-MetallicMineralProductsManufactureofBasicMetals

ManufactureofFabricatedMetalProducts,exceptMachineryandEquipmentManufactureofComputer,ElectronicandOpticalProducts

ManufactureofElectricalEquipmentManufactureofMachineryandEquipmentN.E.C.

ManufactureofMotorVehicles,TrailersandSemi-TrailersManufactureofOtherTransportEquipment

ManufactureofFurnitureOtherManufacturing

RepairandInstallationofMachineryandEquipmentCottonGinning,CleaningandBailing

Non-captiveelectricitygenerationandtransmission.Electricpowergeneration,transmissionanddistribution

Category:TradingWholesaleandRetailTradeandRepairofMotorVehiclesandMotorcycles

WholesaleTrade,exceptofMotorVehiclesandMotorcyclesRetailTrade,exceptofMotorVehiclesandMotorcycles

Category:OtherServicesSewerage

Wastecollection,treatmentanddisposalactivities;materialsrecoveryRemediationactivitiesandotherwastemanagementservices

OtherLandTransportWaterTransport

WarehousingandSupportActivitiesforTransportationPostalandCourierActivities

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AccommodationFoodandBeverageServiceActivities

PublishingActivitiesMotionPicture,VideoandTelevisionProgrammeProduction,SoundRecording

andMusicPublishingActivitiesProgrammingandBroadcastingActivities

TelecommunicationsComputerProgramming,ConsultancyandRelatedActivities

InformationServiceActivitiesChitfunds

Trusts,FundsandOtherFinancialVehiclesOtherFinancialServiceActivitiesExceptInsuranceandPensionFundingActivities(includinginvestment

club,andactivitiesofprivatemoneylenders)OtherFinancialActivities,exceptinsuranceandpensionfundings

RiskandDamageEvaluationFundManagementActivities

RealEstateActivitiesLegalandAccountingActivities

Activitiesofheadoffices;managementconsultancyactivitiesArchitectureandEngineeringActivities:TechnicalTestingandAnalysis

ScientificResearchandDevelopmentAdvertisingandMarketResearch

OtherProfessional,ScientificAndTechnicalActivitiesVeterinaryActivities

RentingandleasingofmotorvehiclesRentingandleasingofpersonalandhouseholdgoods

Rentingandleasingofothermachinery,equipmentandtangiblegoodsn.e.c.EmploymentActivities

TravelAgency,TourOperatorandOtherReservationServiceActivitiesSecurityandInvestigationActivities

ServicestoBuildingsandLandscapeActivitiesOfficeAdministrative,OfficeSupportandOtherBusinessSupportActivities

EducationHumanHealthActivitiesResidentialCareActivities

SocialWorkActivitiesWithoutAccommodationCreative,ArtsandEntertainmentActivities

Libraries,Archives,MuseumsandOtherCulturalActivitiesGamblingandBettingActivities(coveragerestrictedtolegalactivitiesonly

SportsActivitiesandAmusementandRecreationActivitiesActivitiesofbusiness,employersandprofessionalmembershipOrganizations

ActivitiesofOtherMembershipOrganisations(excluding9492andpartof9491relatingtoorganisation)RepairofComputersandPersonalandHouseholdGoods

OtherPersonalServiceActivitiesSource:AdaptedfromNSS73rdround(July2015–June2016);includesinformalnon-agriculturalenterprisesbelongingtothreesectorsviz.,Manufacturing,TradeandOtherServices(excludingconstruction).

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In addition, percentages of shares of formal/informal sectors across broad sectors aresummarizedinTable3.7.Indiatreatsunincorporatedenterprisesmaintainingaccountsasquasicorporates,andtheyaretreatedaspartoftheformalsector.Thepercentagesharesoftheinformal/unorganizedsectorGVAtothetotal,asshowninTable3.7,ismorethan50%acrosstheyears.However,asstatedabove,ifthequasisectorisalsoconsidered,thesharereducesbelow50%.Theshareofunorganizedsectorishighestinagricultureastheholdingsaresmallandfragmented.Thisisfollowedbytrade,construction,realestate,professionalservices,andotherservices.

Table3.7PercentageShareofformal/informalsectorsacrossbroadsectorsIndustry 2011-12 2016-17 2017-18 Organised/

formalUnorganised/informal

Total Organised/formal

Unorganised/informal

Total Organised/formal

Unorganised/informal

Total

OfwhichHH*

OfwhichHH*

OfwhichHH*

Agriculture,forestryandfishing

3.2 96.8 94.8 100.0 2.8 97.2 95.2 100.0 2.9 97.1 95.2 100.0

Miningandquarrying

77.4 22.6 22.6 100.0 77.4 22.6 22.6 100.0 77.5 22.5 22.5 100.0

Manufacturing 74.5 25.5 12.7 100.0 76.4 23.6 12.5 100.0 77.3 22.7 12.0 100.0Electricity,gas,watersupply&otherutilityservices

95.7 4.3 3.2 100.0 95.0 5.0 5.0 100.0 94.7 5.3 5.3 100.0

Construction 23.6 76.4 76.4 100.0 26.6 73.4 73.4 100.0 25.5 74.5 74.5 100.0Trade,repair,Accommodationandfoodservices

13.4 86.6 56.0 100.0 13.4 86.6 55.8 100.0 13.4 86.6 55.8 100.0

Transport,storage,communication&servicesrelatedtobroadcasting

53.0 47.0 39.6 100.0 53.7 46.3 38.5 100.0 52.3 47.7

39.6 100.0

Financialservices

90.7 9.3 0.0 100.0 88.1 11.9 0.0 100.0 88.1 11.9 0.0 100.0

Realestate,ownershipofdwelling&professionalservices

36.9 63.1 57.2 100.0 46.8 53.2 46.7 100.0 47.2 52.8

46.0 100.0

Publicadministrationanddefence

100.0 0.0 0.0 100.0 100.0 0.0 0.0 100.0 100.0 0.0 0.0 100.0

Otherservices 58.8 41.2 22.6 100.0 52.7 47.3 24.4 100.0 52.1 47.9 24.3 100.0TOTALGVAatbasicprices

46.1 53.9 45.5 100.0 47.3 52.7 43.6 100.0 47.6 52.4 43.1 100.0

*ExcludesquasicorporatesSource:ComputedfromNationalAccountsStatistics,2019

Tables3.8Aand3.8Bpresenttheestimationofinformalenterprisesbasedonsecondarydatatakenfromdifferentsourcesencompassingsummaryfortwocategoriesofenterprises,i.e.OAE22andEstablishment23.

22 The Own Account Enterprises (OAEs), defined as "an enterprise, which is run without any hired worker employed on a fairly regular basis". 23 Economic unit that produces and/or sells goods or services and operates from a single physical location. If a firm has multiple locations such as this, each is considered an individual establishment.

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Table3.8A.Estimatednumberofenterprisesbybroadactivitycategoryforsectorandenterprisetype(2010-11)

Broadactivity

Category

Numberofenterprises(‘00)Rural Urban Rural+UrbanOAE Establish

mentall OAE Establish

mentall OAE Establishm

entall

1 2 3 4 5 6 7 8 9 10Manufacturing 9,138 977 10,115 5,292 1,803 7,095 14,430 2,780 17,210Trade 9,954 611 10,565 7,870 2,316 10,186 17,824 2,926 20,751Otherservices 9,154 1,057 10,211 7,402 2,098 9,501 16,556 3,156 19,712All* 28,246 2,645 30,891 20,564 6,218 26,782 48,810 8,863 57,673*includesenterprisesengagedinnon-captiveelectricitygenerationandtransmissionOAE-OwnAccountEnterprises:Year15-16.Source:NSS73rdRound

Table3.8B.Estimatednumberofenterprisesbybroadactivitycategoryforsectorandenterprisetype(2015-16)

BroadactivityCategory

Numberofenterprises(‘00)Rural Urban Rural+UrbanOAE Establish

mentall OAE Establish

mentall OAE Establishm

entall

1 2 3 4 5 6 7 8 9 10Manufacturing 104,975 9,169 114,144 63,163 19,341 82,504 168,139 28,510 196,649Trade 101,874 6,837 108,711 92,829 28,818 121,648 194,703 35,655 230,359Otherservices 90,084 11,930 102,014 80,639 24,225 104,865 170,723 36,156 206,879All* 296,959 27,938 324,897 236,634 72,389 309,023 533,593 100,327 633,920*includesenterprisesengagedinnon-captiveelectricitygenerationandtransmissionOAE-OwnAccountEnterprises:Year15-16.Source:NSS73rdRound

Basedontheanalysisofdatagiveninthesetwotables,itiscalculatedthat1,143,500unitsareaddedeachyear.Assumingthegrowthwassamefornextthreeyears,thetotalnumberofunitswillbe66,822,500attheendof2018-19.Itisevidentfromthedatathatthenumberofmanufacturingunitsaremoreconcentratedinruralareasincomparisontourbanareas.Ontheotherhand, for theothertwocategories,moreenterprisesare found intheurbanareas.

Datawithrespecttonumberofenterprisesfor67thand73rdroundsaregiveninTable3.9A.ItisevidentfromthedatagiveninTable3.9AthatthegrowthofestablishmentunitswasmoreincomparisontotheOAEunits.Itisapromisingsign,suggestingitwillcreateevenmoreproductionandemploymentopportunities.

Table3.9AEstimatednumberofenterprisesinNSS67throundandNSS73rdround-all-IndiaNSSround/Year Numberofenterprises(‘00)

OAE Establishment all1 2 3 4201516(NSS73rdround) 533593(84.2%) 100327(15.8%) 633920(100%)201011(NSS67thround) 488105(84.6%) 88628(15.4%) 576733(100%)Growthrate(%) 9.3% 13.2% 9.9%Source:67thand73rdroundNSSOUnincorporatedNon-AgriculturalEnterprises(ExcludingConstruction)survey,2010-11and2015-16.all-India

AfterexaminingthedistributionacrossmanufacturingandservicesofIndia’sunorganizedsector enterprises, as shownbelow inTable 3.9B, one can see that service firms are the

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dominate type; they account for around 60% or more of units (regardless of size ofenterprise),withmanufacturingaccounting for theremainder.What is interesting is thatservicesare relativelymore importantamong theOAEsand the smallestunits (with1-5workers), while manufacturing is more important among the slightly bigger units (>6workers).Secondly,itisnotablethatmanufacturingismuchmoreimportantasaneconomicactivityinurbanareas,regardlessofsize,thaninruralareas.

Table3.9B:Sizewisesectoralsharedistributionofinformalenterprisesinmanufacturing&servicesin2010-11&2015-16

FirmCategories

RuralServices UrbanServices RuralManufacturing

UrbanManufacturing

Total

2010-11

2015-16

2010-11

2015-16

2010-11

2015-16

2010-11

2015-16

2010-11

2015-16

OAE 39.1 36.0 31.3 32.4 18.7 19.7 10.8 11.8 100.0 100.0Nondirectoryestablishment

20.1 19.3 51.5 54.2 10.1 8.7 18.3 17.8 100.0 100.0

Directoryestablishment

11.4 14.0 43.7 45.8 13.3 11.6 31.6 28.6 100.0 100.0

10&moreworkers

15.8 18.5 38.7 45.6 19.2 11.5 26.4 24.4 100.0 100.0

Source:67thand73rdroundNSSOUnincorporatedNon-AgriculturalEnterprises(ExcludingConstruction)survey,2010-11and2015-16.Estimatedfromunitleveldata

Similarly,Table(3.10)representsthepercentageofenterprisesbybroadactivitycategoryforthesectorsandenterprisetypes.

Table:3.10EstimatedpercentageofenterprisesbybroadactivitycategoryforsectorandenterprisetypeallIndia2015-16

BroadActivityCategory PercentageofInformalenterprise(%) Rural Urban RuralUrban OAE estt all(1) (2) (3) (4) (5) (6) (7)Manufacturing 58.0 42 100 85.5 14.5 100Trade 47 52.8 100 84.5 15.5 100OtherServices 49.3 50.7 100 82.5 17.5 100All* 51.3 48.7 100 84.2 15.8 100*includesenterprisesengagedinnon-captiveelectricitygenerationandtransmissionSource:NSSReportNo.582:EconomicCharacteristicsofinformalNon-AgriculturalEnterprises(ExcludingConstruction)inIndia

Furthermore,Table3.11summarizesthenumberofinformalenterprisetypesinruralandurbanareasinIndiabyfollowingthebroadclassificationofinformalenterpriseactivityintothreecategoriesof:Manufacturing,Trading,andOtherServices.

Table:3.11EstimatednumberofenterprisesbybroadactivitycategoryforsectorandenterprisetypeAllIndia

BroadActivityCategory

NumberofInformalenterprises(’00)Rural Urban Rural+Urban

OAE estt all OAE estt all OAE estt all(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)manufacturing 104,975 9,169 114,144 63,163 19,341 82,504 168,139 28,510 196,649Trade 101,874 6,837 108,711 92,829 28,818 121,648 194,703 35,655 230,359OtherServices 90,084 11,930 102,014 80,639 24,225 104,865 170,723 36,156 206,879

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BroadActivityCategory

NumberofInformalenterprises(’00)Rural Urban Rural+Urban

OAE estt all OAE estt all OAE estt allAll 296,959 27,938 324,897 236,634 72,389 309,023 533,593 100,327 633,920*includesenterprisesengagedinnon-captiveelectricitygenerationandtransmissionSource:NSSReportNo.582:EconomicCharacteristicsofInformalNon-AgriculturalEnterprises(ExcludingConstruction)inIndia

3.2.3EstimateofManufacturing,Tradeandotherservicesenterprisesaspertheircategories–RuralV/sUrbanandOAEV/sEstablishment.

This section presents the data with respect to manufacturing, trade and other servicesenterprisesandtheirdescriptiveanalysis in termsofactualnumberandpercentage.ThedetaileddataispresentedinAnnexure1A.Summaryofdataisgivenintable3.12totable3.14.Basedondetaileddatafollowingisinferred.

Estimatenumberof“Manufacturing”Enterprisesaspertheircategories

Inall, thereare twenty five categoriesof enterprisesbasedonmanufacturing.ThesearecodedasM1toM25.ThenamesofthecodesalongwithdataofenterprisesnumbersandpercentagearegivenattheendofTableA3.1toTableA3.4.Summarydataisgivenintable3.12.BasedonthedatagiveninTablesA3.1toTable3.4,thefollowingcanbeinferred:

(i) Inalltherearefifteencategoriesofmanufacturingenterprisesduring2010-11.(ii) Prominent categories are M6-Manufacture of wearing apparel (25.10%), M5-:

Manufactureoftextiles(15.35%),M4-Manufactureoftobaccoproducts(13.06),M2-Manufactureoffoodproducts(11.80%),andM24-Othermanufacturing(6.10).

(iii) Therearetwenty-fivecategoriesofmanufacturingenterprisesduring2015-16.(iv) MajorcontributingcategoriesareM6-Manufactureofwearingapparel(28.53%),M5-

Manufactureoftextiles(13.24%),M4-Manufactureoftobaccoproducts(16.65),M2-Manufactureoffoodproducts(11.57%),andM24-Othermanufacturing(4.83).

(v) Importantsector forbothyearsarethesamebut theirrankhaschangedandalsocontribution.

Table3.12:SummaryofEstimatednumberofenterprisesbyenterprisetypesandsectorforeachactivitycategory-All-India(200-11&2015-16)–Manufacturing,Trade&OtherServicesYear NumberofEnterprises

Rural Urban Rural+UrbanOAE Estt all OAE Estt All OAE Estt all

Manufacturing2011-12 9138228 976854 10115082 5291761 1803426 7095188 14429989 2780280 172102692015-16 10497538 916893 11414431 6316315 1934128 8250444 16813853 2851022 19664875 Trade2010-11 9953886 610732 10564618 7870356 2315730 10186086 17824242 2926462 207507042015-16 10187387 683716 10871103 9282944 2881815 12164759 19470331 3565531 23035862 OtherServices2010-11 9153903 1057490 10211394 7402353 2098586 9500939 16556256 3156076 197123322015-16 9008350 1193037 10201387 8063947 2422522 10486470 17072298 3615559 20687857Source:NSSReportNo.582

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Estimatenumberof“trade”Enterprisesaspertheircategories:

Inall,therearefourcategoriesofenterprisesbasedonthebasisoftrade.ThesearecodedasT1toT4.ThenamesofthecodesaregivenattheendofTableA3.5toTable3.8,andsummarydataintable3.12.BasedonthedatagiveninTableA3.4toTableA3.8,thefollowingcanbeinferred:

(i) Inalltherearefourcategoriesoftradeenterprisesduring2010-11.(ii) 87.73%ofenterprisesbelongtotheT4category(Otherretailtrade)followedbythe

T3(Otherwholesale trade-6.69%),T1category(Tradeandrepairofmotorvehiclesandmotorcycles)andT2(Activitiesofcommissionagents=1.17%)duringtheyear2010-11.

(iii) Therearefivecategoriesoftradeenterprisesduring2015-16.(iv) 86.89%ofthetradeenterprisesareintheT5category(Otherretailtrade)followedby

theT4category(otherwholesaletrade–7.08%)andT2category(Tradeandrepairofmotorvehiclesandmotorcycles=4.25%)

Estimatenumberof“OtherServices”Enterprisesaspertheircategories:

This section presents the data with respect to “Other Services” enterprises and theirdescriptiveanalyses for theyears2010-11and2015-16. Inall, thereare15categoriesofenterprises in“OtherCategory”.Thedetaileddataandcategories(codes&full titles)aregiven in table A3.9 to Table A3.12. Summary data is in table 3.12. Based on the datapresented in four tables (Tables A3.9 to Table A3.12), the following conclusions can bedrawn:

(i) Boththeyearsranges2010-11and2015-16have15categoriesoftheOtherServicesenterprises.

(ii) Themaximum number of enterprises for the period of 2010-11 are in the S15(27.28%)category,followedbytheS3category(25.96%)andS2category(14.09%).

(iii) The maximum number of enterprises from the 2015-16 period are in the S15category(26.88%),followedbytheS3category(25.99%)andS3category(14.39%).

3.2.4StateWiseEstimation

For the purpose of state wise classification, Table (3.13) presents the percentagedistribution of the estimated number of enterprises by State separately for eachsectorandenterprisetype.Thestatesarearrangedinthedescendingorderofnumberofenterprises.Asshowninthetable3.13;therearefivestates,namely:UttarPradesh,WestBengal,TamilNadu,Maharashtra,andKarnataka.Theseaccountedfornearlyhalfofthetotalestimatednumberofunincorporatednon-agriculturalenterprises(excludingconstruction)inthecountry.Itisalsonotedthatatotalof22majorstatesrepresentedmorethan98%ofthetotalestimatednumberofenterprisesinthecountry.UttarPradeshreportedthehighestshare in the number of enterprises (14.20%) followed byWest Bengal (13.99%).West

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Bengal (17.44%) was the leader among the states with highest share in the number ofenterprisesintheruralsectorfollowedbyUttarPradesh(14.93%).Intheurbansector,itwas observed that Uttar Pradesh (13.43%), followed by Tamil Nadu (10.86%), had thehighestshareintheestimatednumberofenterprises.EventhoughUttarPradeshandWestBengalhadanalmostequalshareinthetotalnumberofenterprises,UttarPradeshhadahighernumberofestablishmentsthanWestBengal.

Table.3.13:PercentagedistributionofenterprisesbyState/UTsforeachsectorandenterprisetype

State Rural Urban Rural+urbanOAE estt all OAE estt all OAE estt all

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)UttarPradesh 15.03 13.84 14.93 14.42 10.20 13.43 14.76 11.21 14.20WestBengal 17.96 11.93 17.44 11.21 7.58 10.36 14.97 8.79 13.99TamilNadu 4.66 7.49 4.90 10.47 12.14 10.86 7.23 10.85 7.80Maharashtra 5.94 5.95 5.94 8.52 11.52 9.22 7.08 9.97 7.54Karnataka 5.40 5.60 5.42 6.22 8.32 6.71 5.76 7.56 6.05Bihar 7.50 6.28 7.39 3.43 3.19 3.38 5.70 4.05 5.44AndhraPradesh 6.03 5.57 5.99 5.10 3.24 4.66 5.62 3.89 5.34Gujarat 3.09 2.65 3.05 8.02 5.90 7.52 5.28 4.99 5.23Rajasthan 3.94 3.90 3.93 4.73 4.00 4.56 4.29 3.97 4.24MadhyaPradesh 4.27 3.23 4.18 4.37 3.86 4.25 4.32 3.68 4.22Telangana 4.22 1.87 4.02 4.32 3.82 4.20 4.26 3.28 4.11Kerala 2.80 8.53 3.29 4.03 4.92 4.24 3.35 5.93 3.75Odisha 4.62 4.12 4.58 1.61 1.60 1.61 3.29 2.30 3.13Jharkhand 3.76 3.23 3.72 1.30 1.01 1.23 2.67 1.63 2.51Punjab 1.82 2.72 1.89 2.60 3.25 2.75 2.16 3.10 2.31Assam 2.49 3.96 2.61 1.05 1.61 1.18 1.85 2.27 1.92Haryana 1.12 1.80 1.18 1.69 2.60 1.90 1.37 2.38 1.53Delhi 0.03 0.03 0.03 2.25 5.46 3.00 1.01 3.95 1.48Chhattisgarh 1.57 0.91 1.51 1.12 1.28 1.15 1.37 1.18 1.34Jammu&Kashmir 1.02 1.44 1.06 1.13 1.36 1.18 1.07 1.38 1.12Uttarakhand 0.62 1.00 0.65 0.66 0.66 0.66 0.64 0.75 0.66HimachalPradesh 0.89 1.81 0.97 0.22 0.34 0.25 0.59 0.75 0.62subtotal 98.78 97.86 98.68 98.47 97.86 98.30 98.64 97.86 98.53allIndia 100 100 100 100 100 100 100 100 100Source: Computed from KI (73/2.34): Key Indicators of Unincorporated Non-Agricultural Enterprises (ExcludingConstruction)inIndia

State/UTwiseestimatednumberofenterprisesbythesectorfortheperiod(2010-11and2015-16)arecompiledandanalysedintermsofactualnumberandpercentage.PercentagedataisgiveninTable3.14anddetaileddataisinAnnexure1A(TableA3.13&TableA3.14).BasedondetaileddatagiveninAnnexure1A(TableA3.13&TableA3.14),itcanbesaidthatthatnumberofunits/enterprisesarethemaximuminthestateofUttarPradesh(8,999,763)followedbyWestBengal(8,868,455)duringtheyears2015-16.Basedondensity,itcanbeinferred that themaximumenterprises in the informalsectorare inWestBengal for theyears2015-16.

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Similartrendscanbeseenfortheyears2010-11.But,fortheperiod2010-11to2015-16,thegrowthwasmoreinWestBengal.Basedonthepercentagesharesdata(Table3.16)forboththeseyears,followingcanbeinferred.

• WestBengal,TamilNadu,Karnataka,Rajasthan,Kerala,andBiharhaveincreasedinnumberofenterprisesduring2015-16incomparisonto2010-11.

• UttarPradesh,Maharashtra,Odisha,MadhyaPradesh,Punjab,Assam,Haryana,Delhi,andUttarakhandhavedeclinedinthenumberofinformalenterprises.

• Thereasonbehindthesepatternscouldbeclosureofbusinessesbytheowners,orinformalunitsmighthavemovedtotheformalsector.

Table3.14:ComparativeAnalysisofShare(%)ofEnterprisesinDifferentStatesfortheyear2010-11and2015-16

States Share(%) States Share(%) 2010-11 2015-16UttarPradesh 14.54 UttarPradesh 14.11WestBengal 12.64 WestBengal 13.99AndhraPradesh 9.71 TamilNadu 7.80Maharashtra 8.94 Maharashtra 7.53TamilNadu 7.75 Karnataka 6.05Gujarat 6.30 Bihar 5.43Karnataka 4.87 AndhraPradesh 5.35MadhyaPradesh 4.50 Gujarat 5.24Odisha 4.24 Rajasthan 4.23Bihar 4.00 MadhyaPradesh 4.21Rajasthan 3.71 Telangana 4.10Kerala 3.23 Kerala 3.75Punjab 2.50 Odisha 3.13Jharkhand 2.07 Jharkhand 2.50Assam 2.00 Punjab 2.31Delhi 1.95 Assam 1.92Haryana 1.83 Haryana 1.54Chhattisgarh 1.17 Delhi 1.48Jammu&Kashmir 1.04 Chhattisgarh 1.34Uttaranchal 0.81 Jammu&Kashmir 1.12Tripura 0.69 Uttarakhand 0.66HimachalPradesh 0.61 HimachalPradesh 0.62Manipur 0.21 Tripura 0.33Meghalaya 0.17 Manipur 0.28Puducherry 0.10 Meghalaya 0.18Chandigarh 0.10 Puducherry 0.15Goa 0.09 Nagaland 0.14Nagaland 0.05 Goa 0.12Sikkim 0.05 Chandigarh 0.09ArunachalPradesh 0.04 Mizoram 0.06Mizoram 0.04 AP 0.04A&N.Islands 0.03 Sikkim 0.04Dadra&N.Haveli 0.02 Andaman&NicobarIsland 0.03Daman&Diu 0.01 Dadra&NagarHaveli 0.03Lakshadweep 0.00 Daman&Diu 0.01all-India 100.00 Lakshadweep 0.00

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AllIndia 1000Source:NSSReportNo.549:NSS73rdRound

SectoralDataAnalysis

Thestate-wideestimatednumberofManufacturingEnterprisesfortheyears2010-11and2015-16:Fortheoveralldataofthestatesformanufacturingsectoroverallpercentageandpercentageforrural,urban,OAE,andEstablishmentisalsocalculated.Thefollowingcanbeinferredfromthedata:

(i) ThemaximumnumberofmanufacturingunitsareinWestBengalwithashareof16.06%in2010-11.Itisfollowedby13.60%manufacturingunitsinUttarPradeshduringthesameyear.

(ii) Themaximumnumberofmanufacturingenterprisesare inWestBengalwithashareof21.25%during2015-16.ItisfollowedbyUttarPradesh(11.24%)duringthesameyear.ThethirdhighestunitsareinTamilNadu(8.88%).

(iii) ThereisnodefinitetrendinthedataforRuralandUrban.AsperthedatagiveninTableabove,theWestBengalunitsaremoreconcentratedinRuralareas.Ontheotherhand,incaseofGujarat,thenumberofunitsaremoreconcentratedinUrbanareasduring2010-11.

(iv) IncaseofUttarPradesh,thenumberofunitsaremoreconcentratedinruralareas,butthedifferenceismuchlessincomparisontoWestBengalandGujarat.

(v) Similartrendsareseeninthedatafortheyears2015-16.

Thestate-wideestimatednumberoftradecategoryenterprisesfortheyears2010-11and2015-16:For theoveralldataof the states for trade sectoroverallpercentageandpercentageforrural,urban,OAE,andEstablishmentisalsocalculated.Basedonthedata,thefollowingconclusioncanbedrawn:

(i) TheStateofUttarPradeshhasthemaximumnumberofenterprisesinthetradesector.Itsshareis16.46%duringtheyears2010-11and17.34%duringtheyears2015-16.Itsunit’sshareinruralareasismorethanthatintheurbanareas.

(ii) WestBengalwasrankedsecondintermsoftradeunitsinthestatewithashareof10.91%during2010-11andashareof9.81%duringtheyears2015-16.Thisnumberofunitsinruralareasislargerincomparisontourbanareas.

(iii) ThethirdstatewiththemaximumnumberoftradeunitsisMaharashtrawithashareof9.01%duringtheyears2010-11and8.24%during2015-16.However,Maharashtrahadmoreunitsinurbanareasincomparisontoruralareas.Inthatway,itisdifferentfromWestBengalandUttarPradesh.

(iv) Andhra Pradesh andTamilNadu are at 4th and 5thwith a share of 7.72%and6.13%,respectively,during2010-11.

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(v) BiharandKarnatakacomeinat4thand5thplaceintermsoftradeunitsindifferentstateswithashareof6.53%and6.02%,respectively,during2015-16.Biharhasmoreunitsinruralareas.ThesamecanbesaidofMaharashtraduring2015-16.

(vi) During the years 2015-16, many states such as Andhra Pradesh, Assam,Chhattisgarh, Himachal Pradesh, Jharkhand, Rajasthan, etc. had more units inruralareas.

(vii) Withinthestates,thetrendwasdifferentforOAEunitsandEstablishmentunits.

Thestate-wideestimatednumberof“OtherServices”enterprisesfortheyear2010-11 and 2015-16: For the overall data of the states for manufacturing sector over allpercentageandpercentageforrural,urban,OAE,andEstablishmentisalsocalculated.Basedonthedatagiveninthetables(seeappendix),thefollowingconclusionscanbedrawn:

(i) During 2010-11, the number of other services unitsweremaximally found inUttar Pradesh (13.32%) followed by Andhra Pradesh (12.07%), West Bengal(11.47%),Maharashtra(9.65%),andTamilNadu(7.83%).

(ii) During 2015-16, the number of other services unitsweremaximally found inUttarPradesh(13.46%)followedbyWestBengal(11.75%),TamilNadu(8.11%),Maharashtra(7.92%),andAndhraPradesh(7.02%).TheAndhraPradeshsharehascomedownduetoabifurcationofthestate.ThecombinedshareofAndhraPradesh andTelangana is10.94%. It is less than the share of Andhra Pradeshduring2010-11.

(iii) Therearenosettrendsasfarastheshareofruralandurbanareasisconcerned.Insomestates,theshareofruralismore,whileinothercasestheshareofurbanismore.

(iv) Similarly,therearenosettrendsfortheshareofOAEandEstablishmentforboththeyearrangesamongthedifferentstates.

3.2.5Discussion

In2018,thenumberofinformalsectorenterpriseswasestimatedas6.34crore24attheall-India level. Out of them, 31.0% of enterprises were engaged in manufacturing, 36.3%enterpriseswereintrading,and32.7%enterpriseswereinthe‘otherservices’sector.Outof6.34croresofinformalnon-agriculturalenterprises,51.3%werelocatedinruralareas.Also,84.2%wereinformalenterprises(OAEs).Theremaining15.8%oftheinformalenterpriseswereestablishments(i.e. theenterpriseswhichemployhiredworkersona fairlyregularbasis).

TheshareofOAEsinthethreebroadactivitycategoriesareManufacturing’(85.5%),‘Trade’(84.5%),and‘OtherServices’(82.5%).ThesharesofOAEsinthetotalinformalenterprisesinruralandurbanareaswere91.4%and76.6%,respectively. ItwasobservedthatUttar

24NSS Report No.582: Economic Characteristics of Informal Non-Agricultural Enterprises (Excluding Construction) in India

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Pradesh had the highest share (14.2%) in the total number of informal non-agriculturalenterprises,followedbyWestBengal(14.0%),TamilNadu(7.8%),Maharashtra(7.5%),andKarnataka (6.1%). These five states accounted for nearly half of the informal non-agricultural enterprises at all-India level. The informal sector not only dominated theenterprise structure of India’s establishments, but it employed the vast majority of theworkersinIndia;theyweretheself-employedaswellasthewage-employed.Theywerealsowhatconstitutedasthebulkofnon-agriculturalinformalityinIndia.

Informal workers normally worked in informal enterprises. However, a last thoroughanalysisofthesizestructureofthenon-agriculturalsectorwasinthereportsoftheNationalCommissionforEnterprisesintheUnorganizedSector(over2007-09).Bycontrast,inthe2019EconomicSurvey,theIndianMSMEsectorwasdiscussedbut,duringthediscussion,theMSMEdataofunorganisedsectorwasnotreallyused.TheASIdatabasetalkedaboutthedwarfandinfantfirms(lessthan100workersinafirm;thoseagedmorethan10yearsareconsidereddwarfs),smallfirms(lessthan100workersinafirm)andlargefirms(morethan100workersinafirm).However,theMSMEsectorisnotaboutonlythesetwocategories.Wehavenotedthat,whileusingenterprisedata,eventhetotalnumberofunregisteredandunorganised firmswerenotexactlyoverlapping.Therewereplentyofunorganized firmsthatwereregistered,exceptthattheyseemedtoberegisteredunderavarietyofActs.Itwasrealisedthat theproblemsofunorganizedsectorcouldnotbeaddressedunlesswedealtwitheachofthesetypesseparately.Also,iftheunitswerenotevenregistered,thenitwouldbedifficulttoframepoliciesandstrategicprogramstofacilitateandempowersuchinformalenterprises.Itwasalsoobservedthat,ofthe31informalenterprisesthatwereregistered,thesewere actually registered under acts thatwere so numerous and diverse in nature.Therefore,thereisstrongneedtohaveaconsolidatedsourceofinformationtosupportandfacilitatesuchunorganisedunits.Similarly,itwasobservedthatonlyveryfew(lessthan1%)were registered, and there were very few under the category of medium and smallenterprises.Also,ahugenumberofunitswereinthecategoryofown-accountenterprises.Althoughthesmallsizedenterpriseswerenumerousinnumber,theyweresimplyvisibleasanegligibleproportionofallenterprises.Finally,wemustacknowledgethattheunorganisedsectorofinformalenterprisesisvast,anditisalsohighlydifferentiatedanddominatedbyOAEs;thesemaybetermedasnano-enterprises.

3.3PrioritizationofSectors

3.3.1Overview

Thissectionpresents theclassificationof informalenterprisesleadingtoidentificationofpriority sectors (based on various parameters like employment, economic contribution,inclusiveness,geographyetc.)forMSDEandalliedstakeholderstofocuson.Tobegintaskofthisidentificationofprioritysectorsfirstitwasimportanttohaveacomprehensivelistofsectorstobeginwith.TheSurveyofUnincorporatedNon-AgriculturalEnterprisesconducted

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inNSScoveredalltheunincorporatednon-agriculturalenterprisesinmanufacturing,tradeandotherservicessector.ThefocusfortheidentificationforthesesectorswasEmployment,GVA(GrossValueAdded)andinclusioninlinewiththepoint3.1.2.2oftheToRthatstated:“Classificationofinformalenterprisesleadingtoidentificationofprioritysectors(basedonvariousparameterslikeemployment,economiccontribution,inclusiveness,geographyetc.)and states/departments/ industry associations etc. for MSDE to focus on.” Gross ValueAdded(GVA)isanimportanteconomicindicatorthatmeasuresthecontributionofdifferentsegmentstotheeconomy.Itgivesthevalueofgoodsandservicesproducedlessthecostofall intermediate consumption that are directly attributable to that production. GVA is ameasurecomparabletoGDPandmaybedefinedasturnoverminusinputcosts.GVAratherthanturnoveristhepreferredindicatorformeasuringeconomicactivityasitremovesthedangerofdoublecountingandallowsameaningfulcomparisonacrosssectors.Classificationon the basis of inclusiveness wherein inclusiveness has been operationalized by usinggenderbasedinclusionparameters.Itiswellrecognised25thatgenderinclusivenessisakeydriverforsustainabletransitionandinclusivegrowthacrossregions,andisakeyelementofamodern,well-functioningmarketeconomyandessentialforsustainablegrowth.

3.3.2.EmployeeProductivityindifferentsectorsofinformalenterprises(GVAPW)

Sub-section3.3.2presentsemployeeproductivity(valueaddedbyemployment)invarioussectorsofinformalenterprisesbylookattheGVAdatawhichinthiscasehasbeenplottedusingGVAperworker26incaseofinformalenterprise27usingdatafromNSSOasshowninTable3.15.GrossValueAddedperWorker(GVAPW)isaveryimportantmeasureoflabourproductivityobtained by dividing thegross value added by the total number ofworkersemployedbytheenterprises.Theworkerdefinitionforthisstudyincludesbothfulltimeandpart-timeworkersincludingworkingowners,hiredworkers(i.e.,personswhoareinthepayrolloftheenterprise),unpaidfamilymemberswhohelpintheentrepreneurialactivitiesandotherhelpersandapprentices.Equalweightagehasbeengiventofulltimeandparttimeworkers.

Table3.15:Distributionofinformalenterprisesbasedonlabourproductivity-EstimatedGVAperworkerbyenterprisetypeandsectorforeachactivitycategory

Activitycategory

GVAperWorker('000) Rural Urban Rural+Urban

OAE estt. all OAE estt. all OAE estt. all OverallGVAPWBasedRank

1 2 3 4 5 6 7 8 9 10 M1 35 87 75 36 98 85 36 94 81 15M2 49 75 57 77 132 105 58 105 77 18M3 31 108 41 47 129 89 35 122 56 24M4 20 91 22 23 87 25 21 90 23 25

25 https://www.ebrd.com/gender-equality-and-inclusion.html 26 Ruane, F., & Sutherland, J. (2005). Export performance and destination characteristics of Irish manufacturing industry. Review of World Economics, 141(3), 442-459. 27 Mihajlović, I., & Stojanović, A. (2019). How to address and understand the failure of SMEs: framework and factors. MONOGRAPH How to prevent SMEs failure-Actions based on comparative analysis in Visegrad countries and Serbia, Bor, University of Belgrade, Technical Faculty in Bor, Engineering Management Department (EMD), 663-694.

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Activitycategory

GVAperWorker('000) Rural Urban Rural+Urban

OAE estt. all OAE estt. all OAE estt. all OverallGVAPWBasedRank

M5 28 77 35 44 131 81 35 119 60 22M6 42 76 47 61 119 82 50 108 66 19M7 83 75 79 67 116 95 69 111 93 14M8 31 112 42 62 135 105 35 125 57 23M9 19 128 61 28 128 85 26 128 81 15M10 73 112 93 94 144 132 91 142 129 7M11 0 103 103 60 76 75 60 81 80 17M12 26 61 38 16 150 93 23 113 63 20M13 22 122 102 55 175 152 36 145 123 8M14 15 162 76 53 186 169 33 183 151 6M15 22 79 57 40 121 90 25 87 63 20M16 81 124 100 100 130 127 90 129 122 9M17 61 118 87 128 139 137 93 135 122 9M18 44 151 103 193 180 184 178 179 178 3M19 80 360 305 89 161 155 87 173 166 4M20 30 155 113 116 279 269 99 275 263 1M21 110 145 142 83 171 160 86 166 158 5M22 85 148 144 83 211 197 83 209 195 2M23 78 106 87 104 129 121 85 120 102 12M24 49 80 56 88 130 109 73 122 94 13M25 68 98 77 135 121 129 110 114 112 11M 36 86 48 63 141 103 46 122 74 T1 99 166 135 203 279 257 179 265 238 1T2 82 102 91 110 117 115 101 114 108 4T3 70 98 79 196 338 289 146 305 237 2T4 119 142 127 169 235 218 148 224 197 3T5 61 134 68 108 175 132 83 168 103 5T 64 132 72 114 190 147 88 180 116 S1 122 210 201 106 316 304 109 303 291 1S2 57 100 70 83 134 112 70 125 95 13S3 97 130 105 120 176 132 107 148 116 11S4 73 64 67 130 339 158 113 94 104 12S5 42 225 196 80 190 177 61 204 185 5S6 87 121 111 93 145 136 92 143 134 8S7 74 89 79 126 159 148 105 149 130 10S8 337 139 271 133 263 195 198 238 216 2S9 116 102 113 211 198 202 186 194 191 4S10 61 111 66 136 230 157 114 213 133 9S11 89 99 92 154 181 170 136 172 156 6S12 67 79 74 99 119 112 84 103 95 13S13 50 170 153 89 172 158 75 171 156 6S14 99 202 133 168 241 227 129 236 201 3S15 51 59 52 85 118 96 67 103 76 15S 71 131 92 104 169 140 88 158 120

Productivityisthekeycomponentofgrowthwithinaneconomyandassuchisanimportantdeterminantofoutput,competitivenessandlivingstandards.Productivitymaybedefinedasthe rate of inputs to outputs within a company, industry or economy. Increases in

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productivity allow firms and sectors to achieve higher levels of value added within thebroadereconomyand increase their competitiveness inboth Irelandand internationally.Labourproductivitymeasureseconomicoutputperunitoflabour.Ingeneral,improvementsinproductivityarerealisedatthefirmlevel;economywideproductivitylevelsareprimarilyanaggregationoftheproductivitylevelsofindividualfirms.Assuch,itisdifficultforpolicy-makersandgovernmentstohaveadirectimpactofproductivity,exceptthroughefficiencyimprovements in the provision of public services, namely education (human capital),physicalinfrastructure(capital)andknowledgecapital.Itistobenotedthatitisthelowerrateofproductivitywithinthemorelabourintensivesectorsthatdrivesdownproductivity.Prioritizationwasdonekeepinginviewthesethings.

3.3.3Distributionofinformalenterprisesbasedontheireconomiccontribution(GVAPE)

PolicymakersfrequentlyuseGVAasaheadlineindicatorofregional/sectoralproductivityandregional/sectoralincomesand,therefore,thewelfareofpeoplebelongingtoaparticularregion/sector28. The sector wise distribution of informal enterprises based on theireconomiccontributionintermsofGVAperenterpriseasperNSSOdatahasbeengiveninthetable3.16.

Table3.16:DistributionofInformalenterprisesbasedontheircontributiontoIndianeconomy-EstimatedGVAperenterprise(GVAPE)inmanufacturingbyenterprisetypeand

sectorforeachactivitycategory

Activitycategory

GVAperEnterprise('000) Rural Urban Rural+Urban

OAE estt. all OAE estt. all OAE estt. all OverallGVAPEbasedRank

1 2 3 4 5 6 7 8 9 10 M1 89 621 369 69 1422 524 76 974 455 6M2 75 300 109 133 534 259 92 425 162 19M3 46 413 66 97 622 257 54 535 103 22M4 24 268 26 28 415 32 25 294 28 25M5 41 384 57 68 715 179 53 637 115 21M6 47 276 59 69 506 127 57 440 92 24M7 149 478 226 126 600 283 129 589 276 14M8 49 377 72 95 553 257 55 466 103 22M9 22 690 103 39 768 205 35 758 183 17M10 85 383 165 140 615 399 129 600 369 11M11 0 433 433 124 506 441 124 488 440 8M12 37 378 74 22 940 233 32 702 135 20M13 48 699 442 55 852 421 52 770 430 9M14 17 1095 130 85 1078 732 44 1079 506 5M15 53 1144 278 85 714 321 59 986 289 13M16 111 539 194 187 602 513 141 596 419 10M17 88 403 171 183 557 400 133 523 313 12M18 44 818 189 236 831 480 212 831 453 7M19 89 1833 917 127 1027 774 119 1091 790 2

28 Woznitza, B., Tyrrell, K., & Knight, J. (2009). Regional economic indicators: A focus on enterprise–driving regional productivity. Economic & Labour Market Review, 3(2), 54-68.

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Activitycategory

GVAperEnterprise('000) Rural Urban Rural+Urban

OAE estt. all OAE estt. all OAE estt. all OverallGVAPEbasedRank

M20 55 775 354 222 2400 1924 188 2320 1784 1M21 120 732 557 191 882 727 176 858 698 3M22 92 515 434 110 945 694 109 929 686 4M23 105 305 145 138 470 279 115 397 194 15M24 69 371 97 122 586 229 102 550 185 16M25 81 291 113 158 387 206 130 360 173 18M 49 424 79 85 645 216 62 574 136 T1 136 586 277 271 1129 656 241 1055 585 1T2 102 284 153 139 366 232 126 347 208 4T3 88 258 119 224 1188 592 173 1027 446 3T4 169 461 222 246 916 585 213 852 472 2T5 85 372 99 149 578 230 115 536 165 5T 89 376 107 157 650 274 121 598 195 S1 240 1043 868 243 1711 1525 242 1625 1432 1S2 95 376 139 138 622 292 116 549 221 9S3 102 341 129 123 670 160 111 442 142 13S4 76 328 168 135 958 178 117 442 174 11S5 165 3701 2142 100 1082 704 116 1603 1012 2S6 91 353 214 131 566 402 125 547 380 5S7 94 236 121 158 602 332 132 527 260 8S8 18 241 22 70 855 172 27 656 51 15S9 122 283 135 223 621 385 196 606 338 6S10 63 392 73 143 688 192 119 651 158 12S11 101 256 126 182 675 338 159 615 287 7S12 100 291 164 136 416 248 119 368 212 10S13 54 1927 733 98 1920 715 82 1923 722 3S14 106 831 188 192 1152 668 142 1103 456 4S15 64 197 71 105 374 149 83 331 110 14S 78 580 136 125 815 283 100 737 211

Amongthemanufacturingactivities,theestimatedGVAPEwashighestfor‘Manufactureofmachinery and equipment n.e.c.’ (M20)withRs. 17.84 lakhs at all-India level as also forurban sector (Rs.19.24 lakhs). GVAPEwasmaximum (Rs. 9.17 lakhs) formanufacturingenterprisesengagedin‘Manufactureofelectricalequipment’(M19)inruralareas.GVAPEislowestforthemanufacturingactivity‘Manufactureoftobaccoproducts’(M4)forall-India(Rs. 28 thousand) as well as separately for rural (Rs. 26 thousand) and urban (Rs. 32thousand)sectors.Amongalltradingactivitycategories,theactivity‘Wholesaleandretailtradeofmotorvehiclesandmotorcycles’(T1)hadthehighestGVAPE(Rs.5.85lakhs)forall-Indiaandoverdifferentsectors.Takingruralandurbantradingenterprises together, theGVAPEwaslowest(Rs.1.65lakhs)in‘Otherretailtrade’(T5)amongallthetradingactivities.Both for all-India level and urban sector, enterprises involved in the activity -‘Accommodation’ (S1) had the highest GVAPE with Rs. 14.32 lakhs and Rs. 15.25 lakhsrespectively.ButforruralareasGVAperenterprisewashighestforenterprisesengagedin‘Warehousingandstorage’(S5)(Rs.21.42lakhs).ThelowestGVAPEin‘otherservices’was

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forenterprisesengagedin‘Financialserviceactivitiesexceptinsuranceandpensionfunding’(S8)bothforruralsector(Rs.22thousand)andatall-Indialevel(Rs.51thousand).Rs.1.49lakhswerethelowestGVAperenterpriseintheurbansectorcorrespondingtoenterprisesbelongingto‘Othercommunity,socialandpersonalserviceactivities’(S15).

Prioritisation of sectors of informal economybased onGVAper enterprise is one of theseveralwaysofprioritization.Anotherwayisbasedoninclusionsandmitigatedinequality.Thisiswhathasbeendescribedinthenextsection.Widespreadinformality-withregardtoemployment,enterprises,andproductiveactivities–isfrequentlyperceivedasabarriertofullparticipationintheeconomyandasahindrancetolongruneconomicdevelopmentandpoverty reduction. In part, this is because the link between, informality, growth andinclusiveness isnot fullyunderstood. 'Inclusivegrowth'hasbeendefinedasgrowth thattakes place in a context in which economic opportunities (including employmentopportunities)expand,accesstoopportunitiesimproves,andinequalitiesarereduced29.

3.3.4.Classificationofinformalenterprisesaspertheirinclusiveness

This section presents classification of informal enterprises as per their inclusiveness. In2007, the international Global Entrepreneurship Monitor (GEM) published a report on“WomenandEntrepreneurship”whichdrewthefollowingconclusions30:

Agendergapexistswithrespecttonewventurecreationandbusinessownership.Thisgapissignificantandsystematic,varyingbothbycountryGDPaswellasbyregion.Thegenderdifferenceismorepronouncedinhigh-incomecountriesbutpersiststhroughoutallregions,withEuropeanand

Asianlow/middle-incomecountriesshowingagreatergap[...]

Opportunitiesforeconomicgrowthexistinallcountrieswherethegapbetweenmaleandfemaleentrepreneurship ishigh. Segmenting theprospectivebusiness startupmarketbygender,womenrepresentthe largestmarketsegment forpotentialnewventurecreation.Understandingthemarketandtailoringservicesaccordinglyisgoodbusinesspractice.Thesameappliestoeffectiveeconomicdevelopmentpolicy.

ThepercentagedistributionoffemaleworkersinthemanufacturingenterprisesbydetailedactivitycategoryforeachsectorandshareoffemaleworkersinOAEsbyactivitycategoryisgivenintable3.17.

29 Heintz, J. (2012). Informality, inclusiveness, and economic growth: an overview of key issues. University of Massachusetts, Amherst, USA. 30 Waring, J. and Brierton, J. (2011), "Women's enterprise and the Scottish economy", International Journal of Gender and Entrepreneurship, Vol. 3 No. 2, pp. 144-163. https://doi.org/10.1108/17566261111140215

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Table3.17.Classificationofinformalsectorenterprise’sbasedongenderinclusiveness-Percentagedistributionoffemaleworkersininformalenterprisesoveractivitycategoryand

shareoffemaleworkersinOAEsbyactivitycategory Rural Urban Rural+Urban

Activitycategory

shareintotal

workers(%)

%ofOAEfemaleworkers

shareintotal

workers(%)

%ofOAEfemaleworkers

shareintotal

workers(%)

%ofOAEfemaleworkers

OverallInclusivitybasedRank

1 2 3 4 5 6 7 M1 0.01 27.84 0.03 30.09 0.02 29.14 21M2 8.08 69.38 8.29 63.96 8.16 67.25 11M3 1.04 95.2 0.53 86.25 0.85 93.02 3M4 30.47 99.35 13.68 98.45 23.97 99.15 1M5 16.14 93.49 19.28 85.36 17.36 90 4M6 23.32 94.85 39.05 84.82 29.4 89.7 5M7 0.06 27.15 1.58 81.01 0.65 77.84 8M8 6.6 98.13 1.4 83.8 4.59 96.43 2M9 0.27 78.23 1.68 71.81 0.81 73.11 9M10 0.05 40.18 0.96 21.94 0.4 23.3 22M11 0 0 0.06 8.25 0.03 7.85 25M12 1.59 74.77 1.76 68.2 1.66 72.07 10M13 0.05 13 0.04 14.39 0.05 13.48 23M14 0.59 87.23 1.27 34.35 0.85 56.86 14M15 8.34 46.08 2.48 60.5 6.08 48.36 17M16 0.01 30.25 0.04 46.39 0.02 41.15 18M17 0.42 86.23 0.61 40.93 0.5 64.71 12M18 0 0 0.06 8.62 0.03 8.04 24M19 0.02 1.53 0.21 38.55 0.1 33.67 20M20 0.03 74.56 0.12 45.09 0.07 54.36 15M21 0.01 0 0.12 43.49 0.05 39.01 19M22 0 0 0.03 83.39 0.01 81.44 7M23 0.1 78.46 0.15 33.96 0.12 57.57 13M24 2.74 89.29 6.51 80.27 4.2 83.88 6M25 0.02 53.52 0.05 48.77 0.03 50.63 16M 100 89.3 100 81.62 100 86.33 T1 0.09 19.78 0.94 8.64 0.5 9.68 4T2 0.09 7.3 0.39 9.67 0.24 9.18 5T3 0.29 89.28 0.19 38.04 0.24 70.26 2T4 3.13 76.59 6.11 22.96 4.57 41.97 3T5 96.39 95.74 92.38 77.57 94.45 87.15 1T 100 94.96 100 73.25 100 84.47 S1 0.79 1.65 1.84 16.21 1.5 13.71 11S2 26.68 82.66 16.57 63.92 19.87 72.14 3S3 0.78 59.77 0.27 43.35 0.44 53 5S4 0 0 0 0 0 0 15S5 0.1 2.51 0.03 6.18 0.05 3.9 14S6 0.05 56.64 0.45 36.57 0.32 37.63 6S7 0.52 46.69 1.07 24.62 0.89 28.81 8S8 1.71 74.51 0.87 52.56 1.15 63.26 4S9 0.03 46.81 0.12 8.45 0.09 12.06 12S10 1.46 74.75 1.84 78.37 1.72 77.37 2S11 0.47 25 2.68 17.83 1.96 18.39 9

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Rural Urban Rural+Urban

Activitycategory

shareintotal

workers(%)

%ofOAEfemaleworkers

shareintotal

workers(%)

%ofOAEfemaleworkers

shareintotal

workers(%)

%ofOAEfemaleworkers

OverallInclusivitybasedRank

S12 3.19 38.73 2.67 35.97 2.84 36.98 7S13 38.38 11.47 41.71 17.08 40.62 15.35 10S14 5.18 24.46 13.13 6.87 10.54 9.69 13S15 20.66 93.8 16.75 68.26 18.03 77.82 1S 100 51.59 100 34.25 100 39.91

Intable3.17,columns(2), (4)and(6)givethedetailedactivitycategorywisepercentagedistributionof femaleworkersoutof thetotal femaleworkers ineachof thethreebroadactivitycategoriesbysector.ThesharesofOAEfemaleworkersintotalfemaleworkersforeach activity category are presented in columns (3), (5) and (7). At all-India level, OAEsaccounted for 86.33%of the femaleworkers inmanufacturing enterprises. The share offemaleworkersengagedinOAEswas89.30%amongtheruralmanufacturingenterprisesand81.62%intheirurbancounterparts.Incaseofenterprisesengagedin‘Manufactureoftobaccoproducts’(M4),99.15%ofthefemaleworkerswerefromOAEs.For16outofthe25activitycategoriesinmanufacturing,OAEshadamajorshareinnumberoffemaleworkers.These16activitycategoriesaccountedforabout93.1%ofthetotalfemaleworkersengagedinmanufacturingactivities.

Atall-Indialevel,OAEsaccountedfor84.47%ofthefemaleworkersintradingenterprises.94.96%ofthesefemaleworkerswereemployedbytradingOAEslocatedinruralareasand73.25% in urban areas. Out of the total number of femaleworkers employed in tradingenterprises,94.45%wereemployedin‘Otherretailtrade’(T5)followedby4.57%employedin‘Otherwholesaletrade’(T4).Percentageshareoffemaleworkersinthethreeremainingtradingactivitiestakentogetherwasabout1%intradingenterprisesduring2015-16.About87.15%femaleworkerswereengagedinOAEspursuing‘Otherretailtrade’(T5)atall-Indialevel.

Atall-Indialevel,OAEsaccountedfor40%ofthefemaleworkersinenterprisesengagedin‘otherservices’activities.TheshareoffemaleworkersengagedinOAEswas51.59%amongthe enterprises located in rural sector and 34.25% in their urban counterparts. About77.82% of the female workers were engaged in OAEs in ‘Other community, social andpersonal service activities’ (S15), closely followed by ‘Real estate activities’ (S10) with77.37%femaleworkersengagedinOAEsofthisactivitycategory.OAEshadamajorshareinnumberoffemaleworkersin5outofthe15activitycategoriesin‘otherservices’.These5activitycategoriesaccountedforabout41.2%ofthetotalfemaleworkersengagedin‘otherservices’ activities. Percentage share of femaleworkers in enterprises engaged in ‘otherservices’ ishighest at40.62% for ‘Education’ (S13)at all-India level followedby19.87%workersin‘Foodserviceactivities’(S2).89%femaleworkersareengagedin4activities,viz.,

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‘Foodserviceactivities’(S2), ‘Education’(S13), ‘Humanhealthandsocialwork’(S14)and‘Othercommunity,socialandpersonalserviceactivities’(S15).

3.3.5Major statewise prioritization of sectors/subsectors based on an efficient andcomprehensiveensemble-basedfeatureselectionmethodology

InSection3.3.2to3.3.4 itcanbeseenthat thevariousManufacturing(M),Trade(T)andother services (S) sectors have been ranked on the basis of individual sup-parameter(GVAPW, GVAPE and gender based inclusivity criteria respectively). But for getting anoverallpictureof theorderofpriorityof focusacombinedoverviewofranksofGVAPW,GVAPE,genderbasedinclusivityandnumberofworkers(employmentdata)iscritical.

Takingaverageofranksisnottrivialandhenceanensemblebasedfeatureselection(FS)methodologycanbeused.IntheFSprocess,normally,twostepsarerequired.Inthefirststep,featuresaretypicallyranked,whereas,inthesecondstep,acut-offpointisdefinedtoselectimportantfeaturesandtofilterouttheirrelevantfeaturesforbuildingmorerobustmachine learning models. In this regard, the applied univariate feature selection (UFS)algorithmcovers the firststepofFS,while the thresholdvalue selection (TVS)algorithmcovers the second step. Fig 3.1 shows the functional details of the applied univariateensemblefeatureselection(Uefs)methodology,whichconsistsofthreemajorcomponentsofUFS,TVS,andselectfeatures.

Forexample,featuref2hasthehighestpriority,thenfeaturef4,andsoon,asshowninFig3.1. Similarly, theTVScomponentdefinesa cutoffpoint forselecting important features.Finally, the select features component filters out the irrelevant features from the final-rankedlistoffeaturesbasedonacutoffpointandselectsasubsetoffeaturesthataredeemedas important for the classifier construction.Forexample, f2, f4, f1,…, fn−45 is the listoffeaturesthatwereselectedbytheproposeduEFSmethodology

Figure3.1:Univariateensemble-basedfeaturesselectionmethodology

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Theprioritizedsub-sectors/activities,state-wise isgiven intheAnnexure1B.AsummarytableofthesameasdesiredisgiveninTable3.18.Thistablehasallthesubsectorsascolumnnamesandthenamesofstates/UTsastherownames.Thelastrowinthetableiscumulativefrequency to sum the count of occurrences of a particular activity/subsector so thatrecommendations can be made for prioritization of focus sub-sectors for MSDE andstakeholders. The “Y” in the table explains the presence or absence of a particularactivity/subsector in the top ranks (as per the rankings calculated) for the particularstate/U.T..Wehaveseentopthreetofouractivities/sub-sectorsformanufacturingsector,twofortradeandtopthreetofourforservicessector.

Followingistheexpandedformofthecodedsubsectors/activitiesforeachsector:

MANUFACTURING: M1: Cotton ginning, cleaning and bailing, M2: Manufacture of foodproducts, M3: Manufacture of beverages, M4: Manufacture of tobacco products, M5:Manufactureof textiles,M6:Manufactureofwearingapparel,M7:Manufactureof leatherand related products,M8:Manufacture ofwood and products of wood and cork, exceptfurniture;manufactureofarticlesofstrawandplaitingmaterials,M9:Manufactureofpaperandpaperproducts,M10:Printingandreproductionofrecordedmedia,M11:Manufactureof coke and refined petroleum products, M12: Manufacture of chemicals and chemicalproducts,M13:Manufactureofpharmaceuticals,medicinalchemicalandbotanicalproducts,M14:Manufactureofrubberandplasticsproducts,M15:Manufactureofothernon-metallicmineralproducts,M16:Manufactureofbasicmetals,M17:Manufactureoffabricatedmetalproducts,exceptmachineryandequipment,M18:Manufactureofcomputer,electronicandopticalproducts,M19:Manufactureofelectricalequipment,M20:Manufactureofmachineryandequipmentn.e.c.,M21:Manufactureofmotorvehicles,trailersandsemi-trailers,M22:Manufacture of other transport equipment, M23: Manufacture of furniture, M24: Othermanufacturing,M25:Repairandinstallationofmachineryandequipment

TRADE: T1: Trade and repair of motor vehicles and motor cycles, T2: Activities ofcommissionagents,T3:Otherwholesaletrade,T4:Otherretailtrade

SERVICES:S1:Accommodation,S2:Foodserviceactivities,S3:Landtransport,S4:Watertransport,S5:Warehousingandstorage,S6:Supportactivitiesfortransportation,postalandcourieractivities,S7:InformationandCommunication,S8:Financialserviceactivitiesexceptinsuranceandpensionfunding,S9:Otherfinancialactivities,S10:Realestateactivities,S11:Professional, Scientific and Technical activities, S12: Administrative and support serviceactivities,S13:Education,S14:HumanHealthandSocialwork,S15:Othercommunity,socialandpersonalserviceactivities

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Table3.18:SummaryofPrioritizedSub-Sectors/ActivitiesineachofthethreesectorsacrossallStates/U.T.sinIndiaSTATE/UT M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M13 M14 M15 M16 M17 M18 M19 M20 M21 M22 M23 M24 M25 T1 T2 T3 T4 S1 S2 S3 S4 S5 S6 S7 S8 S9 S10 S11 S12 S13 S14 S15AndhraPradesh

Y Y Y Y Y Y Y Y Y

Jammu&Kashmir

Y Y Y Y Y Y Y Y Y

HimachalPradesh

Y Y Y Y Y Y Y Y

Punjab Y Y Y Y Y Y Y Y YChandigarh Y Y Y Y Y Y Y Y YUttarakhand Y Y Y Y Y Y Y Y Y

Haryana Y Y Y Y Y Y Y Y Y

Delhi Y Y Y Y Y Y Y Y Y

Rajasthan Y Y Y Y Y Y Y Y Y

UttarPradesh

Y Y Y Y Y Y Y Y Y

Bihar Y Y Y Y Y Y Y Y Y

Sikkim Y Y Y Y Y Y Y Y Y

ArunachalPradesh

Y Y Y Y Y Y Y Y Y

Nagaland Y Y Y Y Y Y Y Y Y

Manipur Y Y Y Y Y Y Y Y Y

Mizoram Y Y Y Y Y Y Y Y Y

Tripura Y Y Y Y Y Y Y Y Y

Meghalaya Y Y Y Y Y Y Y Y Y

Assam Y Y Y Y Y Y Y Y Y

WestBengal Y Y Y Y Y Y Y Y Y

Jharkhand Y Y Y Y Y Y Y Y Y

Odisha Y Y Y Y Y Y Y Y Y

Chhattisgarh Y Y Y Y Y Y Y Y Y

MadhyaPradesh

Y Y Y Y Y Y Y Y Y

Gujarat Y Y Y Y Y Y Y Y Y

DamanandDiu

Y Y Y Y Y Y Y Y Y

DadraandNagarHaveli

Y Y Y Y Y Y Y Y Y

Maharashtra Y Y Y Y Y Y Y Y Y

Karnataka Y Y Y Y Y Y Y Y Y

Goa Y Y Y Y Y Y Y Y Y

Lakshadweep

Y Y Y Y Y Y Y Y Y

Kerala Y Y Y Y Y Y Y Y Y

TamilNadu Y Y Y Y Y Y Y Y Y

Puducherry Y Y Y Y Y Y Y Y Y

AndamanandNicobarIslands

Y Y Y Y Y Y Y Y

FrequencyCount

0 15 3 0 12 8 1 4 3 14 1 5 1 10 17 2 9 1 6 4 3 0 4 9 7 9 5 31 25 15 9 2 0 0 1 7 0 3 2 8 2 27 26 2

IntraSector(M/T/S)Rank

23 2 15 23 4 8 19 12 15 3 19 11 19 5 1 18 6 19 10 12 15 23 12 6 9 3 4 1 2 3 4 8 13 13 12 6 13 7 8 5 8 1 2 8

(QualitativedetailsandsecondarydatatriangulatingthedetailsofthistableareavailableasAnnexure2)(SourceofData:Calculationsbyauthorsbasedon67thand73rdRoundsofNSSO)

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Forfurtherunderstandingandderivingmeaningfulinferencesfromthesummarydataofthepriority table given in Table 3.18, it deemed necessary that we rank the cumulativefrequencies of the chapters and come up with sets of focussed priorities w.r.t theactivities/subsectorsforMSDEandalliedstakeholder.ThesesetsofprioritiesareshowninTable3.19.Thewaytointerpretthistablewillbe:Row1i.e.FirstSetofPriorityencompassfocusonM15(Manufactureofothernon-metallicmineralproducts),M2(Manufactureoffoodproducts),M10 (Printingand reproductionof recordedmedia),M5 (Manufactureoftextiles), M14 (Manufacture of rubber and plastics products), M17 (Manufacture offabricated metal products), M24 (Other manufacturing), M6 (Manufacture of wearingapparel)frommanufacturingsector,T3(Otherwholesaletrade),T4(Otherretailtrade)fromTrade sector and S13 (Education), S14 (Human Health and Social Work), S1(Accommodation),S2(Foodserviceactivities),S11(Professional,ScientificandTechnicalactivities)inServicessector.Similarlyrowtwoandthreecanbeinterpreted.

Table3.19ThreesetsofprioritiesthatcouldbefocusedbyMSDEbasedonsummaryofTable3.2

Manufacturing Trade ServicesFirstSetofPriority M15,M2,M10,M5,M14,M17,M24,M6 T3,T4 S13,S14,S1,S2,S11SecondSetofPriority

M25,M19,M12,M8,M20,M23,M9,M3,M21 T1 S7,S9,S10,S12,S15,S3

ThirdSetofPriority M16,M7,M11,M18,M1,M4,13,M22 T2 S6,S5,S4,S8

Tofurtherdodatatriangulationandincorporatethewomenentrepreneurdatathefollowingsectionhasbeenwritten–3.3.6.

3.3.6WomenEntrepreneurDatabasedPriorityRankingusingEconomicCensusdata

Womenpreneurs(womenentrepreneurs)andtheaugmentationofenterprisesstartedbywomenhasledtothechangeinthedemographiccharacteristicsofbusinessandeconomicgrowthofourcountry.Women-ownedbusinessesenterprisesareplayingaprominentroleinsocietyinspiringothersandgeneratingmoreemploymentopportunitiesinthecountry.Although data onwomen labour force, literacy, health aspects etc., are being generatedregularly though regular Censuses and Surveys but data onwomen entrepreneurship atnationallevelisratherscanty.Therefore,duringSixthEconomicCensus,questionsrelatedtowomenentrepreneurshipinproprietaryownershipwereadded31.

Thetotalnumberofestablishmentsownedbywomenentrepreneurswas8,050,819outofwhich5,243,044constitutingabout65.12%ofthetotalestablishmentswerelocatedinruralareasandtheremaining2,807,775(34.88%)were located inurbanareas.Further,about6,697,354 establishments i.e., 83.19% operated without hired workers and 1,353,465(16.31%)operatedwith

31 https://msme.gov.in/sites/default/files/All%20India%20Report%20of%20Sixth%20Economic%20Census.pdf

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hiredworkers.Thepercentageofestablishmentswithouthiredworkersinruralareaswas86.85%whereas, in urban areas, it was 76.33%. The number ofwomen establishmentsinvolvedinagriculturalactivitieswas2,761,767constituting34.3%ofthetotalnumberofestablishmentsownedbywomen.

Table3.20depicts the totalno.of establishmentsunderwomenentrepreneursbybroadactivity.Totalnumberofagriculturalestablishmentswere2.76millionconstituting34.3%ofthetotalestablishmentsownedbywomen,whereas,about5.29millionestablishments(65.7%) were involved in non-agricultural activities. In agricultural sector majority ofestablishmentsi.e.,2.54millionestablishments(92.20%)pertainstolivestock,followedbyforestryand logging(4.51%),agricultureotherthancropproduction(1.89)andfisheriesand aquaculture (1.4%). In non-agricultural sector, about 2.4 million establishments(45.36%)wereengagedinmanufacturingactivity.Otherimportantactivitiesweretrading(28.57%),otherservices(8.18%),accommodationandfoodservices(4.22%)andeducation(4.1%).

Table3.20BroadActivity/Type-wiseTotalNumberofEstablishmentsunderWomenEntrepreneurshipinIndia

BroadActivity/Type-wiseTotalNumberofEstablishmentsunderWomenEntrepreneurshipinIndia(2013)

BroadActivities WithoutHiredWorkers

WithatleastOneHiredWorker

Total %ageShareinTotal

Establishments01.ActivitiesRelatingtoAgricultureotherthanCropProductionandPlantation

37294 15016 52310 0.65

02.Livestock 2342134 204211 2546345 31.6303.ForestryandLogging 118365 6110 124475 1.5504.FishingandAquaCulture 33747 4890 38637 0.48Sub-TotalAgriculturalActivities 2531540 230227 2761767 34.3005.MiningandQuarrying 4009 3820 7829 0.1006Manufacturing 2099355 300108 2399463 29.8007.Electricity,Gas,SteamandAirConditioningSupply

957 2366 3323 0.04

08.WaterSupply,Sewerage,WasteManagementandRemediationActivities

5860 4284 10144 0.13

09.Construction 33261 13764 47025 0.5810.WholeSaleTrade,RetailTradeandRepairofMotorVehiclesandMotorCycles

14000 16237 30237 0.38

11.WholeSaleTrade(NotCoveredinItem-10Above)

31581 17067 48648 0.60

12.RetailTrade(NotCoveredinItem-10Above) 1159414 272788 1432202 17.7913.TransportationandStorage 88623 36084 124707 1.5514.AccommodationandFoodServiceActivities 148988 74107 223095 2.7715.InformationandCommunication 11142 8711 19853 0.2516.FinancialandInsuranceActivities 54578 21693 76271 0.9517.RealEstateActivities 41570 4484 46054 0.5718.Professional,ScientificandTechnicalActivities 15080 15601 30681 0.3819.AdministrativeandSupportServiceActivities 27018 18246 45264 0.5620.Education 113751 103723 217474 2.7021.HumanHealthandSocialWorkActivities 32407 42988 75395 0.9422.ArtsEntertainment,SportsandAmusementandRecreation

9113 9439 18552 0.23

23.OtherServiceActivitiesnotElsewhereClassified 275107 157728 432835 5.38Sub-TotalNon-AgriculturalActivities 4165814 1123238 5289052 65.70Total 6697354 1353465 8050819 100.00Source:MinistryofStatisticsandProgrammeImplementation,Govt.ofIndia.(ON1121)

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Table 3.21 depicts the total no. of persons employed in establishments under womenentrepreneurs by broad activity. The top five economic activities as per the number ofpersonsemployedinestablishmentsownedbywomenentrepreneurswere:i)Agriculture(30.14%),ii)Manufacturing(29.36%),iii)Trade(17.69%),v)Education(5.49%),iv)OtherServices(5.37%).Inagriculturalestablishments,maximumpersonswereemployedi.e.,3.68million(90.8%) inLivestock followedbyForestryand logging(5.16%),agricultureotherthancropproduction&plantation(2.54%)andFishingandaquaculture(1.52%).Innon-agriculturalestablishments,about3.95millionpersonsconstituting42.02%wereengagedinmanufacturingactivity.Otherimportantactivitiesintermsofemploymentweretrading(25.32%),education(7.86%),otherservices(7.68%)andaccommodationandfoodservices(4.96%).

Table3.21BroadActivity/Type-wiseTotalNumberofPersonsEmployedinEstablishmentsunderWomenEntrepreneurshipinIndia

BroadActivity/Type-wiseTotalNumberofPersonsEmployedinEstablishmentsunderWomenEntrepreneurshipinIndia(2013)

BroadActivities WithoutHiredWorkers

WithatleastOneHiredWorker

Total %ageShareinTotal

Establishments01.ActivitiesRelatingtoAgricultureotherthanCropProductionandPlantation

53979 48849 102828 0.76

02.Livestock 3141875 537661 3679536 27.3603.ForestryandLogging 192751 16441 209192 1.5604.FishingandAquaCulture 43677 18117 61794 0.46Sub-TotalAgriculturalActivities 3432282 621068 4053350 30.1405.MiningandQuarrying 5616 24176 29792 0.2206Manufacturing 2650723 1297571 3948294 29.3607.Electricity,Gas,SteamandAirConditioningSupply

1218 18099 19317 0.14

08.WaterSupply,Sewerage,WasteManagementandRemediationActivities

7128 12761 19889 0.15

09.Construction 42587 55107 97694 0.7310.WholeSaleTrade,RetailTradeandRepairofMotorVehiclesandMotorCycles

18852 56592 75444 0.56

11.WholeSaleTrade(NotCoveredinItem-10Above)

43147 63297 106444 0.79

12.RetailTrade(NotCoveredinItem-10Above) 1432474 765440 2197914 16.3413.TransportationandStorage 106097 107940 214037 1.5914.AccommodationandFoodServiceActivities 207342 259542 466884 3.4715.InformationandCommunication 13809 44821 58630 0.4416.FinancialandInsuranceActivities 96331 88491 184822 1.3717.RealEstateActivities 46041 13656 59697 0.4418.Professional,ScientificandTechnicalActivities

18765 56293 75058 0.56

19.AdministrativeandSupportServiceActivities 34000 81946 115946 0.8620.Education 133134 605720 738854 5.4921.HumanHealthandSocialWorkActivities 41899 180186 222085 1.6522.ArtsEntertainment,SportsandAmusementandRecreation

11865 30026 41891 0.31

23.OtherServiceActivitiesnotElsewhereClassified

330647 391493 722140 5.37

Sub-TotalNon-AgriculturalActivities 5241675 4153157 9394832 69.86Total 8673957 4774225 13448182 100.00Source:MinistryofStatisticsandProgrammeImplementation,Govt.ofIndia.(ON1121)

Fordrawingcombinedinferencestogetherwithsub-section3.3.5ofthisreport(whichusedNSSOdataitisimportanttomapsynergiesintheactivityareas/sub-sectorsthatarecommon

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inboththesourcesofdata.Thefollowingtable–table3.22–throwslightonthesame.

Table3.22:Mappingofnon-agriculturalactivities’terminologybetweeneconomiccensusandNSSOdatasources

BroadActivities(Aspereconomiccensus)-NonAgricultural NSSOBasedActivitiesTerminology

05.MiningandQuarrying -

06Manufacturing M

07.Electricity,Gas,SteamandAirConditioningSupply -08.WaterSupply,Sewerage,WasteManagementandRemediationActivities

-

09.Construction -10.WholeSaleTrade,RetailTradeandRepairofMotorVehiclesandMotorCycles

T1

11.WholeSaleTrade(NotCoveredinItem-10Above) T3

12.RetailTrade(NotCoveredinItem-10Above) T4

13.TransportationandStorage S5+S6

14.AccommodationandFoodServiceActivities S1+S2

15.InformationandCommunication S7

16.FinancialandInsuranceActivities S8+S9

17.RealEstateActivities S10

18.Professional,ScientificandTechnicalActivities S11

19.AdministrativeandSupportServiceActivities S12

20.Education S13

21.HumanHealthandSocialWorkActivities S14

22.ArtsEntertainment,SportsandAmusementandRecreation S15

23.OtherServiceActivitiesnotElsewhereClassified S15

NowthatmappingofterminologybetweeneconomiccensusandNSSOdatasourceshasbeendone, the next task is to determine prioritization of activities based on two criteria viz.numberofestablishmentsunderwomenentrepreneurshipinIndiaandnumberofpersonsemployed inestablishmentsunderwomenentrepreneurship in India.ThesamehasbeenshowninTable3.23.

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Table3.23CalculationofPriorityofvariousnon-agriculturalactivitiesbasedonwomenentrepreneurshipdata

BroadActivities(NonAgricultural) TotalNumberOfEstablishmentsUnderWomenEntrepreneurshipInIndia

TotalNumberOfPersonsEmployedInEstablishmentsUnderWomenEntrepreneurship

WithoutHiredWorkers

Withatleastonehiredworker

Total

%ageShareinTotalEstablishments

RankonbasisofNumberofEstablishments

WithoutHiredWorkers


Total


Rankonbasisofno.ofPeopleEmployed

OverallRankusing2criteria(establishments+employment)

05.MiningandQuarrying 4009 3820 7829 0.1 18 5616 24176 29792 0.22 17 1806Manufacturing 2099355 300108 2399463 29.8 1 2650723 1297571 3948294 29.36 1 107.Electricity,Gas,SteamandAirConditioningSupply 957 2366 3323 0.04 19 1218 18099 19317 0.14 19 1908.WaterSupply,Sewerage,WasteManagementandRemediationActivities 5860 4284 10144 0.13 17 7128 12761 19889 0.15 18 17

09.Construction 33261 13764 47025 0.58 10 42587 55107 97694 0.73 11 1010.WholeSaleTrade,RetailTradeandRepairofMotorVehiclesandMotorCycles 14000 16237 30237 0.38 13 18852 56592 75444 0.56 12 13

11.WholeSaleTrade(NotCoveredinItem-10Above) 31581 17067 48648 0.6 9 43147 63297 106444 0.79 10 912.RetailTrade(NotCoveredinItem-10Above) 1159414 272788 1432202 17.79 2 1432474 765440 2197914 16.34 2 213.TransportationandStorage 88623 36084 124707 1.55 6 106097 107940 214037 1.59 7 614.AccommodationandFoodServiceActivities 148988 74107 223095 2.77 4 207342 259542 466884 3.47 5 415.InformationandCommunication 11142 8711 19853 0.25 15 13809 44821 58630 0.44 14 1516.FinancialandInsuranceActivities 54578 21693 76271 0.95 7 96331 88491 184822 1.37 8 717.RealEstateActivities 41570 4484 46054 0.57 11 46041 13656 59697 0.44 14 1118.Professional,ScientificandTechnicalActivities 15080 15601 30681 0.38 13 18765 56293 75058 0.56 12 1319.AdministrativeandSupportServiceActivities 27018 18246 45264 0.56 12 34000 81946 115946 0.86 9 1220.Education 113751 103723 217474 2.7 5 133134 605720 738854 5.49 3 521.HumanHealthandSocialWorkActivities 32407 42988 75395 0.94 8 41899 180186 222085 1.65 6 822.ArtsEntertainment,SportsandAmusementandRecreation 9113 9439 18552 0.23 16 11865 30026 41891 0.31 16 16

23.OtherServiceActivitiesnotElsewhereClassified 275107 157728 432835 5.38 3 330647 391493 722140 5.37 4 3Sub-TotalNon-AgriculturalActivities 4165814 1123238 5289052 65.7

5241675 4153157 9394832 69.86

Sub-TotalAgriculturalActivities 2531540 230227 2761767 34.3 3432282 621068 4053350 30.14

Total 6697354 1353465 8050819 100 8673957 4774225 13448182 100

(numberofestablishmentsandnumberofpeopleworkinginthoseestablishments)using6thEconomicCensusdatadownloadedfromhttps://www.indiastat.com/economy-data/8/economic-census/15008/economic-census-2012-2013/859489/stats.aspx

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FromthecalculationsdoneinTable3.23,thefollowingprioritization(inorderofmulti-criterionranking)ofactivities(non-agricultural)basedonwomenentrepreneurshipdatafromthe6theconomiccensus:

1. Manufacturing2. RetailTrade3. OtherServiceActivitiesnotElsewhereClassified4. AccommodationandFoodServiceActivities5. Education6. TransportationandStorage7. FinancialandInsuranceActivities8. HumanHealthandSocialWorkActivities9. WholeSaleTrade10. Construction11. RealEstateActivities12. AdministrativeandSupportServiceActivities13. WholeSaleTrade,RetailTradeandRepairofMotorVehiclesandMotorCycles14. Professional,ScientificandTechnicalActivities15. InformationandCommunication16. ArtsEntertainment,SportsandAmusementandRecreation17. WaterSupply,Sewerage,WasteManagementandRemediationActivities18. MiningandQuarrying19. Electricity,Gas,SteamandAirConditioningSupply

Comparingthisprioritizationwiththeprioritizationdoneinsection3.3.5wecanseethatfew sectors are common and emerging as the possible key focus areas for promotingformalization initiatives by MSDE and allied stakeholder namely: Retail Trade,Accommodation and Food Services, Transportation and Storage (Logistics), Education(Services),HealthandSocialWelfare(Services),FinancialandInsuranceActivities,WholeSaleTradeandRealEstateActivities.

3.4ConclusionThis chapter mostly focussed on reporting of the data and also prioritisation of thesubsectors/activities.Thereportingandestimationpartofthechapter(viz.sections3.1and3.2) encompassed the mapping of current available databases to estimate the informalenterprisesanddetailedclassificationsof informalenterprisesundervarioussectorsandsubsectorsalongwithapercentagebreak-upbetweentheformalandinformalenterprisesunder each sector. Section 3.3 described the distribution and prioritization of informalenterprises to give the overall ranking of various sectors/sub-sectors for priority. 3.3.5sectionhadprioritizationbasedonfourparametersviz.Employment,GVAPW,GVAPEandinclusivenessonastate-level.Thiswassupplementedwithwomenentrepreneurshipdatabasedprioritizationinsection3.3.6.Thestate-leveldetailedcalculationsandprioritizations

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ofallsectors/sub-sectorsingiveninAnnexure2ofthisreportforsection3.3.5.ThissectionmostlyfocussedonNSSOdata.Threesetsofprioritieswereshowninthissection.

Firstsetcomprisedof:M15(Manufactureofothernon-metallicmineralproducts),M2(Manufactureoffoodproducts),M10(Printingandreproductionofrecordedmedia),M5(Manufactureoftextiles),M14(Manufactureofrubberandplasticsproducts),M17(Manufactureoffabricatedmetalproducts),M24(Othermanufacturing),M6(Manufactureofwearingapparel)frommanufacturingsector,T3(Otherwholesaletrade),T4(Otherretailtrade)fromTradesectorandS13(Education),S14(HumanHealth and Social Work), S1 (Accommodation), S2 (Food service activities), S11 (Professional,ScientificandTechnicalactivities)inServicessector.Similarlyrowtwoandthreecanbeinterpreted.

SecondSetComprisedof:M25,M19,M12,M8,M20,M23,M9,M3,M21,T1,S7,S9,S10,S12,S15,S3

Thirdsetcomprisedof:M16,M7,M11,M18,M1,M4,13,M22,T2,S6,S5,S4,S8

Thiswasfollowedbyprioritisationbasedonwomenentrepreneurshipdatasourcedfrom6th Economic Census (2013). Comparing this prioritization of section 3.3.6 with theprioritizationdoneinsection3.3.5wecanseethatfewsectorsarecommonandemergingasthe possible key focus areas for promoting formalization initiatives byMSDE and alliedstakeholdernamely:RetailTrade,AccommodationandFoodServices,TransportationandStorage(Logistics),Education(Services),HealthandSocialWelfare(Services),FinancialandInsuranceActivities,WholeSaleTradeandRealEstateActivities.

Informal enterprises constitute for millions of unregulated, unlicensed, and untaxedmicroenterprises thatarereferredtoas the“informalsector”.The informal“enterprises”includesmallenterprisesrangingfromwasterecyclingunits,streetvendors,pavementfoodstalls,saleofpiratedbooks,anddigitalproductstohome-basedmanufacturingenterprises.Thesesmallbusinessesormicroenterprisestypicallyoperatedatsmallerscalesofbusiness,withlowlevelsoflabour,littleuseoftechnology,lowphysicalandhumancapital,andlowincomes. Compared to formal enterprises, informal enterprises have fewer or lessvaluablefactors of production other than their own labour: such as capital, land, andtechnology.Second, theyalsohave lessbargainingpowertodemandtheirshareofvalueadded.Thevalueoftheirproductionisoftencapturedbyemployers,intermediariesalongthe supply chain, and especially the lead firms at the top of the supply chain. Third,definitionsandmeasuresofproductivityvaryfromsectortosector.And,therearefewdirectmeasuresoftheproductivityoftheinformalenterprises.However,theinformalenterprisescanpotentiallycontributetoreductionofpovertyandinequality,therebyenablinginclusivegrowthfrombelow.Thischapterguidesw.r.tprioritizationofsubsectorswhichwasasourceofinputforthenextchapter–Chapter4.ThiswasalsoasourceofinputforChapter6(TheHowpartoftheformalizationprocess).

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Mapping the policies and support provided to informal sector

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Chapter4-Mappingthepoliciesandsupportprovidedtoinformalsector

4.1.IntroductionThe chapter presents support/policies of different stakeholders provided to theemployees/unitsintheinformalsectorwhichmaypossiblyhelptransforminformalunitstowardsformalization.Thischapteralsoincludeskeyactorsthatsupporttheinformalsectorincluding(butnotlimitedto)–CentralandStateGovernments/Ministries,largescaleNGOs,SocialImpactEnterprises,PrivateSectorCSRActivities,TechnologyFirmsetc.andagencieswhicharecarryingouttherelatedgroundlevelsupportandimplementationactivities.Thesupportsincludemeasureslikeskilling,reskilling&upskillingdevelopmenttrainingoftheentrepreneurs,recognitionofpriorlearning(RPL),easeofdoingbusiness,financialsupport,newandimprovedtechnologyimplementation,oranyothermeasurewhichwillhelptheseunitstowardscapacitybuildingandpromotingthemtocomeunderthepurviewofformalsector.Thischapterpresentstheoverviewofpolicies,schemes,supportetcinanactorwiseand impact area wise manner. Section 4.2 envisages the government policies that areworkingtowardsinformalsectorwithasub-classificationonthebasisofkeyimpactareassuchasFinancialcapital/support,infrastructuressupport,technologicalsupportandotherrelevantsupport.Similarly,Section4.3isaboutlargescaleNGOswithasub-classificationonthe basisof key impact areas, Section 4.4 is about Social ImpactEnterpriseswith a sub-classification on the basis of key impact areas, Section 4.5 is about Private Sector CSRActivitieswithasub-classificationonthebasisofkeyimpactareasandSection4.6isaboutsupportfromTechnologyFirmswithasub-classificationonthebasisofkeyimpactareas.ThereafterthesupportandinitiativesofgigeconomyhavebeencoveredinSection4.7.Adetailedaccountofstatelevelspoliciesfocussingonpromotionofentrepreneurship(oneofthekeythemesofthisstudy)onstate-wiseandactorwiselevelarediscussedinappendix3.

4.2GovernmentInitiativesforInformalSector4.2.1FinancialCapitalandInsurancesupport

ThePradhanMantriRojgarProtsahanYojana(PMRPY)

It is a scheme to incentivise employers registered with the Employees' Provident FundOrganisation (EPFO) for job creation by the Government paying the full contribution ofemployerstotheEmployeePensionScheme(EPS)andEmployees’ProvidentFund(EPF)inrespectofnewemployeeshavinganewUniversalAccountNumber(UAN).ThisSchemehasa dual benefit, where, on the one hand, the employer is incentivised for increasing theemploymentbaseofworkersintheestablishment,andontheotherhand,alargenumberofworkerswillfindjobsinsuchestablishments.Adirectbenefitisthattheseworkerswillhaveaccesstosocialsecuritybenefitsoftheorganizedsector.TheSchemewillbeinoperationfor

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aperiodof3yearsandtheGovernmentofIndiawillcontinuetopaythefullcontributiontobemadebytheemployer for thenext3years.That is,allneweligibleemployeeswillbecoveredunderthePMRPYSchemetill2019-20

KeyStakeholder(s):Employees’ProvidentFundOrganisation,India;MinistryofLabourandEmployment,MinistryofElectronics&InformationTechnology,GovernmentOfIndiaSource:https://pmrpy.gov.in/

PradhanMantriShramYogiMaan-dhan

PradhanMantriShramYogiMaan-dhanisacentralgovernmentschememeantforoldageprotectionandsocialsecurityofUnorganisedWorkers(UW).UnorganisedWorkers(UW)aremostlyengagedasrickshawpullers,streetvendors,mid-daymealworkers,headloaders,brick kiln workers, cobblers, rag pickers, domestic workers, washer men, home-basedworkers,ownaccountworkers,agriculturalworkers,constructionworkers,beediworkers,handloomworkers,leatherworkers,audio-visualworkersorinsimilarotheroccupations.Thereareestimated42croresuchunorganisedworkersinthecountry.

Itisavoluntaryandcontributorypensionscheme,underwhichthesubscriberwouldreceivethefollowingbenefits:

(i) Minimum Assured Pension: Each subscriber under the PM-SYM, shall receiveminimumassured pension of Rs 3000/- permonth after attaining the age of 60years.

(ii) FamilyPension:Duringthereceiptofpension,ifthesubscriberdies,thespouseofthe beneficiary shall be entitled to receive 50% of the pension received by thebeneficiaryasfamilypension.Familypensionisapplicableonlytospouse.

(iii) Ifabeneficiaryhasgivenregularcontributionanddiedduetoanycause(beforeageof 60 years), his/her spouse will be entitled to join and continue the schemesubsequently by payment of regular contribution or exit the scheme as perprovisionsofexitandwithdrawal.

Keystakeholder(s):MinistryofLabourandEmploymentSource:https://labour.gov.in/pm-sym

CreditFacilitationThroughBank

TomeetthecreditrequirementsofMSMEunits,NSIChasenteredintoaMemorandumofUnderstandingwith various Nationalized andPrivate Sector Banks. Through associationwith thesebanks,NSICarranges for creditsupport (fundornon-fund-based limits) frombanksfortheMSMEs.SchemeBenefits&Highlights

• Termloansforacquisitionoffixedassets(viz,land/building,plant/machinery,otherfixedassets)towardssettingupofnewunitsandforexpansion,modernizationanddiversificationincaseofexistingunits.

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• WorkingCapitalrequirementfacilitytomeettheworkingcapitalneedsoftheMSMEunitsintheformofopencashcredit,overdraftagainstbookdebtsandbilldiscountingfacility.

• Nonfund-basedlimitssuchasguarantees,letterofcredit,foreignbankguarantees,foreignletterofcreditetc.areprovided.

• Theinterestrateandthesecuritynormsdependuponbankstobanks.• The scheme also provides handholding facility to the entrepreneurs and facilitate

documentation

Key Stakeholder(s):National Small Industries Corporation (Ministry of Micro, Small andMediumEnterprises)Source:https://www.nsic.co.in/schemes/Credit-Facilitation-Through-Bank.aspx

BillDiscounting

Theschemecoverspurchase/discountingofbillsarisingoutofgenuinetradetransactionsi.e., purchase of supplies made by small scale units to reputed public limitedcompanies/StateandCentralGovernmentDepartments/Undertakings.Billsdrawnbysmall-scale units for suppliesmade by them and duly accepted by purchaserwill be financedagainstsecurityofbankguaranteeinfavourofNSIC.Purchaserunit(s)mayapproachNSICfor sanctionof annual limits by furnishing information asper theprescribed applicationform.

Key Stakeholder(s):National Small Industries Corporation (Ministry of Micro, Small andMediumEnterprises)Source:https://www.nsic.co.in/Schemes/Bill-Discounting

PradhanMantriMUDRAYojana(PMMY)

PradhanMantriMUDRAYojana(PMMY)isaschemelaunchedbytheHon’blePrimeMinisteron April 8, 2015 for providing loans up to 10 lakh to the non-corporate, non-farmsmall/microenterprises.These loansare classifiedasMUDRA loansunderPMMY.TheseloansaregivenbyCommercialBanks,RRBs,SmallFinanceBanks,MFIsandNBFCs.UndertheaegisofPMMY,MUDRAhascreatedthreeproductsnamely'Shishu','Kishore'and'Tarun'tosignifythestageofgrowth/developmentandfundingneedsofthebeneficiarymicrounit/entrepreneurandalsoprovideareferencepointforthenextphaseofgraduation/growth.

KeyStakeholder(s):MinistryofFinanceSource:https://www.mudra.org.in/

CreditGuaranteeFundSchemeforMicroandSmallEnterprises

TheCreditGuaranteeFundSchemeforMicroandSmallEnterprises(CGMSE)waslaunchedbytheGovernmentofIndiatomakeavailablecollateral-freecredittothemicroandsmallenterprisesector.Boththeexistingandthenewenterprisesareeligibletobecoveredunder

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the scheme. TheMinistry ofMicro, Small andMedium Enterprises and Small IndustriesDevelopmentBankofIndia(SIDBI),establishedaTrustnamedCreditGuaranteeFundTrustforMicroandSmallEnterprises(CGTMSE)toimplementtheCreditGuaranteeFundSchemeforMicroandSmallEnterprises.TheschemewasformallylaunchedonAugust30,2000andisoperationalwitheffectfrom1stJanuary2000.ThecorpusofCGTMSEisbeingcontributedbytheGovernmentandSIDBIintheratioof4:1respectivelyandhascontributedRs.1906.55croretothecorpusoftheTrustuptoMarch31,2010.AsannouncedinthePackageforMSEs,thecorpusistoberaisedtoRs.2500crorebytheendof11thPlan

Key Stakeholder(s): Development Commissioner (MSME), Ministry of MSME; ScheduledcommercialbanksandselectRegionalRuralBanks.NationalSmallIndustriesCorporationLtd.(NSIC),NorthEasternDevelopmentFinanceCorporationLtd.(NEDFi)andSIDBI.Source:https://msme.gov.in/sites/default/files/CredirGuranteeFundScheme_1.pdf

MicroCredit(MC)forSHGs

Thisschemeismeant toprovidesmall loansto theeligibleScheduledTribesmembersofSHGs for undertaking Income Generation Activities. The loans are provided based onrequirementoftheSHGsthroughStateChannelizingAgencies.Thebeneficiaries/SHGshavetofullfilltheeligibilitycriteriaoftheSCAsandcomplywiththetermsandconditionsofthelendingbytheSCA.NSTFDCprovidesloanuptoRs.50,000/-permemberandmaximumRs.5.00lakhperSHG.NSTFDCmayprovideupto100%ofthefundsrequired,asloan,incasetheSCAsis/arenotabletoprovideMargin/Money/Subsidy.

KeyStakeholder(s):NationalScheduledTribesFinanceandDevelopmentCorporationSource:http://www.nstfdc.net/nstfdc/(S(j5pbxmohkbaw4fbknwg0dee1))/frm_mcs.aspx

Financialserviceactivitiesexceptinsuranceandpensionfunding

TheGovernmentofIndiahasintroducedseveralreformstoliberalize,regulateandenhancethisindustry.TheGovernmentandReserveBankofIndia(RBI)havetakenvariousmeasurestofacilitateeasyaccesstofinanceforMicro,SmallandMediumEnterprises(MSMEs).Thesemeasures include launching the Credit Guarantee Fund Scheme for Micro and SmallEnterprises,issuingguidelinestobanksregardingcollateralrequirementsandsettingupaMicroUnitsDevelopmentandRefinanceAgency(MUDRA).Withacombinedpushbybothgovernmentandprivatesector,Indiaisundoubtedlyoneoftheworld'smostvibrantcapitalmarkets.In2017,anewportalnamed'UdyamiMitra'waslaunchedbytheSmallIndustriesDevelopmentBankofIndia(SIDBI)withtheaimofimprovingcreditavailabilitytoMicro,Small andMediumEnterprises' (MSMEs) in the country. Indiahasscoredaperfect10 inprotecting shareholders' rights on the back of reforms implemented by Securities andExchangeBoardofIndia(SEBI).

4.2.2KnowledgeCapitalSupport

GeneralEducation

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Mid-daymealscheme,RashtriyaMadhyamikShikshaAbhiyan,RashtriyaUchchatarShikshaAbhiyan,SaaksharBharat,SarvaShikshaAbhiyan,etc.

Technical&VocationalEducation

Sub-Missionon Polytechnics, ApprenticeshipTraining,DeenDayalUppadhyayaGrameenKaushalYojna (DDU-GKY), CraftsmanTraining Schemes Implemented through IndustrialTrainingInstitute(itis),NationalUrbanLivelihoodMission,Bachelorofvocationaldegreeinuniversities,CommunityColleges,JanShikshanSansthan,PardhanMantriKaushalVikasYojna (PMKVY): Recognition of prior learning, Pardhan Mantri Kaushal Vikas Yojna(PMKVY): Short Term Training, Vocationalization of secondary and higher secondaryeducation,etc.

SeekhoaurKamao(Learn&Earn)

This is a placement linked skill development scheme implemented since 2013-14 forminorities aiming to upgrade the skills ofminority youth in variousmodern/traditionalskills depending upon their qualification,present economic trends andmarket potential,which can earn them suitable employment ormake them suitably skilled to go for self-employment.Theschemeensuresplacementsofminimum75%trainees,outofwhichatleast50%placementisinorganizedsector.TheschemeisimplementedthroughselectedProjectImplementingAgencies(PIAs)alloverthecountry.

KeyStakeholder(s):MinistryofMinorityAffairsSource:http://seekhoaurkamao-moma.gov.in/Index.aspx

UpgradingtheSkillsandTraininginTraditionalArts/CraftsforDevelopment(USTTAD)

Schemehasbeen launchedon14thMay,2015topreservetherichheritageof traditionalarts/craftsofminorities.Theschemeaimsat:

§ capacitybuildingandupdatingthetraditionalskillsofmastercraftsmen/artisans§ documentation of identified traditional arts/crafts ofminorities; set standards for

traditionalskills§ training of minority youths in various identified traditional arts/crafts through

mastercraftsmen;and§ developnationalandinternationalmarketlinkages

KeyStakeholder(s):MinistryofMinorityAffairsSource: http://www.minorityaffairs.gov.in/schemesperformance/usttad-upgrading-skills-and-training-traditional-arts-crafts-development

NaiManzil

Schemehasbeenlaunchedon8thAugust,2015withanaimstobenefittheminorityyouthwho do not have a formal school leaving certificate i.e. those in the category of schooldropoutsoreducated in the communityeducation institutions likeMadrasas, inorder to

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providethemformaleducationandskills,andenablethemtoseekbetteremploymentintheorganizedsectorandthustoequipthemforbetterlives.

KeyStakeholder(s):MinistryofMinorityAffairsSource:http://www.minorityaffairs.gov.in/schemesperformance/nai-manzil-social-assesment-and-social-management-framework

MaulanaAzadNationalAcademyforSkills

Maulana Azad National Academy for Skills (MANAS), established on 11/11/2014workstowards meeting all skill up-gradation/development needs of Minority Communities.MANAS provides an all India level training framework based upon tie-ups withLocal/National/InternationaltrainingorganisationsonPPPmodel,forimpartingtrainingtotheMinoritypopulation inskillsets thatare in linewithemergingmarketdemands.Thetrainingprogrammeisaimedatprovidingmeaningfulandsustainablelivelihoodoptionsintermsofself-employment/wageemploymentopportunitiestoallitstrainees,withprimaryfocusonself-employment.MANASalsoprovidesconcessionalcreditforminoritycommunityaftermeetingtheirSkillingNeedsforexpandingtheirexistingbusinessesandsettingupnewbusinesses.

KeyStakeholder(s):MinistryofMinorityAffairsSource:http://manassd.ind.in/

EntrepreneurshipSkillDevelopmentProgrammes(ESDPs)

Comprehensive training programmes are organized to upgrade skills of prospectiveentrepreneurs,existingworkforceandalsotodevelopskillsofnewworkersandtechniciansof MSEs by organizing various entrepreneurship-cum-skill development trainingprogrammesfornewlivelihoodenterprisecreationandruralenterprisedevelopment.

KeyStakeholder(s):DevelopmentCommissioner(MSME),MinistryofMSMESource:http://www.dcmsme.gov.in/Enterprise&skillDevelopment.htm

ManagementDevelopmentProgrammes(MDPs)byMSME

The objective of imparting training on management practice system is to improve thedecision-making capabilities of existing & potential entrepreneurs resulting in higherproductivity and profitability. Inputs on a variety of topics of managerial functions areprovidedtotheparticipantsinshortdurationtrainingprogrammes.Theseprogrammesareofshortdurationandthecurriculumisdesignedbasedontheneedsoftheindustryandarecustomized,ifrequiredbytheclients.

KeyStakeholder(s):DevelopmentCommissioner(MSME),MinistryofMSMESource:http://www.dcmsme.gov.in/Enterprise&skillDevelopment.htm

AssistancetoTrainingInstitutionsScheme(ATIScheme)

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The assistance is provided to National level training institutions operating under theMinistryofMSME,namely,NIMSME,KVIC,CoirBoard,ToolRooms,NSIC&MGIRIintheformofcapitalgrantforthepurposeofcreationandstrengtheningofinfrastructureandsupportforentrepreneurshipdevelopmentandskilldevelopmenttrainingprogrammes.AssistanceisalsoprovidedtoexistingStatelevelEDIsforcreationorstrengthening/expansionoftheirtraininginfrastructure.

KeyStakeholder(s):DevelopmentCommissioner(MSME),MinistryofMSMESource:https://msme.gov.in/sites/default/files/Revised-ATI-GUIDELINES-without-research.pdf

SkillUpgradation&QualityImprovementandMahilaCoirYojana(MCY)

Skill Upgradation & Mahila Coir Yojana (MCY) is one of the key components under theScheme Coir Vikas Yojana. Coir Board imparts training in processing of coir and valueadditiontopotentialworkers,coirartisans/entrepreneursthroughitstrainingcentres,i.e.,NationalCoirTrainingandDesignCentre(NCTDC),Kalavoor,AlleppeyandResearch-cum-ExtensionCentre,Thanjavur,andFieldTrainingCentresofRegionalOfficers/SubRegionalOfficersoftheBoardlocatedatvariouspartsofthecountry.TheMahilaCoirYojana(MCY)is intendedtoprovideself-employmentopportunities toruralwomenartisans inregionsprocessingcoconuthusk.

KeyStakeholder(s):DevelopmentCommissioner(MSME),MinistryofMSMESource:http://coirboard.gov.in/?page_id=221

WholesaleandRetailTradeandRepairofMotorVehiclesandMotorcycles

TheecosystemincludesIndustryBodiessuchasCII,ACMA,SIAM,FICCIwhichareplayinganimportant role in communicating and coordinating across companies in the sector.Government Bodies which include Ministry of Labour & Employment, Ministry of SkillDevelopmentandEntrepreneurship(MSDE),andMinistryofHeavyIndustriesandPublicEnterprises(MOHIPE),departmentofElectronicsandInformationTechnology,MinistryofHumanResourceDevelopment,andNitiAayog.StateLevelbodiesarealsothereandplayanimportant role. Trade Unions, Companies and manufacturing units, Universities andTrainingCenters,SkillingBodiessuchasNationalSkillDevelopmentCouncil (NSDC),andNationalSkillDevelopmentAgency(NSDA).

MarketingDevelopmentAssistanceScheme

ExportpromotioncontinuestobeamajorthrustareafortheGovernment.Inviewoftheprevailing macro-economic situation with emphasis on exports and to facilitate variousmeasuresbeingundertakentostimulateanddiversifythecountry’sexporttrade,MarketingDevelopment Assistance (MDA) Scheme is under operation through the Department ofCommercetosupporttheundermentionedactivities:

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(i) Assistexportersforexportpromotionactivitiesabroad(ii) AssistExportPromotionCouncils(EPCs)toundertakeexportpromotionactivities

fortheirproduct(s)andcommodities(iii) Assist approved organizations/trade bodies in undertaking exclusive

nonrecurring innovative activities connectedwith export promotion efforts fortheirmembers

(iv) AssistFocusexportpromotionprogrammesinspecificregionsabroadlikeFOCUS(LAC),Focus(Africa),Focus(CIS)andFocus(ASEAN+2)programmes.

(v) Residualessentialactivitiesconnectedwithmarketingpromotioneffortsabroad.

KeyStakeholder(s):MinistryofCommerceSources:https://www.eepcindia.org/policy-info/P150323153115/53/mda-schemes

EducationServiceSectorInitiatives

EducationservicesectorwillplaythemajorroleinskillIndiaandstartupIndiainitiatives.Itwill also promote entrepreneurship culture in the country, in addition to do its basicresponsibility (Teaching, Research & Development, Innovation, Training etc.). NewEducationpolicy2020willbeadefiningtoolforthefutureinthecountry.

4.2.3InfrastructureCapitalSupport

EnterpriseDevelopmentCentres

TheEDCswill be set up atDistrict level,within the administrative control of theMSMEDevelopment Institutes/TechnologyCentre,underwhose jurisdictionthey fall.TheEDCswould primarily have two verticals viz., Enterprise Development Vertical and SkillDevelopmentVertical.Thetwoverticalswillensurethataspirationsoftheyoutharewelladdressed intermsofhandholdingsupportto thosewhoaspiretobeself-employedandcreatebusinessenterpriseandimpartingSkilltrainingtothosewhointendtogetemployed.

EnterpriseDevelopmentVerticalinteraliaamongotherthingswouldfocusprimarilyon:

1. Ideation;2. Mentoringandincubation;3. Creditfacilitation&Marketaccessibility;and4. EnterpriseClinic:Diagnosticstudiesintheeventofsickness,counsellingand

otherfacilities.

SkillDevelopmentVerticalwouldprovideinformationsuchaspotentialjobsavailabilityinthemarketbasedonin-depthmarketintelligenceandadvisethepotentialjobseekerstogetrelevant skill sets through prominent institutions/agencies in pertinent sector(s). TheseEDCs shall be connectedwith theNational Resource Centre to be set up in the office ofDCMSME.TheEDCswillofferbenefits toentrepreneursviz. access to common toolsandinfrastructure,collaborationandsharing,networking,businessinfrastructure.

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KeyStakeholder(s):DCMSME,TechnologyCentreDCMSMESource:www.rbi.org.in/Scripts/PublicationReportDetails.aspx?UrlPage=&ID=924#BVIII

PanditDeendayalUpadhyayShramevJayateKaryakram

ItisadedicatedShramSuvidhaPortal:ThatwouldallotLabourIdentificationNumber(LIN)tonearly6lakhsunitsandallowthemtofileonlinecompliancefor16outof44labourlaws.Anall-newRandomInspectionScheme:UtilizingtechnologytoeliminatehumandiscretioninselectionofunitsforInspection,anduploadingofInspectionReportswithin72hoursofinspectionmandatory.UniversalAccountNumber:Enables4.17croreemployeestohavetheirProvidentFundaccountportable,hassle-freeanduniversallyaccessible.ApprenticeProtsahanYojana:Will supportmanufacturing unitsmainly andother establishments byreimbursing50%ofthestipendpaidtoapprenticesduringfirsttwoyearsoftheirtraining.RevampedRashtriyaSwasthyaBimaYojana:IntroducingaSmartCardfortheworkersintheunorganizedsectorseededwithdetailsoftwomoresocialsecurityschemes

KeyStakeholder(s):MinistryofLabourandEmploymentSource:https://labour.gov.in/sites/default/files/5486751d17b04eflyerenglish1.pdf

MarketingAssistance&TechnologyUpgradation

TheobjectiveofthisprogrammeenvisagesthatsomeofthoseclustersofMSMEs,whichhavequality production and export potential, shall be identified & encouraged and assistedthroughthisschemetoachievecompetitivenessinthenationalandinternationalmarkets.TheprogrammeaimsatimprovingthemarketingcompetitivenessoftheMSMEsectorbyimprovingtheirtechniquesandtechnologies’promotionofexportsandtoprovideacheckon imports also.The broad activities planned under the scheme include Technology upgradationinPackaging,Skillsupgradation/DevelopmentforModernMarketingTechniques,CompetitionStudiesofthreatenedproducts,SpecialcomponentsforNorthEasternRegion(NER), Identification of newmarkets through state/district level, local exhibitions/tradefairs, Corporate Governance Practices, Marketing Hubs and Reimbursement to ISO18000/22000/27000Certification.

Key Stakeholder(s):The office ofDevelopment Commissioner (MSME),Ministry ofMicro,Small&MediumEnterprises,Governmentof IndiaSite isHostedbyNational InformaticsCentre, Department of Electronics and Information Technology, Ministry of C&IT,GovernmentofIndiaSource:http://www.dcmsme.gov.in/schemes/MarketingAss&Techup.htm

ZEDScheme

The scheme envisages promotion of Zero Defect and Zero Effect (ZED) manufacturingamongstMSMEsandZEDAssessmentfortheircertificationwiththefollowingobjectives:

§ TopromoteadaptationofQualitytools/systemsandEnergyEfficientmanufacturing.

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§ ToencourageMSMEstoconstantlyupgradetheirqualitystandardsinproductsandprocesses.

§ To drive manufacturing with adoption of Zero Defect production processes andwithoutimpactingtheenvironment.

TherefurtherisaseriesoffinancialsupporttobeprovidedunderthisschemetotheinformalsectorMSMEs

Key Stakeholder(s): Development Commissioner (MSME), Ministry of MSME; NationalMonitoringandImplementingUnit(NMIU)Source:http://www.dcmsme.gov.in/schemes/FAQ_ZED_11619.pdf

EntrepreneurialandManagerialDevelopmentofSMEsthroughIncubators

Theobjectivesoftheschemeare:

§ Topromoteemergingtechnologicalandknowledgebasedinnovativeventuresthatseekthenurturingofideasfromprofessionals.

§ Topromote and support untapped creativity of individual innovators and also toassistindividualinnovatorstobecometechnology-basedentrepreneurs.

§ To promote networking and forging of linkages with other constituents of theinnovationchainforcommercializationoftheirdevelopments.

Fundingsupportforsettingupof‘BusinessIncubators(BI)’:ThecostmayvaryfromRs4to8lakhforeachincubatee/idea,subjecttoanoverallceilingofRs62.5lakhforeachBI.

a)UpgradationofinfrastructureRs2.50lakhb)Orientation/trainingRs1.28lakhc)AdministrativeexpensesRs0.22lakh

TotalassistanceperBIRs66.50lakh

KeyStakeholders:NationalManufacturingCompetitivenessProgramme,DCMSMESource:http://www.dcmsme.gov.in/schemes/Institutions_Detail.pdf

LeanManufacturingCompetitivenessScheme(LMCS)forMSMEs

UndertheScheme,MSMEswillbeassistedinreducingtheirmanufacturingcosts,throughproperpersonnelmanagement,betterspaceutilization,scientific inventorymanagement,improved processed flows, reduced engineering time and so on. LMCS also bringsimprovementinthequalityofproductsandlowerscosts,whichareessentialforcompetinginnationalandinternationalmarkets.

ThelargerenterprisesinIndiahavebeenadoptingLMCStoremaincompetitive,butMSMEshave generally stayed away from such Programmes as they are not fully aware of thebenefits.Besides,experiencedandeffectiveLeanManufacturingCounsellorsorConsultantsarenoteasilyavailableandareexpensivetoengageandhencemostMSMEsareunableto

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afford LMCS. Scheme has been approved as a pilot project in 100 Mini Clusters forimplementations of Lean Techniques. The main objective of the Lean ManufacturingCompetitivenessScheme (LMCS) is tobringmanufacturing competitiveness in theMSMESector. Lean Manufacturing involves applying Lean Techniques (e.g. Total ProductiveMaintenance(TPM),5S,Visualcontrol,StandardOperatingProcedures,JustinTime,KanbanSystem,CellularLayout,PokaYoke,TPM,etc.)toidentifyandeliminatewasteandstreamlinea system. The focus is on making the entire process flow, not improving only a fewoperations.Workerempowermentisalsoemphasizedthroughouttheeffort.

Key Stakeholder(s):The office ofDevelopment Commissioner (MSME),Ministry ofMicro,Small&MediumEnterprisesSource:http://www.dcmsme.gov.in/schemes/lean-manufact.htm

MakeinIndia

MakeinIndiainitiativeslaunchedin2014toencourageMNCstosetupmanufacturingunitsin India.With this initiative India became a most attractive center for FDI.Many policyinitiatives are taken under theMake in India and favorable results are seen.Skill Indiainitiativewaslaunchedin2015withanobjectivetotrain400millionpeoplewithdifferentskills. It involves schemes such as National Skill Development Mission, Pradhan MantriKaushal Vikas Yojana (PMKVY) and national Policy for Skill Development andEntrepreneurship.Inaddition,theGovernmenthaslaunchedtwonewWorldBankAssistedprojects. i.e., Skill Acquisition and Knowledge Awareness for Livelihood promotion(SANKALP) Scheme and Skill Strengthening for Industrial Value Enhancement (STRIVE).Theseschemesareaimedtoimprovequalityofskilldevelopmentandreforminstitutionsforskill development in India. These schemes will certainly impact informalization in themanufacturingsector.

StartupIndiacampaignwaslaunchedin2015withtwoobjectives,i.e.,supportstartupsandmakepoliciesforstartups.Manybenefitsareprovidedundertheschemeduringthelastfiveyears.TheJapanesefirmSoftbankhaspledgedUS$10billionunderthescheme.US$2billionis already invested by Softbank. The evaluation of the scheme is already started by thegovernment.Manymoreinitiativesareoncardtomakeitareality.

National Manufacturing Policy launched during 2011. The objectives were to makemanufacturing contribution inGDP20%andcreate 100million jobs by2021. There aremanycomponentof thepolicy.Tomention,PPP,National InvestmentandManufacturingZones(NMZs)arepopularones.In2016,8NMZswereannouncedfordevelopment.100%FDIisapprovedinthesectorthroughdirectroutesunderthepolicy.

Food

The Ministry of Food Processing Industries (MoFPI) is making all efforts to encourageinvestmentsinthefoodbusiness.Ithasapprovedproposalsforjointventures(JV),foreign

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collaborations,industriallicenses,and100percentexportorientedunits(Ibef(2019)).

The HRD Ministry is supporting this sector by creating infrastructure facilities fordegree/diploma courses in the food processing sector, entrepreneurship DevelopmentProgramme (EDP), Food Processing Training Centres (FPTC), and providing training atrecognizedinstitutionsatState/Nationallevel.

Beverages

Taxrebate,customdutyexemptions,encouragementtoprivatesector,FDInorms,FocusonInfrastructure, Focus onR&D, Cold storage facilities. There is nomention in the policiesdirectlyaboutformalization.However,thesepolicyinitiativesmaypromoteformalizationofthesector.

TobaccoProducts

PTI (2019b) reported that the Union Health Ministry has re-initiated the process ofamendingtheCigarettesandOtherTobaccoProductsAct(COTPA)inabidtostrengthenitsprovisions,includingabanonthesaleofloosecigarettesandheavyfineforviolationofrules.Theministryhadproposedanumberofamendmentsto the2003 legislationandput thedraftCigarettesandOtherTobaccoProducts(ProhibitionofAdvertisementandRegulationofTradeandCommerce,Production,SupplyandDistribution)AmendmentBillinthepublicdomainin2015.Itwillachievetwoobjectives.ThefirstoneisthatitwillbemoreinlinewithWHOframeworkConventiononTobaccocontrol.Secondly,itwillreduceinformalizationinthesector.

Textile

Departmentofindustriesandcommerce(2018)highlightedthecentralgovernmentschemefor development and export from the textile sector. These schemes are (i) Amendedtechnology upgradation fund scheme (ATUFS), (ii) Scheme for Integrated Textile Parks(SITP),(iii)SchemeforCapacityBuildinginTextileSector(Samarth),(iv)SwarnjayantiGramSwarajgarYojana(SGSY),(v)IntegratedProcessingDevelopmentScheme(IPDS),(vi)DutyDrawback,(vii)RemissionStateLevies(ROSL),(viii)MerchandiseExportfromIndiaScheme(MEIS),(ix)marketDevelopmentAssistance(MDA),(x)MarketAccessInitiative(MAI).

Government Policy Initiatives: The government has been implementing various policyinitiatives and programmes for development of textiles and handicrafts, particularly fortechnology,infrastructurecreation,skilldevelopment.Theseinitiativesinclude(i)AmendedTechnologyUpgradationFundsScheme(ATUFS),(ii)PowerTexIndiaScheme,(iii)SchemeforIntegratedTextileParks,(iv)SAMARTH-schemeforcapacitybuildinginTextileSector,(v) Silk Samagra- integrated silkdevelopment scheme, (vi)North EasternRegionTextilePromotionScheme(NERTPS),(vii)NationalHandicraftDevelopmentProgramme(NHDP),and(viii)ComprehensiveHandicraftsClusterDevelopmentScheme(CHCDS).

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TheTextileMinistryofIndiaannouncedRs690crore(US$106.58million)forsettingup21ready-made garment manufacturing units in seven states for development andmodernizationofIndianTextileSector(IndiaToday(2018)).Theseinitiativesalongwiththeskilldevelopmentschemeofthegovernment,newexpectedtextilepolicy2020,andlabourlawreformswillhelpinreducinginformalactivitiesofthetextilesector.

WearingApparel

Thegovernmenthadprovidedfiscalincentivesforapparel,madeups,andtechnicaltextileunitsunderMSMEandlargecategories.Theseincentivesare(i)investmentsubsidybywayofreimbursementofnetGSTon intrastatesale, (ii)Exemption fromelectricityduty, (iii)Exemption from development and land use charges (CLU/EDC), and Exemption fromproperty tax. Further to it, support for apparel,made ups, and technical textile units isprovidedunder(ATUFS).

Leatherrelatedproducts

“Centralsectorscheme‘IndianFootwear,Leather&AccessoriesDevelopmentProgramme’is under implementation for the period 2017-18 to 2019-20. The scheme aims atdevelopment of infrastructure for the leather sector, addressing environmental concernsspecifictotheleathersector,facilitatingadditionalinvestments,employmentgenerationandincrease inproduction.”GoodsandServiceTax (GST)Rates,DutyFree Importof Inputs,Interest equalization rate, Removal of Animal Quarantine clearance for most of thecategoriesoffinishedandcrustleathersimportedintoIndia.

PIB(2019)reportedrecentinitiativesfortheleatherindustry.Theseinitiativesinclude(i)HumanResourceDevelopment(HRD)sub-scheme:HRDsub-schemeprovidesassistanceforPlacement Linked Skill Development training to unemployed persons, (ii) IntegratedDevelopment of Leather Sector (IDLS) sub-scheme, (iii) Establishment of InstitutionalFacilitiessub-scheme,(iv)MegaLeather,FootwearandAccessoriesCluster(MLFAC)sub-scheme, (v) Leather Technology, Innovation and Environmental Issues sub-scheme, (vi)PromotionofIndianBrandsinLeather,FootwearandAccessoriesSectorsub-scheme,(vii)AdditionalEmploymentIncentiveforLeather,FootwearandAccessoriesSectorsub-scheme:(Employees'ProvidentFund).GSTincentivesarealsogiventotheindustry.Someofthesemay directly contribute towards formalization of informal components of the industry.However, there is no direct mention of policies with respect to formalization but theseinitiativeswillpromoteformalization.

CokeandRefinedPetroleumproducts

LargenumberofpolicyinitiativesaretakenbyGovernmentofIndiaaslistedatthewebsiteofMinistryofPetroleumandNaturalGas,GoIbutthesearemainlyfororganizedsector.

ChemicalandChemicalProducts

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TheGovernmentofIndiahasconceptualizedPCPIRsasclustersthatprovideinvestorswitha transparent and investment friendly policyand facility regime. PCPIRs have high-classinfrastructureandprovideacompetitiveenvironmentconduciveforsettingupbusinesses.Thedetails canbe seenathttps://www.makeinindia.com/sector/chemicals.Thesepolicyinitiativeswillgiveboosttoformalizationbutintheabsenceofpolicyinitiativesitwillgiverisetoinformalizationalso.

BasicMetals

GovernmentofIndiaisdevisingnewpolicyofbasicmetalsectorkeepinginviewchangingscenario. To mention new Aluminum policy includes seven major changes in differentcomponentsoftheindustry.Theseare(i)declaringAluminumasacoreindustry,(ii)reformsincoalandbauxitemining,(iii)metalscraprecycling,(iv)energypolicyforenergyintensivesector, (v) export policy for downstream industry, (vi) trade policy andmega free tradeagreements,(vii)policiesforinfrastructureanddatabases.(Source:NitiAayog–NeedforAluminumPolicyinIndia)

Computer,ElectronicandOpticalProducts

The Government of India is developing manufacturing hubs in this sector. It has takeninitiativessuchas(i)Easeofdoingbusiness,(ii)PhasedManufacturingProgramme(PMP),whichaccordingtoexperts,supportedthe local industrytransition fromasimplephone-assemblymarkettoonethatnowmanufacturesPCBs,(iii)TheNationalPolicyofElectronics2019 (NPE 2019) recently replaced the policy book of 2012, (iv) Development of theElectronicsSystemDesignandManufacturing(ESDM)sector,(v)Thepolicyisrequiredtogenerateemploymentfor10millionby2025(However,nomentionofinformalandformalsegment).

ElectricalEquipment

MissionPlan2012-22Visionwas“TomakeIndiaacountryofchoicefortheproductionofelectricequipmentsandreachanoutputofUS$100billionbybalancingexportandimports

OtherTransportEquipment

Under its "Aatma Nirbhar Bharat Abhiyan", government has decided to soon initiateprocurementofarmsandammunitionfromlocalindustriestoreduceimportdependenceonforeignOriginalEquipmentManufacturers(OEMs).Thegovernmentstartedpreparingaroadmapinthisdirectionsinceitcameintopower,andtheArms(Amendment)Bill,2019,bringing changes to the six-decade-old Arms Act, 1959 was passed by Parliament inDecemberlastyearforthispurpose.

TechnologyandQualityUpgradationSupporttoMSMEs

ThefirstobjectiveofthepresentSchemeistosensitizethemanufacturingMSMEsectorinIndiatotheuseofenergyefficienttechnologiesandmanufacturingprocessessoastoreduce

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cost of production and the emissions of GHGs by providing EET equipment. The secondobjectiveoftheschemeistoencouragetheMSMEstoacquireproductcertification/licencesfromNational/Internationalbodiesandadoptothertechnologiesmandatedaspertheglobalstandards.

• Creating awareness among the MSMEswithin and around the identified ClustersaboutMarketTransformationofEnergyEfficiency,CarbonCreditTrading,etc.

• IncreasedadoptionofNational/InternationalProductCertificationstandardsbytheMSMEsectortoenhanceprofitabilityoftheimplementingMSMEsbyreducingenergycostsandalsothroughpossibleincomefromcarboncredits.

• ImplementationofEnergyEfficientTechnologiesandothertechnologiesmandatedaspertheglobalstandardsinMSMEs

The basic objective of this Activity is to encourage MSMEs in adopting energy efficienttechnologies.UnderthepresentActivity,MSMEswillbeassistedinimplementationoftheprojectsthroughloansfromSIDBI/banks/financialinstitutionsforwhichsubsidyupto25%ofthecostoftheprojectwillbeprovided.

Key Stakeholder(s): The office of Development Commissioner (MSME),Ministry of Micro,Small&MediumEnterprises

Source:https://msme.gov.in/technology-and-quality-upgradation

Accommodation

e-Visafacilitywasofferedto169countriesasofDecember2019.

Landtransport

Major policy initiatives impacting land transport sector includes (i) National UrbanTransportPolicy2014, (ii)AtalMission forRejuvenationandUrbanTransportation, (iii)AutomotiveMissionPlan–2016-26,(iv)SmartCitiesMission,(v)MakeinIndia,(vi)NationalManufacturingPolicy,(vii)SkillDevelopment,(viii)FameIndiaScheme,and(ix)VoluntaryVehicleModernization/Endofthelifepolicy.Thesmarttransportwillchangethelandscapeofthelandtransportindaystocome.

Watertransport

ThegovernmentundertheSagarmalaschemeandNationalWaterwaysActisdeveloping20,275kilometrelong111newrivercourseintonationalwaterways.A1620kilometrelongnational waterway is situated on River Ganga between Haldia and Allahabad. OnBrahmaputrariver.A891kilometrelongnationalwaterway2betweenSadiaandDhubri.Apart fromthatwesterncoastalriversonthecoastofKeralaandnationalwaterway3 inMaharashtraandGoaarebeingdeveloped.Coastalcargotransportisbeingdevelopedonthesecoasts.Governmentisalsodeterminedtogiveaboosttotourismapartfrommakingtraveleasier.Moreandmorepreparationsarenowbeingmadeforseaplanes.

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Theseaplanewillopenupauniquewindowofconnectivitytomanyareasandregionsalloverthecountrywherelandandotherrestrictionsdonotallowconstructionofafull-fledgedairport.

KeyStakeholder(s):MinistryofPorts,ShippingandWaterwaysSource:http://sagarmala.gov.in/about-sagarmala/vision-objectives

Warehousingandstorage

ThegrowthinwarehousinginIndiaisprimarilybeingdrivenby(i)Make-In-Indiainitiative,(ii)EnhancedTrade,(iii)SuperiorTechnologyandDigitalIndia(widerinternetpenetration,technologyenabledgrowthdriverslikeautomation,realtimetracking,RFIDforautomateddata collection and stock identification, the modern Warehouse Management Systems(WMS)andotherITdrivensolutions,helpcreateasophisticatedandefficientwarehousingnetwork that provides integration with automatic material handling equipment, cross-docking,yardmanagement,labourmanagement,billingandinvoicing,etc)(iv)GovernmentPoliciessuchasfreetradewarehousing,zones(FTWZs)andlogisticparks,and(v)relaxedinternationaltrade,implementationofsuperiorandreformedtaxstructureslikeGSThavefurtherledtothefastgrowthofthesector.

FoodServices

NationalHorticultureBoard(NHB)

Setting up of cold storage (of capacity above 5000MT and up to 10000 MT) and theirmodernization are eligible for assistance under the NHB Scheme of Capital Investmentsubsidy for construction/ expansion/ modernization of cold storage for HorticultureProducts(asubschemeunderMIDH).Itisopenendedcreditlinkedschemewithscaleofassistance@40%ofcapitalcostofprojectlimitedRs30.00lakhsperprojectingeneralareaand50%limitedtoRs37.50lakhsperprojectincaseofNE,Hilly&amp.

NationalHorticultureMission(NHM)

Coldstorage(longtermstorageanddistributionhubs)upto5000MTcapacityareeligibleforassistanceundertheopen-endedschemeofNHM/HMNEH(asubschemeofMIDH).Theassistanceisextendedassubsidiestocreditlinkedprojects@35%ofcapitalcostofprojectingeneralareaand50%incaseofHilly&Scheduledarea.OperationalGuidelinesforMissionforIntegratedDevelopmentofHorticulture(MIDH)

SmallFarmerAgri-BusinessConsortium(SFAC)assistancetocoldstorage

Settingupofcoldstorageasapartofaintegratedvaluechainprojectareeligibleforsubsidyprovidedthecoldstoragecomponentisnotmorethan75%ofTFO(TotalFinancialOutlay).Thescaleofassistanceassubsidytoprojectsis@25%ofcapitalcostandmaximumceilingtoRs2.25croresingeneralareaand33.33%andmaximumceilinguptoRs4croresincaseof NE, Hilly & Scheduled area. Integrated Scheme for Agricultural Marketing (ISAM)-

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OperationalGuidelines.

AgriculturalandProcessedFoodProductsExportDevelopmentAuthority(APEDA)

SettingupofcoldchainareassistedbyAPEDAasapartofstrategytodeveloptheindustriesrelatingtothescheduledproductsforexport.TheScaleofassistanceas40%subsidysubjecttoalimitofRs75lakhsforcoldchainprojectswithmechanizedhandlingsystem.

FoodProcessingUnit

UnderHorticultureMissionForNorthEasternRegionandHimalayanStates(HMNEH)asubschemeofMIDHFoodprocessingunitsforhorticultureproductsareextendedcreditlinkedbackendedcapitalinvestmentassistanceof50%ofprojectcost(ceilingamountofprojectcostisRs8crores)intheStatesofJ&K,HimachalandUttarakhand.

KeyStakeholder(s):MinistryOfFoodProcessingIndustriesSource:https://www.mofpi.nic.in/Schemes/related-schemes-other-agencies

Supportactivitiesfortransportation,postalandcourieractivities

PTI (2020) reported that India Post has entered into a tie-upwith the Indian CouncilofMedical Research (ICMR) for delivery of its COVID-19 testing kits to 200 additional labsdesignatedforcoronavirustestingacrossthecountry,anofficialstatementsaidonThursday.Nodalofficershavebeenidentifiedfromboththeagencies--DepartmentofPostandICMRforeachregionaldepottoensuresmoothoperations.

InformationandCommunication

Ministryofelectronicandcommunicationprovideintotal34servicessuchase-VisitorPass,NIELIT-Payment Details Updation, Download Aadhaar, UIDAI, Locate a UIDAIenrollment/updatecenternearyou,UIDAI,etc.

Realestateactivities

IBEFreportsthatasperdataofDepartmentforPromotionofIndustryandInternalTradePolicy(DPIIT),constructionisthefourthlargestsectorintermsofFDIinflows.FDIinthesector(includesconstructiondevelopmentandconstructionactivitiesstoodatUS$41.53billionfromApril2000toDecember2019.IBEF(2020)furtherlistedthenewinitiativesofgovernmentsuchassmartcityprojects,PradhanMantriAwasYojana(Urban),AffordableHousingFund(AHF)intheNationalHousingBank(NHB),approved419SEZsetc.,willgivefurtherboosttothesector.

TheRealEstateRegulationandDevelopmentAct,commonlyknownasRERA,isanothersuchstep.ItisanactoftheParliamentofIndiawhichseekstoprotecthome-buyersaswellashelpboostinvestmentsintherealestateindustry.TheActestablishesRealEstateRegulatoryAuthority(RERA) ineachstate forregulationof therealestatesectorandalsoactsasanadjudicatingbodyforspeedydisputeredressal.Itmakesitmandatoryforallcommercialand

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residential real estate projects where the land is over 500 square meters, or eightapartments,toregisterwiththeRealEstateRegulatory(RERA)forlaunchingaproject,inordertoprovidegreatertransparencyinproject-marketingandexecution.Themainaimistoprohibitunaccountedmoneytoenterthissectorandcreateamoretransparentstructureregardingpricingofanyproperty.

HumanHealthandSocialwork

GovernmentInitiativestopromoteIndianhealthcareindustryare(i)allocationofRs35,600crore (US$ 5.09 billion) in Union Budget 2020-21 for nutrition-related programmes, (ii)allocationofRs69,000crore(US$9.87billion)outlayforthehealthsectorthatisinclusiveofRs6,400crore(US$915.72million)forPMJAYschemeinUnionBudgetfor2020-21,(iii)governmentinitiativetoincreasehealthcarespendingtothreepercentoftheGrossDomesticProduct(GDP)by2022,(iv)settingupnewbranchesAllIndiaInstituteofMedicalSciences(AIIMS)atManethi,DistrictRewari,HaryanaatacostofRs1,299crore(US$180.04million),(v)settingupofNationalNutritionMission(NNM)withathree-yearbudgetofRs9,046crore(US$ 1.29 billion) to monitor, supervise, fix targets and guide the nutrition relatedinterventionsacrossministries,(vi)launchofPradhanMantriJanArogyaYojana(PMJAY),toprovidehealthinsuranceworthRs500,000(US$7,124.54)toover100millionfamiliesevery year, (vii) approval of Ayushman Bharat-National Health Protection Mission as acentrallySponsoredSchemecontributedbybothcenterandstategovernmentataratioof60:40forallStates,90:10forhillyNorthEasternStatesand60:40forUnionTerritorieswithlegislature.Thecenterwillcontribute100percentforUnionTerritorieswithoutlegislature,and (viii) launching of Mission Indradhanush with the aim of improving coverage ofimmunizationinthecountry.Itaimstoachieveatleast90percentimmunizationcoveragebyDecember2018whichwillcoverunvaccinatedandpartiallyvaccinatedchildreninruralandurbanareasofIndia

Hotels,SmallRestaurantsandstreetfoodvendors

Government initiatives includes (i) major policy changes made by theMinistry of FoodProcessingIndustries to formalizethesmallrestaurantsandstreetvendors, (ii)NationalPolicyonFoodProcessing,(iii)InvestmentViaNABARD:ThegovernmentplanstoestablishINR8000crorefundforDairyProcessingandDevelopment.Thiswillhelpinmodernizationofoldandobsoletemilkprocessingunitsparticularlyinthecooperativesectorresultinginmore value addition for the farmers and increase in their income and it will also helpindustrytoservequalityproductstoconsumersandcreateformaljobs(Saily(2017)).

DomesticWorkSegment

TheministryisconsideringaDraftNationalPolicyondomesticworkers.Thepolicyaimstogivethedomesticworkerstherighttoregisterasworkers.RegistrationofdomesticworkerswillinreturngivethemalltherightsandbenefitsasconferreduponthembytheConstitution

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ofIndia.FollowingaresomeofthemajorconsiderationsoftheDraftNationalPolicy.Apartfor National Policy on DomesticWorkers, Government of India has also launchedmanyschemes such as Aam Aadmi Bima Yojana, Pradhan Mantri Suraksha Bima Yojana andPradhanMantriJeevanJyotiBimaYojana(Tyagi(2020)).Thesesocialsecurityschemesaimtoprovidedomesticworkerswith lifeanddisabilitycoveragealongwitha INR2 lakhondeathatapremiumofINR330/annum.Onemajorissueaboutformalizationistheincreasein cost of hiring domestic services, whichmay lead to reduction in demand, eventuallyreducingjobsinthissector.But,researchshowsthatgainsinincomegeneratebenefitsforthewelfare of the society as awhole,with the demand remaining stable even there areincreasedcostsfordomesticwork.

InformalPrivateTransport

OrganizedmasspublictransporttocatertotheneedsofahumongouspopulationisanotheraspectwhichIndianeedstolookupon.Insomeparts,organizedmasspublictransportisnotavailable, while in others, provisions are rarely able to meet the fast growing demand.Consequently, various road transport solutions are coming up to fill the gap. They areclassifiedasIntermediatePublicTransport(IPT)or“paratransit”astheycoverthespacebetweenpublicandmasspublictransport.IPToperateseitherthroughcommutershiringthemfordoortodoortripsorasinformalpublictransportbycarvingoutfixedroutesandprices. These vehicles operate largely informally and therefore their service levels,accountabilityandreliabilityoftenremainspoor.InTier2andTier3cities,IPTisthemostused source of transport as it provides an affordable option for the commuters. Autorickshawswhicharepartof IPTareresponsible forhighlevelsofCO2emissionsandareunsafe.Thepeople involved in the IPTsectorneed trainingandmadeawareabout theirresponsibilitiesasperthelawofthecountry.

4.3SupportbyLargeScaleNGOs4.3.1FinancialCapitalandInsuranceSupport

FordFoundation

FordFoundationaimstoprovidemarketecosystemtoallsmallbusinessesandcreditaccesstothedailywageworkersandartisanstoprovidethemworkingcapitalbymeansofmicrofinance.

• MakingMicroFinancemoreaccessibletoprovideworkingcapitaltosmallartisans,lowwageworkers.

• Enhancing skills and leadership capacity among poor people to build their ownmicro-financeanddevelopmentorganizations

• Leveraginggreaterresources formicro finance fromgovernmentandcommercialresourcesespeciallybanks

• Accesstomarketecosystemwithreferencetomarketdemandandcoordinationof

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services• Promotingmarketresponsiveanddemandledenterprisedevelopmentservicesto

microandsmallentrepreneurs

Beneficiary:SmallartisansandlowwageworkersSource:https://ngosindia.com/the-ford-foundation/

ShreniCommunityTrust

• TheShreniReliefFund, spearheadedbyShreniCommunityTrust, anon-profit inBengaluru, aims to provide direct monetary support to the daily wage earnersprimarilyweaversandartisans.

• TheaimofShreniistohelpthemovercometheirlackofaccesstomonetarycapital.AsShrenialreadyworkswiththemontheground,theyhavebuiltacertainamountof network through the years especially with the community leaders, who arebasicallyonerepresentativefromaweaverorartisancommunity.

• Shreni has a network of over 1500 workers, with secondary access to severalthousandmorefromtheinformalsector.

• Themembers are spread over the south Indian states, in clusters such asKallur,Shigli, Kamatagi, Guledgudda, Channapatna, Srikakulam, and Gadwal amongstothers.

• Fromthisnetwork,theywillidentify500ofthemostvulnerableweaverandartisanfamilieswhowillreceivedirectfinancialsupporttoaddresstheirimmediateneedssuch as food grains and medical supplies, as well as, to make credit and loanpayments.

Beneficiaries:WeaversandartisansSource:https://www.shrenis.com/initiatives

4.3.2KnowledgeCapitalSupport

4.3.2.1Upskillingforall

UtthanMahiti

They use a strategy of developing and disseminating knowledge and know-howappropriatetotheneedsoflocalpeopleandthecreationofanenablingenvironmentratherthanmerelyprovidingtraininginjob-orientedskills.

Beneficiary:DailywageworkersSource:http://www.nzdl.org/gsdlmod?e=d-00000-00---off-0cdl--00-0----0-10-0---0---0direct-10---4-------0-1l--11-en-50---20-about---00-0-1-00-0--4--------0-0-11-10-0utfZz-8-00&cl=CL1.82&d=HASH0157d9f6294695adac270ae7.4.6.5.7&gt=1

ShroffsFoundationTrust

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• They have a strategy of integrating socio-economic development which includesservices and dispensation of welfare along with the promotion of training andeducation.

• Theyworkinupliftingthemarginalizedbytrainingtheminvariousskillssothattheycanearnadecentlivingandarenotexploitedbyinhumaneconditions.

Beneficiary:ArtisansandhandloommanufacturersSource:http://www.shroffsfoundation.org/initiatives.aspx

MittiKeRang

• MKRstartedin2014asasocialventure,currentlyworkingin11countriesacrossthe globe, rebuilding the lives of underprivileged women and their children byprovidingaportaltoempower,educate,andrehabilitatethem.

• Theyorganizevariousskill-basedworkshopsandprojectstomakewomenawareoftheirrightsandbenefits.Atpresent,MKRisdedicatedtoraisingfundstohelpmigrantworkersaffectedinthepandemicbydirectlytransferringmoneytotheiraccounts.

Beneficiaries:WomendailywageworkersSource:https://mittikerang.medium.com/top-15-ngos-in-india-working-for-women-empowerment-81a878bb77d2

SuccessFoundation(NGOarmofViztarInternational)

ThebudgetforskillinghasbeenincreasedtomorethanRs10,000croreayearbytheGovernment.PPPssuchasthoseinitiatedthroughNSDCneedtobesteppeduptocreateawareness and training modules which can help fill this gap with the help oforganisations such as Viztar International which is a transformation training andbusinessconsultingfirm,andthroughitsNGO,SuccessFoundation,haspartneredwithNSDCtoprovidevocationaltraininginsemi-urbanandruralareas.Theseareuniqueinthewaythattheyequallyemphasiseonprovidingsoft-skillssothatthecandidateshaveaholisticdevelopmentthathelpsthemdelivertheirbestinwhatevertheydo.

Beneficiaries:AgricultureworkersanddailywageearnersSource:http://viztarinternational.com/corporate_social_responsibility.php

FoundationforSustainableDevelopment(FSD)

Promotion of alternative income generation activities for reducing extreme poverty,discriminations and economic inequalities; Foundation for Sustainable DevelopmentInvolvedroletoimplementMGNREGAworkforthepoorcommunitiesandcommunity-based health precautions are revived. They are trying to eradicate poverty throughupskillingmethods.

Beneficiaries:Farmersandagriculturallabourers

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Source:http://www.fsdindia.org/

4.3.2.2UpskillingForWomen

MAKAAM

MAKAAMisanational informalplatformworkingtosecurewomenfarmers' identityandrightsinIndia.Theyaddressthestatusofwomenfarmersinfarmsuicidefamiliesandvarious issuesthatwomenfarmersarecontentwith.MAKAAMprovidessupportandempowermenttofarmsuicideaffectedfamiliesforthewomentocontinuewiththeirlives,livelihood,andfamilialresponsivities.Bybecomingself-reliantthrougheducation.

Beneficiary:WomenfarmersSource:https://mittikerang.medium.com/top-15-ngos-in-india-working-for-women-empowerment-81a878bb77d2

Self-EmployedWomen'sAssociation(SEWA)

• Indiathathasbuiltasupplychainofartisans,SEWAtradefacilitationCentrecompanyownedandmanagedby50,000womenartisans.Theyaimatstrengtheningwomenby providing themwith adequate training and skills towork in various informalsectors.Thereare1.9millionSEWAMembersacrosstheglobeincludingcountrieslikeAfghanistanandSriLanka.

• Employs common and implementable approaches of combining training in self-employment skills and providing a network of other services for support of themarginalizedwomentohelpthemfindworkandupliftthemselves.

Beneficiaries:WomenartisansandworkersSource:https://mittikerang.medium.com/top-15-ngos-in-india-working-for-women-empowerment-81a878bb77d2

AZADFoundation

• AZADFoundationisafeministfoundationwithavisiontoshapetheworldwhereallwomenareabletoaccesslivelihoodswithdignity,generatewealthandvalueandtocreate a sustainable and more equal world for all by imparting training andeducation.

• The foundation has been able to supportmore than 2000 crore women to gainemployabilityfordecentwork.Theirproject“WomenonWheel”hasempoweredurban women to become professional drivers making transportation safer forwomeninIndia.

Beneficiary:WomendailywageearnersSource:http://azadfoundation.com/latest_news/bringing-women-wheels

Snehalaya

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Theyrescueandrehabilitatetraffickedandforcesexworkersprovidingasafehaven,freecounselling,legalaid,vocationaltraining,andalternativework.

Beneficiary:ForcedsexworkersSource:https://www.shethepeople.tv/drafts/10-ngos-working-womens-empowerment-know/

4.3.3InfrastructureCapitalSupport

4.3.3.1DigitalInclusion

NationalHawkerFederation

• NHF has been actively working with the Navdanya (Farmers network) andQlikchain(TechnologyPartner),toempowerthelivelihoodsandbuildaninclusivepeople-sustainableeconomybymeansofdigitalinclusion.

• HawkerBazaarExpress,anorganichomedeliveryappforhawkersdirectlysourcedfromfarmersofNavdanya,providingtransparencyontheblockchainfromfarmtothali.Duringthislockdown,HawkerBazaarExpressisbeingrevivedtohelpallowthestreetvendorstoreachouttoawidermarketandprovidefairpricingtothefarmingcommunities.

Beneficiaries:StreetvendorsandfarmersSource:http://www.nationalhawkerfederation.com/

Bill&MelindaGatesFoundations

• TheysupporteffortsbytheIndiangovernmenttodigitizegovernmentpaymentstopoorhouseholdsandencouragenewdigitalbankingmodels.

• Theyalsoworkto identifygaps indigital financial inclusionefforts,andweworkwithprivate-sectorproviderstodesigndigitalfinancialproductsthatmeettheneedsofpoorhouseholds.

• This isextremelyhelpful fordailywageearnerstobebroughtundertheambitofformaleconomybygettingaccesstoproductsdigitallywhichwouldotherwisebebeyondthereachofthepoorhouseholdsofdailywageworkers,streetvendorsetc.

Beneficiaries:DailywageworkersprimarilyinBiharandUttarPradeshSource:https://www.gatesfoundation.org/Where-We-Work/India-Office/Financial-Services

Nexharvest:

TheyprimarilyworktohelpfarmersincreaseoutputwhilelinkingthemtoE-mandisandfoodprocessingunitssothattheycandigitallyselltheirproduce.Theyhave3operationsthattheycurrentlyareworkingon:

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• OperationSapling:Aprogrammetoincreaseoutputintermsofqualityandquantityinfarmers'fields.

• OperationDoubling:Todoublefarmersincomeintermsofbusinesssustainabilityofagriculturalenterprise.

• OperationCoupling:Tolinkfarmerstoe-mandis,foodprocessingunitsandothermeansofsellingproduce.

Beneficiary:FarmersSource:http://www.nexharvest.org/services.html

4.3.3.2AccesstoLegalAid

WIEGO

• WIEGOworkswithfourmainoccupationalgroupsofinformalworkers:domesticworkers,home-basedworkers,streetvendorsandwastepickers.Workersineachoccupationalgroupfaceuniquelegalchallenges.

• Domestic workers' hours are often poorly defined; many lack the right to liveoutsidetheemployer’shomeoreventotaketheirrestperiodsoutsideofthehome.Migrantdomesticworkers faceadditionalchallenges,as their immigrationstatusmaybedirectlytiedtotheircontinuedemploymentwithasingleemployer.

• Whereprotective legislationdoesexist, it isoftendifficulttoenforceasdomesticworkiscarriedoutinprivatehomes,outofthepubliceye.

• Convention189(C189).C189recognizesdomesticworkers’righttodecentworkingconditions, which include: daily andweekly rest periods; aminimumwage andminimumageconsistentwithothersectorstherighttochoosewheretospendtheir

• leaveandwheretolive;andtherighttocleartermsofemployment.TheConventioncameintoforcein2013.

Beneficiaries:Domesticworkers,home-basedworkers,streetvendorsandwastepickers.Source:https://www.wiego.org/informal-workers-and-law

CLAP(committeeforlegalaidtopoor)

• CLAP,theacronymofCommitteeforLegalAidtoPoor,istheoldestPublicInterestLawOrganisationinIndia.

• CLAPhasamissiontorenderlegalservicespro-bonotostrengthenaccesstojusticeformarginalizedandundertakesjuridicaladvocacyforlegalreform.

• It originatedwith a view to broaden the horizon of legal services in its variousdimensionforpromotion,protectionandenforcementofhumanright.

• Overtheyearsitevolvedasaspecializedorganizationinthefieldoflawandjustice.Broadly the Legal Service Institute endeavours to eliminate injustice from thesocietyandengagedtopromotejustice.

• Through its strategic legal intervention, the Legal Service Institute re-affirms its

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commitmenttostrivetowardsprogressiverealizationoffundamentalhumanrightswithdignityofindividualsandthecommunities.

• Whiledoingsoitaimstobringaboutgoodgovernancebasedonruleoflawthroughstrategicapplicationoflawwhichisequitable,transparentandaccountableaswellasgenderresponsive.

Beneficiaries:DailywageearnersSource:https://www.clapindia.org/

Nirmana:NationalPlatformforDomesticWorkers(NPDW)

• NIRMANA:Worksforconstructionanddomesticworkersinunorganisedsectorstoprovidethemsocialsecurity,dignifiedlivelihoods

• NIRMANA undertakes its work for unorganised sector workers in general andspecificallyconstructionanddomesticworkers,inthreecriticalareas:-

• NationalCampaigns• PublicEducationandPolicyChange• DignifiedLivelihoods

• This platform was created in 2012, comprising of several domestic workerscollectives and member-based organisations from around the country that aredemandingcomprehensivelegislation.ThecoordinatedeffortacrossthecountryisfocusedongettingtheGovernmentofIndiatoratifyILOConvention189on'DecentWorkforDomesticWorkers'passedinJune2011.

Beneficiary:ConstructionanddomesticworkersSource:https://www.nirmana.org/

4.3.3.3Accesstofood&basicamenities

Swaniti

• Swaniti works with members of Parliaments on constituency and state-leveldevelopmentworkbypickingparticularlyprogressiveMPsandtopicsthatneedtobeaddressedandhelpcatalyzechangesincommunities.

• They analyze government data, understand local challenges, and deliverdevelopment solutions to elected officials by leveraging government resources.Swanitiaimsatprovidingimprovedaccesstobasicfoodandamenitiesforalldailywageworkers.

• TherehavebeensignaturecampaignsalloverthecountrywithworkerorganisationattemptingtosensitizetheirlocalMPsontheissuesaffectingthisoftenmarginalizedandvulnerablesectionofworkers,withthehopetheywillraiseitinParliament.

• NPDWhasbroughtoutadraftDomesticWorkersBill(RegulationofWorkandSocialSecurity), 2017 bill which has been given to the petition committee of the RajyaSabha.

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• Mission Convergencewas a flagship programmeof theDelhi Government during2008-2016.NIRMANAhadworkedwithGenderResource Centre to support skilldevelopmentandvocationaltrainingofwomen.NIRMANAcoveredmorethan3000marginalized households in theNorth-East andNorth-West districtofDelhi andprovideddifferenttypesofsupportsuchaslinkingthemwithgovernmentschemes,vocationaltraining,medicalsupportthroughhealthcampetc.

• Inorderaddressmigrationandhumantrafficking,anintegratedapproachtotackletheproblematsourceanddestinationwastakenup.NIRMANAconductedlivelihoodtraining in the form handloom weaving and lac cultivation at source areas. Atdestination i.e. Delhi, training on tailoring and beautician as well generalhousekeepinghasbeentakenup.

• In 2018, NIRMANA conducted 'Recognition of Prior Learning (RPL)' certificationprogramme through NSDC for domesticworkers in NorthWest District of Delhi.Placementserviceshavealsobeenintroduced.

• NIRMANA supports the National Campaign Committee for Unorganised SectorWorkerstoensureeffectivelegislationispassedbyParliamentinaccordancewiththerecommendationsoftheSecondLabourCommission.

Beneficiary:ConstructionanddomesticworkersSource:https://www.nirmana.org/

Goonj

• Goonjundertakesdisasterrelief,humanitarianaidandcommunitydevelopmentinpartsof21statesacross India. Itrecyclesdiscardedclothesandhouseholdgoodsintousefulproductsforthepoor,suchassanitarynapkins.

• Goonjisworkingtowardslong-termrehabilitationofdailywageearners.UndertheprogrammeRahat, thevolunteersaimtopreparekitswith essentialssuch asdryrationsandpersonalcareproducts,andtransportthemtooveramillionpeopleinareaswithhugepocketsofmigrantlabour.Theywillalsoutilisedonationstoaddresstheimpactonfamilyincome,healthcare,debtandeducation.

Beneficiary:LowwageworkersSource:https://www.wiego.org/resources/goonj

RAHI(RiseAgainstHunger)

UnderthecurrentCovid-19circumstances,theloweststrataofthesociety,comprisingof dailywageworkers, constructionworkers, contract laborers, street vendors havebeentheworsthit.Thesegroupshavelosttheonlysourceoftheirincomeandhavenomeanstomakeendsmeetorprovidefoodfortheirfamilies.RiseAgainstHungerIndia(RAHI)hassteppedintosupportsuchgroupsinthetimeofthisemergencybyprovidingthemwithmealsandotheressentialsupport.

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Beneficiaries:Contractlabourers,streetvendorsSource:https://www.riseagainsthunger.org/

NYDHEE

• NYDHEE is serving the lowest strata of the society (such as dailywageworkers,constructionworkers,contractlaborers,streetvendorsetc.)throughsupplyofdrymeals.

• Along with the supply of essential items, their volunteers are also educatinghouseholds/communitygroupsonthebehaviouralchangeaspectlikehandwashing,socialdistancingandothermeasurestheymustadapttoavoidcontamination.

Beneficiaries:ConstructionworkersandstreetvendorsSource:https://www.investindia.gov.in/bip/resources/list-ngos-providing-relief-during-covid-19

OXFAMIndia

CapacityDevelopmentoflocalstakeholders,FoodSecurityandWater,SanitationandHygiene (WASH), to ensure theRight toSurvival for thoseworst affected–migrantworkers, stranded daily wage earners, agricultural workers and other vulnerablegroups,includingwomenandgirls.

Beneficiaries:Migrantworkers,strandedfarmersanddailywageearnersSource:https://www.oxfamindia.org/programdetails

4.4SocialImpactEnterprises

4.4.1FinancialCapital

Registered with National Housing Bank (NHB), Altum Credo aims at providing financialassistance to first-home buyers in the rural and semi-urban areas who are otherwiseexcludedfromformalchannelsoflong-termfinance.TheyhavetheirpresenceinthestatesofKarnataka,MaharashtraandTamilNaducurrently.Similarly,anotherorganization,calledArohanFinancialServicesLtd,reachesouttotheunderservedwitharangeoflow-ticketsizeproducts.ErgosGrainbank is a companywhich is helping the formalization of financingprocessforthefarmers,astheyenablefarmerstoconverttheirgrainstodigitalassetsandgaincreditagainstthesedigitalassetsthroughpartneredbanksandNBFCs.

4.4.2InfrastructuralandTechnologicalCapital

AgroStarisatech-basedplatformwhichprovidesagronomyadvicealongwiththeserviceandagri-inputproductsthatenablefarmerstosignificantlyimprovetheirproductivityandincome. It is currently operational in states of Gujarat, Maharashtra, Rajasthan, MadhyaPradesh and Uttar Pradesh and has over 5 Lakh farmers on its digital platform. Theorganizationhelpsthefarmerstoavailagro-solutionsthroughasimplemissedcallthroughits Android app. Another organization named EkGaon has helped connect the farmers

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directlytotheconsumersbyleveragingstateofthearttechnologyandtoolstoconnectover20,000farmersandover20artisan-producerorganizationstobringover100premiumfoodproductstomarkets.ReMaterialsisacompanywhichworksforimprovingthelivelihoodofthepeopleinruralareaswhodonothaveadequateroofingintheirhouses.

4.4.3KnowledgeCapital

Aimedatimprovingthelifeofcottonworkers,Appachi,aTamilNadubasedorganization,helpsthecottonfarmersbyworkingcloselyonthecottonmanufacturingsupplychain,rightfromproduction to the finalsellingandconsumptionof cotton.Theyhavealsoopenedaholisticschoolwhicheducatesaround850ruralchildrenprovidingqualityeducationasaCSR activity. Butterfields makes learning more effective for the children coming fromdisadvantaged backgrounds in the fields of science, math, sanitation, early childhoodeducation, nutrition,health&hygiene. It haspartnershipwith organizations such asRB,StateBankofHyderabad,NTPC,ITC,etc.

4.4.4Others

G.V.Meditechishelpingprovideaccessible,low-cost,qualityhealthcarefacilitiestovillagersinandaroundVaranasiareausinge-Choupalnetwork.Theyhavecreatedover150healthcampstoprovideawarenessofbasichealthandhygieneandeducatethevillagers.Wasteisthelivelihoodofthousandsofsociallymarginalizedwastepickersthroughoutthecountrywhocollectandconsolidaterecyclablewaste.Thesewastepickersoftenbelongtooppressedcommunitiesandworkinsometimesde-humanizingconditions.HasiruDalaInnovationsisacompanythatbelievesintheprofessionalizationandthesubsequentformalizationoftheseinformal waste pickers with an aim to provide access to opportunity andmarkets thatempowerentrepreneurship inand securepredictable livelihoods forwastepickers.Let'sRecycle isanorganizationwhichhas formalizedtheIndianunregulatedandunorganizedwastemanagementsectorbysourcingwastefromthemarginalizedwastepickers.

4.5PrivateSectorCSRActivities

4.5.1FinancialCapitalInitiatives

GoldmanSachs10,000SmallBusinessesisaninvestmenttohelpentrepreneurscreatejobsandeconomicopportunitybyprovidingaccesstoeducation,capitalandbusinesssupportservices.GoldmanSachs10,000Women initiativeprovideseconomicgrowthbytowomenentrepreneurswithabusinessandmanagementeducation,mentoringandnetworking,andaccesstocapital.

Beneficiary:Smallbusinesses/WomenCategory:S8Source:https://www.goldmansachs.com/worldwide/india/citizenship/india-10kw.html

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4.5.2Infrastructure&TechnologicalCapitalInitiatives

• AbbottpartneredwithPrabhatdiarylimitedtoextendsupporttosmallDiaryfarmersbyprovidingthemtrainingandkeyresourcesessentialtoproducehigherquantityofhigherqualitymilk.

Benficiary:DairyFarmersCategory:M2Source:https://www.abbott.com/responsibility/social-impact/shared-impact/india-dairy.html

• AdityaBirlaFashiontrainswomentobecomeentrepreneursviamicromanufacturingunitschemeandenablesthemtosetupgarmentmanufacturingunits.

Beneficiary:RuralwomenCategory:M6Source:https://www.adityabirla.com/media/stories/madura-supports-women-entrepreneurs

• Bajaj Education Initiative covers 76 low cost and supports themwith infrastructuredevelopmentandcapacitybuilding.BajajAutoisalsosupportingBhartiyaYuvaShaktiTrust(BYST)intraining25000youngpersonsinAurangabadandWardhatocreate1000entrepreneursin5years.

Beneficiary:Underservedchildren/YouthCategory:S13Source:https://www.bajajauto.com/corporate-social-responsibility

• CastrolrunsitsownLivelihoodprogramCastrolSarathiMitrafortrainingtruckdriversinentrepreneurshipandbusinessandCastrolEklavyaformechanics

Beneficiary:TruckDriversandMechanicsCategory:S3andT1Source:https://www.castrol.com/content/dam/castrol/country-sites/en_in/india/home/csr/policy.pdf

• ICICI:RuralSelfEmploymentTrainingInstitute(RSETIs)AsapartofMinistryofRuralDevelopment (MoRD), ICICI started RSETIs. It focuses on providing free vocationaltraining in to empower villagers to become self-reliant. The initiative also promotesentrepreneurshipanddevelopmentofmicro-enterprisesbyprovidingloans.

Beneficiary:RuralpeopleCategory:S8Source:https://www.icicibank.com/managed-assets/docs/about-us/ICICI-Bank-CSR-Policy.pdf

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• OlaprovidesEmploymentthroughOlaFoundation.ToensureEconomicIndependencethroughhandmadeproductsandothercrafts,theOlaFoundationCorporateGiftingUnithiresthewivesofourdriverpartnerstohelpcreateauthentichandmadeproducts.

Beneficiary:WomenCategory:M8Source:https://ola.foundation/

• Pidilite:Thecompanyhasmadearrangements/signedMOUswithvariousinstitutesandexpertorganizations, forproviding technical inputs to the farmers.For the importantcropsoftheregionsuchascotton,onion,groundnut,coconut,etc

Beneficiary:FarmersCategory:S2Source:http://www.pidilite.com/rural-development

• GoCoop, India's first global online marketplace, enables handloom and handicraftcooperatives and artisans in connecting directly with buyers. GoCoop also supportsnationalandinternationalbuyersincludingwholesalers,retailers,brands,designersandconsumers in efficiently sourcing hand-made fabrics and craft directly from theproducersresultinginabetterpriceforbothbuyersandsellers

Beneficiary:CottonfarmersCategory:M5Source:https://www.textileexcellence.com/news/industry-news/textile-companies-focus-on-csr-but-still-fall-short-of-mandate/#:~:text=Companies%20such%20as%20Aditya%20Birla,Nitin%20Spinners%20are%20classified%20active.


• AbbottDairy Farm Initiative:Please refer to Infrastructural and Technological Capitalsectionfordetails.

• HindalcorunsTheAdityaBirlaRuralTechnologyPark(trainingprograminprogrammesindiesel/handpumprepair/maintenance,electricalrepair/maintenance,bee-keeping,tailoring, knitting and agriculture-related programmes and encouraging self-employment)andTheYashogamiSkillsTrainingCentre(Trainswomeninskillssuchasrexine handicraft, fashion design, tailoring, food processing, pottery, lamination,electronicsassembly,zardozi,jewellerydesign,papiermache,rangoli,andfabricdesign),Balwadis(primaryeducation)

Beneficiary:RuralPeopleCategory:S13Source:http://www.hindalco.com/sustainability/corporate-social-responsibility

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• Aditya Birla Fashion Entrepreneurship Program: Please refer to Infrastructural andTechnologicalCapitalsectionfordetails.

• AsianPaintsrunsvocationalandskill-basedtrainingprogramforpainters,carpentersandworkerstoimprovetheirlivelihoods

Beneficiary:PaintersCategory:S12Source:https://www.asianpaints.com/sustainability/community-C.html

• BajajAutosupportsIISER,India’sleadingresearchinstitute,inconstructingadedicatedHallofresidenceforWomenResearchScholars.BajajAutohascontinuedtosupporttheBanasthaliVidyapeeth(awomen’suniversity)insettingupaHostelandaBajajcenterforAutomationandBajajLawSchool.

Beneficiary:ResearchScholars/StudentsCategory:S11Source:https://www.bajajauto.com/corporate-social-responsibility

• BMWrunsSkillDevelopmentLivelihoodprogramtotraindisadvantagedyouthandhelpthem in achieving their personal and professional goals by successfully moving intosustainedemploymentorjob-basedtraining

Beneficiary:UrbanyouthCategory:S13Source:https://www.bmw.in/en/topics/bmw-india-foundation/skill-development.html

• Castrol Sarathi and Castrol Eklavya Programme: Please refer to Infrastructural andTechnologicalCapitalsectionformoredetails.

• CiplahaspartneredwiththeSkill&EntrepreneurshipDevelopmentInstitute(SEDI)inBaddi and the ITI Sikkim to provide opportunities for youth to learn technical andfunctionalskillsbytrainedprofessionalsinareassuchascarpentry,electrical,sewing,beauticiancourse,etc.

Beneficiary:UnderservedyouthCategory:S13Source:https://www.cipla.com/sites/default/files/2019-08/Corporate_Social_Responsibility_Policy.pdf

• Daburhasitslivelihoodprogramtoenhancevocationalskillsincluding,beekeeping,foodprocessing,preservation,vermi-composting,etc.

Beneficiary:RuralpeopleCategory:S2orM2

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Source:https://www.dabur.com/amp/in/en-us/csr-be-the-change/csr-policy

• Dr Lal pathlabs hasRural Phlebotomist EntrepreneurshipDevelopment Program andCentre of Excellence to train youth in phlebotomy Technician and develop them assuccessfulmicro-entrepreneurs.

Beneficiary:RuralYouthCategory:S14Source:http://b-able.in/lal-pathlabs/

• Goldman Sachs 10,000 Small Businesses/ 1000 Women initiative: Please refer toFinancialCapitalsectionformoredetails.

• ICICI:RuralSelfEmploymentTrainingInstitute(RSETIs):PleaserefertoInfrastructuralandTechnologicalCapitalsectionformoredetails.

• JSWrunsitsownJSWskillsschoolaimstoimprovetheemployabilityoftheyouthandwomen by offering industry-centric courses for vocational skill enhancement. This isachieved through facilitation of infrastructure and development and up-gradation ofteachingtoolsofGovernments’IndustrialTrainingInstitutes(ITI),acrossIndia.

Beneficiary:YouthCategory:S13Source:https://www.jsw.in/foundation/program-page-skill-enhancement

• KohlerrunsTheKohlerPlumbingAcademy(KPA)thatbeganasaninitiativetocombatthelackofqualifiedplumbersinIndiaandtoprovideareliablelivelihoodwhereoptionswerelimited.

Beneficiary:Plumbers/RuralunemployedyouthCategory:S12Source:https://kohler.design/happy-and-proud-indian-kohler-plumbing-academy-graduates/

• PepsiCoIndiacontinuestostrengthenitspartnershipswithfarmersacrossthecountryto boost their productivity and income. Working closely with farmers and stategovernments to improve agri sustainability, crop diversification and enhance farmerincomes.Helpingfarmersrefinetheirfarmingtechniquesandraisefarmproductivity.

Beneficiary:FarmersCategory:S2Source:https://www.pepsico.com/docs/album/sustainability-report/2018-csr/pepsico_2018_csr.pdf

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4.5.4.Others

• TataTeaandHULprovidesupporttoTeaplantationfarmersintermsofmedicalcareinemergencies,schoolsforchildren,andvocationaltrainingstoyouth.

Beneficiary:TeaplantationfarmersCategory:M3Source:https://zenodo.org/record/884097#.X7k7FWgzZPY;http://www.csrmandate.org/hindustan-unilever-and-unicef-support-tea-plantation-workers-in-assam-to-tide-over-covid-19/

4.6TechnologyFirms

4.6.1FinancialCapitalInitiatives

1. PayPal32: The global leaders in payments has announced Seller Protection forIntangibles.Thisprogramisanextensionofanexistingprogramthatearliercoveredmerchantssellingtangiblegoodssuchashandicrafts,fashiongoodsetc.Theextensionwillcover2typesofbuyercomplaints–unauthorizedtransactionsanditemnotreceivedtransactions.AkeyobjectiveforPayPalinIndiaistoensurethatgenuinesellers,smallorbig,areprotectedfromunauthorizedclaimsandchargebacks.

2. Flipkart:a. GrowthCapitalprogramme33toaddressthesellers'needforworkingcapitalb. TohelpMSMEsandsellersthroughthispandemic,Flipkarthadintroducedahealth

insuranceplan34,specifictoCOVID-19,tocovertheseller’salongwiththeirfamiliesandemployees,ataspecialratewithacoveragerangingbetweenRs50,000toRs3lakhperindividualwithannualpremiumsstartingatRs369.

4.6.2Infrastructure&TechnologicalCapitalInitiatives

1. Intel35: Intel India launchedDigital Skills for India programmewhere the company,alongwiththe IndianGovernment,hopes to ‘impact’nearly fivemillionpeople in thecountrybytheendof2015.Theprogrammeincludedthelaunchofamobileapplicationto enable digital skills training, programme to impart training at village level and an'InnovateforIndiaChallenge’.

2. Google:InternetSaathi36,aninitiativeledbyGooglewasstartedin2015andhasnowreachedaround4,000villageswith1,900-trained'saathis'.Underthisinitiative,Googleconducts various outreach and educational programmes to help women get online.

32 https://www.paypal.com/in/webapps/mpp/paypal-seller-protection 33 https://seller.flipkart.com/slp/content/flipkart-growth-capital 34 https://www.flipkart.com/covid-insurance-store 35 https://www.livemint.com/Politics/tVi3qteBfYKkXOPdwl1O4J/Intel-India-to-aid-govt-with-digital-literacy-programme.html 36 https://internetsaathiindia.org/

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Googleisaddingupto500additional'saathis'perweek.Morethan100,000womenhavebeentrainedsofar.

3. Paytm37:MobilecommerceplatformPaytmhastiedupwithNationalCentreforTradeInformation(NCTI),aimedathelpingMSMEsscale faster.ThetwoorganisationshavesignedamemorandumofunderstandingtoofferavirtualmarketplaceplatformforNCTImembersandwillextenditsservicesandtoenablethemtosellonline.

4. Amazon38:AmazonIndialaunchedthe‘KalaHaat’programin2016togiveIndiancraftspersonsandtheirproductsaglobalplatformtodisplaytheirproducts.Amazonreportsanimpactonover750,000weaverandartisanhouseholdsthroughKalaHaat.Underthepartnership with the Government of Uttar Pradesh for the state’s ‘One District OneProduct scheme’, Amazon, through its ‘Kala Haat’ programme is helping traditionalindustries to scale up and access the Indian market. Amazon also provides theseentrepreneurs training, accountmanagementguidance,marketing tools andexcellentinfrastructure of storage and delivery network to aid their progress through onlineselling.

5. Alibaba:The"GlobalSMEEnablementProgramme"39willprovidecloudtechnologyrelief tobothnewandexistingSMEcustomersof thecompanyaroundtheworldandequipthemwiththesolutionsneededtomaintainbusinesscontinuityamidtheCOVID-19pandemic.

6. Flipkart:

a. WalmartVriddhiSupplierDevelopmentProgram40,whichaimstoempower50,000smallandmediummanufacturersinthenextfiveyearswithcash&carryand ecommerce (Flipkart) businesses, but for its global outsourcing arm thatsuppliestodevelopedmarkets.

b. FlipkartSamarthprogramme41willenablelocalartisans,weaversandartisansofKarnatakatodisplaytheirhallmarkproductstoapan-Indiacustomerbase.


1. Facebook:The‘SMEIndiaCouncil’42,aninitiativebyFacebookhasbeensetalongwith12smallbusinessownersfromdifferentgeographiesandvariedbusinessobjectivestoshareconcerns,newideas,andfeedbacktocustomizeofferingstowardsthesector.

37https://economictimes.indiatimes.com/small-biz/sme-sector/paytm-ties-up-with-ncti-to-promote-indian-msmes/articleshow/46907518.cms?from=mdr 38 https://www.thehindubusinessline.com/news/amazons-kala-haat-weaves-magic-for-indias-textile-traditions/article24692771.ece 39 https://www.alibabacloud.com/press-room/alibaba-cloud-launches-usd-30m-global-sme-enablement-program 40 https://walmartvriddhi.org/ 41 https://seller.flipkart.com/slp/content/flipkart-samarth 42 https://www.facebook.com/business/news/Introducing-the-SME-India-Council

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4.7GigEconomy

Gig economy is a work engagement where on one side, there is a service seeker i.e. aconsumerwithademandforaspecific task,andontheotherside,andthere isaserviceprovideri.e.agigworkerwhocanperformthatspecifictask.Inthiseconomy,tech-enabledplatformsconnecttheconsumertothegigworkertohireservicesonashort-termbasis.Theprime attraction of the model lies in the reduction of transaction costs for both sides.Digitizationandonlineplatformsbringthefreelancersandclientstogetherinoneplace

Gig workers include self-employed, freelancers, independent contributors and part-timeworkers.Indiahasemergedasthefifthlargestcountryforflexi-staffingaftertheUS,China,BrazilandJapan.Haryana,MadhyaPradesh,AndhraPradesh,GujaratandTelanganahavemost opportunities in terms of growth for the flexi-workers43. Digital platforms haveemergedasenablersforemploymentcreationwiththepowertoeasilydiscoverjobseekersandjobprovidersintheabsenceofintermediaries.

According to a World Bank report, India is home to 1.8 crore freelancers, more thandevelopedmarketslikeUKandUS.TheglobalmarketsizeforonlinefreelancingisprojectedtogrowtoUSD4.4billionin2016.Itisalsoestimatedthatbytheendof2020globalrevenuesforfreelancingwillbetothetuneofUSD15billiontoUSD25billion.PayPalwantstobeanenablerforthissegment.

About23%ofthesurveyedfreelancersearnintherangeof₹40-45lakhannually,23%earnintherangeof₹2.5-5lakhayear,13%earnbetween₹10-15lakhannually,11%earn₹2.5lakhorlessannuallyand8%earn₹7.5-10lakhannually,asperthereport.44

Paymentmethodsusedinfreelancersareanimportantpartofthetransaction.Thecommonproblemsfacedbyfreelancerinthematterofpaymentisunnecessaryfees,increasedriskofnotbeingpaidforwork,andlengthydelaysinpayment.PayPalandStripearethetwolargestusedpaymentplatformsusedbyfreelancersacrosstheglobe.

Table4.1Mappingofgig-workorganizationswithskillsOrganization No.of

freelancersNo.ofclients

Organizationtype

Taskcomplexity

Skill/Applicablesector Provisionsfortrainingandupskilling

FlexingIt 50,000 19,000 Onlinefreelancing

High Business/StrategyConsulting No

GharseNaukri 750 Onlinefreelancing

LowtoMedium

Content development, socialmedia development, chatassistantsetc.

Yes-thirdpartytieups

V-Pact 250 Onlinefreelancing

MediumtoHigh

Consulting,research,ITservices Yes

GaiaInternet 70-100 Onlinefreelancing

MediumtoHigh

Contentwriting No

JobsForHer 3000 Onlinefreelancing

Lowtomedium

Translation, content writing,designingetc

Yes

43 https://www.investindia.gov.in/team-india-blogs/gig-economy-shaping-future-work 44 Insight into the freelancers ecosystem, PayPal

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Organization No.offreelancers

No.ofclients

Organizationtype

Taskcomplexity

Skill/Applicablesector Provisionsfortrainingandupskilling

SHEROES45 Onlinefreelancing

LowtoMedium

Callcentreandhelpcentrechatservices

Yes

DesiCrew46 RuralBPO LowtoMedium

Dataentry,contentcreation,GISbased mapping services,transcriptionandlocalisation

Yes

HarVa47 RuralBPO Low Data entry, processing andconversion,documentscanning,web search and call centreservices

Yes

Truelancer Onlinefreelancing

MediumtoHigh

Graphic designing, contentwriting,basicdataentry,videoproduction,digitalmarketing

No

DataHalli48 RuralBPO Medium Cheque processing, xml/htmlcoding, customer services,fundingservicesetc

Yes

iMerit49 Dataprocessingandanalyticsorganization50

MediumtoHigh

Simpledatabasedjobs Yes

HansaCheetah51

OnlineSurveyplatform

None Filling up surveys for varioussectors like telecom, media,financial services, consumerproducts and technologyspaces52

No

Croogster OnlineFreelancing

MediumtoHigh

Logo design, content writing,digitalmarketingetc.

No

Upwork53 Onlinefreelancing

LowtoMedium

Appdevelopment,socialmediamarketing, content writing,graphicdesign54

Yes

Youth forWork55

Onlinefreelancing

Medium Matches freelancers withcompanies based on skillassessment

Yes

Vindhya56 RuralBPO Medium Contact centre solutions, dataprocessing,onsitesupportetc

Yes

DataPure57 OnlineFreelancing

High Data enrichment, marketing,research, sales intelligentpersonalassistants58

IndiVillage59 98 RuralBPO LowtoMedium

Data entry and verification,image editing and processing,contentwriting60

45 https://inc42.com/buzz/sheroes-wants-to-connect-1-mn-women-with-opportunities-in-next-3-years-founder-sairee-chahal/ 46 https://www.nextbigwhat.com/social-entrepreneurship-interview-with-desicrew-founder-rural-bpo-297/ 47 http://www.harva.co.in/slider2.html 48 https://yourstory.com/2013/08/datahalli-a-village-of-data-empowering-its-women-with-the-rural-bpo/ 49 https://imerit.net/ourstory 50 http://www.thehindubusinessline.com/info-tech/helping-youth-in-hinterland-acquire-deeplearning-skills/article9707238.ece 51 http://www.hansaresearch.com 52 https://play.google.com/store/apps/details?id=com.hansaresearch.cheetah&hl=en 53 https://www.forbes.com/sites/elainepofeldt/2016/05/03/freelance-giant-upwork-shakes-up-its-business-model/#10e546c41855 54 https://www.upwork.com/about 55 https://kb.youth4work.com/identify-improve-showcase-your-talents-4e3caab8a8a 56 http://vindhyainfo.com/about-2/ 57 https://www.datapure.co 58 https://in.linkedin.com/company/datapure 59 http://www.indivillage.com/#ruralbp 60 http://www.indivillage.com/services#bposervices

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Informal Micro-entrepreneurs: Challenges and Issues

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Chapter5-InformalMicro-entrepreneurs:ChallengesandIssues

5.1IntroductionThischapterreportsthechallengesandissuesfacedbymicro-entrepreneursinIndiaaswellasatgloballevel.ItpresentsreviewofvariousacademicstudiesalongwithselectIndiancasestudiesinthecontextofinformalsector.Italsodepictsselectcasesacrossglobewhereveranyendeavourregardingformalisationofinformalsector,hastakenplace.Onthebasisofafore-mentioned cases/studies, the chapter subsequently draws inferences and suggestsrecommendations.

5.2ReviewofCaseStudiesinthecontextofIndianInformalSectorThissectionisprimarilybasedontheliteratureinwhichreportedlyinformalsectorhasbeenstudiedandexplored.Thetimelineofthisliteraturerangesfrom1990till2019.EffortshavebeenmadetocollateanumberofcasesfromthecontextofIndianinformalsector.Thesecases have been drawn fromvarious literature and are treated as sample to understandchallengesand issuesof informalmicro-entrepreneurs in the contextof India thatmightincludegapsintermsofaccessinggovernmentpolicies,formal/informaltraining,accesstocapital,markets,monitoring and role played by technology platforms (if any) etc. Thesecaseshavebeenborrowedfromtherespectivesourcesandhavebeenacknowledgedwhilementioningexcerptfromarespectivestudy.

5.2.1InformalManufacturingSector

5.2.1.1CaseStudy1:Thana-Belapur,Maharashtra61

Thetrans-ThanaCreekindustrialbeltlieswestoftheThanacreekbetweentheurbancentersofThanaandBelapur. It is approximately sixteenkilometers in lengthand in the east isflankedbytheMumbra-Parsikhills.ThelandslopeswestwardsintotheThanacreek;soilsarepoorandthenaturalvegetationisoneofscrubgrassland.

Unlikethelargescaleandsmall-scaleunitsinthetrans-ThanaCreekarea,informalsectorunits are mostly unauthorized and do not occupy MIDC (Maharashtra IndustrialDevelopmentCorporation)plots.Theyhave insteadsprungupmostlyopposite thelarge-scaleplants,thatis,alongthewesternsideoftheThana-Belapurroad.ThislandbelongstotheMIDCbutafewyardsfurtherwest,itbecomesCIDCO(CityandIndustrialDevelopmentCorporation) land. Since thewidth of theMIDC landwest of the Thana-Belapur road isnarrow' (approx 20 ft) there are space constraints to the carving out of industrial plots.Instead,thelandhasseenahostofunauthorizedstructuresincludingsmallthatchedeating

61 Shaw, A. (1990). Linkages of large scale, small scale and informal sector industries: A study of Thana-Belapur. Economic and Political weekly, M17-M22.

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places and numerous informal sector units which are functionally integrated into theindustrialmatrixoftheregion.

Thereisanimportantforwardlinkthatlargeplantshavewithinformalsectorunitsandthatisthroughtherecyclingofthewasteproductsfromlargeplants.Wasteproductscouldbeempty drums, cartons, treated effluents and even un-standardized chemicals. Informalsectorunitsbuythewastes,cleanandsorttheminsortingunitslocatednearbyandresellthem.Thus,onthewestsideoftheThana-Belapurhighwayonecomesacrossanassortmentofsmallshedsdealingwithwastepaper,emptyplasticbagsandsacks,dyesandpowderedchemicals,oldtyresandtimber.

Asperthesaidstudy,fifteensuchunitswerevisitedinthefieldincludingapolyesterchipwork shed. Here polyester chips bought from Kota, Rajasthanwere stored, cleaned andweighed.Twolargethatched-roofedshedscomprisedtheworkshop.Inone,thechipswerestoredandintheother,thechipswerecleaned.Womendidthecleaningusinglargestrainersor'jalis'whichweresimilarto‘jalis'usedforcleaningflourandothercereals.Abouttwentywomenwereinvolvedinthiswork.Thebasicmethodofcleaningchipswasnodifferentfromthatofcleaningfoodgrains.Menworkersdidtheheavymanualworksuchaspackingthecleanedchipsintosacks,weighingthechipsandloadingandunloading.FurthersouthofthisworkshedonecameacrossastringofmuchsmallerISunits-aboutfifteeninallandmostlydealingwithtimberwastes.However,thefirstunitvisitedwasashedwherethickplasticmattedbagswerepiledandstored.Inthecourtyardinfrontoftheshedlayemptyplasticdrumsandcontainers.Theseproductswerecollectedfrombothsmallandmediumunits.Thesearchformaterialsisadailyaffairwiththreeoftheshed'stotaloffourworkersbeingoutonthesearchmostofthetime.Onbothsidesofthisunittherewereothertimberunits.Theycollectedpackingcasesfromtheplantsoppositepayingonerupeeperkgforthemandallhadthreetofourworkers.Apartfrombreakingthecasesandstackingthem,theworkalsoinvolvedtakingthenailsoutofthewood.Inoneoftheunitstherewasaworkerwhodid just thiswork foraroundRs600amonth.Thenailsareresoldtoscrap irondealers.Woodenspoolsonwhichcablesarewrappedandwoodenstandsonwhichgoodsarestoredinthelargeplants,werealsocollectedandresold.Insomeunits,asinanotherplasticbagcollectionunit,theownersnotonlywentinsearchofmaterialsbutalsoboughtthemfromindividual collectors.Many such collectorswerewomen from local villages. Prices theirwastesfetchedwereverylow:aroundonerupeepersack.InthelargerISwastecollectionunits, the plasticwastes are not just stored but also cleaned and cut. These are labour-intensive operations with a high percentage of female workers. Inside such a unit, onegenerallyfindsacentralpositionoccupiedbytheweighingandcuttingequipment.Inthecourtyard outside the shed is generally located a cementwater tank for scrubbing cleanitemssuchasplasticbags.Thebagsarefirstcutinto,sheetsandthencleanedwithsoapandwater.Thisiswomen'swork.Thecleanedsheetsarehungoutonrowsofropetodrylookingverymuchlikeclothesonaclothes-line.Theworkersinsuchunitsaremostlytemporary,

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theirnumbersdependingontheavailabilityofmaterial.Mostcomefromlocalvillageslivingwithinwalkingdistanceoftheshed.Pricesofthewastes,aftercutting,washingandcleaningvariedconsiderably:anoildrumcanfetchuptoRs250,alargeplasticsackbetweenRs10toRs15whilewoodenstandssellforaroundRs2to4akg.WhilemostoftheroadsideISunitsweresmall,operatingfromthatched-roofshedsandrunwiththreeorfourworkers,therewasoneISunitwhichdidnotfitintothispattern.Thisonelayinsidearoadsidevillageandwasthelargestandbestorganisedofalltheunits,authorhadvisited.Unliketheothers,itwasrunbyacityownerwhohadhisnewcarparkedoutside.Theshedwasbuiltofbricksandcementwithatinroof.Thewastescollectedherewerelargeplasticsacksandplasticpipes.LiketheotherISunits,theworkforceherefluctuated,therebeingtwentyworkersatthetimeofvisit.Theunitwasonlythreeyearsold,quiteunliketheotherISunitswhichwereonanaveragearoundfifteenyearsold.

The field study of the numerous small informal sector units reveals several interestingfeaturesabouttheinformalsectorinThana-Belapur:

! Thegeographicalproximityof recyclingunits to their sourcesofmaterial supply, thelargeplants;! Thelabourintensiveprocessofsorting,cuttingandcleaningthewastes;! Thehighpercentageoffemaleworkerswhoareengagedintasksthatareextensionsofhouseholdwork;! Thelackofadequatephysicalprotectionofworkersundertakingsuchtasks.Theplasticbagsthataresohighlypricedbywastedealersoriginallycontainedstrongchemicals.Infact,thesacksoftenhadwarningsaboutthechemicalsbeingskinirritants.However,theplasticwasterecyclingworkerswererarelyseentobewearinggloves.

5.2.1.2CaseStudy2:Durgapur,WestBengal62

Durgapur,anindustrialcityissituatedintheBardhamandistrictofWestBengal,175kmfromthestatecapitalKolkata.TheGrandTrunkRoad(NH2)andthemainDelhi-KolkataRailway line pass through it. The Durgapur Barrage on the River Damodar serves floodcontrol, reservoir, water supply and Irrigation purposes. Informal manufacturing sector(IMS)inDurgapur,arecharacteristicallydifferentnotonlyintermsoftheiremploymentsize,butalso in termsof their interactionswith the restof theeconomyand their role in thedevelopmentprocess.Thisistruerwhentheregionhasadominantformalindustrialsector.IMS,hereareclassifiedintoownaccountmanufacturingenterprises(OAMEs),non-directoryestablishments (NDMEs) and directory establishments (DMEs). Highest numbers ofenterprises and employment are observed to be in repair services, followed by foodproducts,woodproductsandmetalproductssector.

62 Mukherjee, D. (2004). Problems and prospects of informal manufacturing sector: A Case study of Durgapur City. Indian Journal of Regional Science, 36(2), 1-22.

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Asperthesaidstudy,thereasonsforsettingupaunitwereclassifiedintothreecategoriesviz.pullfactors(goodprospect,adequatedemand,etc.),pushfactors(previousexperience,familybusiness,etc.)anddistressfactors(lowcapitalorskillrequired,etc.).Itwasobservedthatwhereas85%oftheDMEsand51%oftheNDMEsareresultsofPullfactors,only30%oftheOAMEswereso.Pushfactorsareresponsibleforsettingupof40%ofNDMEsand50%ofOAMEs,while20%oftheOAMEsweresetupduetoDistressfactors.DMEsweredoingfairlywellonparameterslikefixedcapitalperenterpriseandworkingcapitalperenterprise.PerformanceparameterslikeValueAddedperenterpriseandProfitperenterprisewerealsobetterincaseofDMEs.However,theNDMEswereinasuperiorpositionregardingcapital-labourratioandlabourproductivity(valueaddedperlabour).

Thesaidstudyidentifiesfollowingfactorswhichmightaffecttheperformanceoftheseunits:

! Resourceavailabilityanduse! Productivityandunitsize

Thesaidstudyfurtheridentifiesfollowingproblemsfacedbyinformalmanufacturingsector(IMS)inDurgapur:

! InadequateDemand! ResourceCrunch:withlimitedcapital,lowcapacityandirregular,scantyanddrawnoutturnoverdue to declining demand, the resource generation processhas been sloweddownsignificantly.Theproblemcouldhavebeenmitigatedbytheformalcreditsystem.However, such forces are inoperative mostly because the smaller units suffer fromabsenceofcollateralrequiredforinstitutionalloans.Inmanycases,theentrepreneursareharassedbybankofficialsandareunabletogetbankloanevenafterprovingtheircredit-worthinessunlesstheygreasetheirpalms.! InfrastructuralProblems! Activity-specificProblems:canbelinkedwiththeresourcecrunch.! Absence ofMobility: due to gained specialization in a particular trade due to longerinvolvement and lack of training and skill development programmes for theentrepreneursandworkers

5.2.1.3CaseStudy3:Assam63

Inthisstudyaprimarysurveyofagroupofinformalmanufacturingunitswascarriedoutwhich includes manufacture of food products and beverages, manufacture of textiles,manufacture of wearing apparel, manufacture of fabricated metal products, andmanufactureoffurnitureasthesaidgroupconstitutedlargelytheinformalmanufacturing

63 Majumdar, A., & Borbora, S. (2015). Production Linkages between the Formal and the Urban Informal Manufacturing Sectors: A Case Study in Assam. Review of Integrative Business and Economics Research, 4(1), 75.

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sectorofAssam.Guwahatiwasconsideredasthemainsamplingareabecauseoftherapidurbanizationandconsequentmigrationofpeopletothisarea.

Around62%of theseenterpriseswereproprietorshipbusiness.A largenumberof theseenterpriseswerenondirectoryestablishments(NDMEs).Averyhighpercentage(83.3%)oftheenterpriseswasrunbythemaleentrepreneurs.Themeanage for theworkers in theinformalsectorwasfoundtobe41years.Theminimumentryageofanentrepreneurtotheinformalsectorwas found tobe23years.Agedpeopleabove60 (1.7%)yearswerealsofoundtoberunningsuchunits.Theentrepreneursoperatinginthispartofthestatewerefoundtobehailingfromthenativedistricts,mostlyfromKamrup(25%),Nalbari(23.3%)andBarpeta(19%).AverysmallnumberofsuchentrepreneursarefoundtobefromoutsidethestatesuchasBihar(5.2%),Rajasthan(0.9),U.P(0.9)andwestBengal(0.9).

Asoundliteracylevelwasfoundamongtheentrepreneurs.46.6%ofthemhavestudiedupto10thstandardad36.2%havestudiedupto12thstandardandabove.Averagefamilysizewasfoundtobeofconsistingof4memberswiththeaveragesizeofthedependents1.62;whereasthenumberofearningmembersinthefamilywas1.44.

Nearly 82% of these enterprises were run by the entrepreneurs without any training.Regarding prior work experience, it is found that only 15% of the entrepreneurs wereengagedinformalsector;therestarefoundtobeactorsoftheinformalsectoritself.Lackofjobopportunitiesapparentlywasthemostimportantfactorforaworkertoindulgeinaninformalsectoractivity,overotherfactorssuchasfamilytraditionorhigherreturnsthanothereconomicengagement.Educationalqualificationoftheworkerswasnotanimportantfactorfortheiremploymentasonly14%oftheemployerswantedtheirworkerstoknowtheminimumreadingandwritingskills.Theownersoftherestoftheunitswantedtheirworkerstoknowthebasicskillsrequiredintheprocessofmanufacturingtherespectivegoods.

62% of the informal units were found to be registered under Guwahati MunicipalityCorporation(GMC).InvestmentmadebytheseinformalunitsvariesfromaminimumofRs.3500 to a maximum of Rs. 400000. Mean investment was found to be Rs. 86185. Steelfabrications and some of the wooden furniture units are found to have incurred highinvestment. 42% of the informal units have the accessibility to credit; of which 28%approachtotheformalsector(banksetc.)and14%takesinformalsourceofcreditfinancing(friends,relatives,pastsavingsetc).MonthlyincomeoftheownersoftheseurbaninformalmanufacturingunitsvariesfromaminimumofRs.3000toamaximumofRs.30000,withameanincomeofRs.11720.

Almostallsteelfabricationunitsandahigh62.9%ofthefurnitureunits,purchasetheirrawmaterials/intermediategoodsentirelyformtheformalsector.Intermsofthesaleofthefinalproductsbytheinformalmanufacturingsectortotheformalsector,itwasfoundtobeonly21.5%ofthesaidsample.

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These units sell a major portion of their final products directly to the final consumers.However,alittlemorethanhalfoftheenterprisesshowexistenceofthebackwardlinkagewiththeformalsectorintermsofthepurchaseofrawmaterialsandtheintermediategoods.The presence of backward linkage between the formal sector and the informalmanufacturing sector was found to be affected positively by the status of registration,number of workers, level of investment and income, credit accessibility, intention forexpansionandattitudetowardsprofits.Whereas,contrarytopriorexpectations;trainingoftheentrepreneurs,durationandlocationofoperationandintroductionofeconomicreform,werefoundtoaffectthepresenceofbackwardlinkagenegatively.

5.2.1.4CaseStudy4:HandloomWeaving,Bhagalpur,Bihar64

InIndia,handloomweavinghasalongtraditionofexcellenceandcraftsmanship.However,the industrialisationof thenationduring1980s resulted in thevirtualdestructionof thehandloomsectorwiththeadventofthemechanisedunitsoftextilesandgarmentproduction.Overaperiodofabouttwodecades,thehandloom-weavingsectorhaswitnessedashiftfromconventionalskillstomoderntechnologicaladvances.

Theerstwhile‘cityofsilk’,BhagalpurinBihar,issituatedonthesouthernbankoftheGangesriverandknownfor itshistorical importanceaswell.Bhagalpur isadivisional town.ThehistoricalexistenceoftheweavingcommunityofBhagalpurdistrictcanbetracedbacktoover100years.Handloomsilkweavinghastraditionallybeenafamilyenterprisecarriedonatthehouseholdbasisthatinvolvedallfamilymembers.SinceBhagalpurisnotaveryfertileland,agriculturally,manyfamiliesinthisregiondependedonthetextileindustryfortheirlivelihood.The‘Tassar ’varietyisoneofthefinestqualitiesofsilkandisproducedonlyinthetropicalzonesofIndiaandisexclusivelyhandloom-based.‘Tassar ’silkhastraditionalandculturalvaluesassociatedwiththelivesofweaversofBhagalpur.Inthisregion,thereare twomajorweavers ’pocket, namely, Nathnagar and Champanagar, where handloomweavingtakesplaceatalargescale.

Traditionally, handloom weaving has been a family occupation, practiced in a ruralhouseholdset-upbymembersofthelowerstrataofsociety.Outofthetotalworkforceofsprawlingweaving villages ofNathnagar and Champanagar, therewere nearly thousandweavingfamiliesandapproximately30thousandweavers,whodependonthisindustryfortheirlivelihood.

Asperthestudy,thenatureoftheindustrywassmall-scaleandweaverswereself-employedandheoperatingsysteminsilkproductionwasverysimilartothesilkproductionsystembeingadoptedinothertraditionalhandloomindustry,thatis,theputtingdownsystem.

Inthehistoryofhandloomindustry,thereexistedasystemofoneheadormasterweaverwho trainedandgave rawmaterial to small independentweavers toworkonunder the

64 Sarmistha, U. (2015). Rural Handloom Textile Industry in Bihar: A Case of Rural Informal Sector. Social Change, 45(1), 107-117.

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putting-downsystem.Inthissystem,theindependentweaverswereabletoselltheirownproduct to thebuyersdirectlyandthenpaybackthemasterweaversthecostof therawmaterial.Theweaver’sfamilyusedtomakeonethread,dyeitandthenmakeclothoftheirown.However,withincreasingglobalisation,anewplayerwasaddedtothissystem.Thiswasmahajan(moneylender/trader),whoemergedfromthesamecommunityandisapartofthecapitalistclass.Underthenewsystem(withthemahajan),hekeepsfullcontroloverthemarket,productionandprofitoftheproduct.Apartfrombeingthemoneylender,heactsasdistributor,supplierandmarketingpersonaswell.

Asperthesaidstudy,themahajanswerethemasterweaverearlierandusedtoworkonloomswithotherworkers.Thissegment,over theyears, accumulatedwealthandmovedawayfromweavingworktobecomebusinessmen.Underthenewsystem,thewageweaversprocuretherawsilkfromthemahajanonloanandthentheweaver’sfamilyworktogetherto reel, dye and weave the finished cloth and hand over the final cloth material to themahajan,whothenpaysall theweaversonpieceratebasis.Underthepieceratesystemworkersarepaidaccordingtonumberofpiecesofworktheyproduceregardlessof timetheyspendtoproduceit.Underthepieceratesystem,thehandloomworkersarealwaysatalossastheirtimeisunderestimated.

Thestudyrevealsthattheweaversarepoor,illiterateandlackbargainingpower.Theyareleftwithnooptionbuttodependonthemahajans.Further,inthehandloomsectorwhereintheworkismanualandtedious,onanormaldayofwork,aweaverfamilycannotproducemorethan8–10metersofclothmaterial,whichiswhypaymentonthebasisofthepieceratesystemleadstothemarginalisationoftheweavers.TheaveragewagepaidtoaweaverforhislabourwasRs.2–2.5permeter,irrespectiveofwhethertheindividualisworkingaloneor the entire family is engaged in production. The average remuneration for weaversworkingonthepowerloom(whocanproduce20metersperday)isRs.40–45perdayandtheincomeforweaversworkingonthehandloom(whocanproduce8metersperday)isRs.16–20perday.

Theotherkeyissues,asperthesaidstudywerelackofmarketopportunitiesandprevalenceofilliteracyamongthepoorweavers.Theweavershadnoaccesstoeitherrawmaterialormarket.

Asamplequote:Asayoungweaver,Iqbal,says,“Iknowhowthemahajansworkandtakebenefitsoutofourworkbutwecansaynothingagainstthemasotherwisewhowillgiveworktous?Also,ifweaccumulatesomewealthandstartourownbusinesses,itwillstillbedifficultforustosurviveamongthesahukar(mahajans)inthemarket”.

Thelackofmedicationandproperhealth-carefacilitieswereleadingtolargescalemigrationfromthisdyingindustry.Toearnabetterliving,morethan80%oftheskilledadultweaversmigratedoutofthisregiontoworkinotherdestinations.

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Asamplequote:OmTanti,a28-year-oldweaver fromBhagalpur,says,“Webelongtotheweaving community and have our own hereditary art, which has been providing us withlivelihoodforgenerations,andtherefore,wewanttosaveandpreserveit”.

The said study further pointed out the failure of the government to control the supply,distributionandmarketingoperationsandtoarrangeancillaryfacilitiestotheweaversisgivingspaceforinfiltrationofgrowingnumberofmahajansintothesystem,whoultimatelyenjoytheheavyprofitmarginsresultinginmarginalisationofpoorweavers.

5.2.2StreetFoodVendors

5.2.2.1CaseStudy1:NewDelhi65

NewDelhiisoneofthemegacitiesinnorthernIndia.Inthesaidstudy,apooloftwentystreetfoodvendorswasconsidered.Intermsofgender,theprofessionismale-dominatedinNewDelhi.Thesevendorshavewidelydiffering levelsof education;somehasvery littlebasiceducationwhileothershavedegrees.Manystreetfoodvendorshavecompletedsomeformalgeneraleducationandhaveacquiredatleastbasicreading,writingandnumeracyskills.Averysmallproportionofthesevendorshavereceivedanykindofformalvocationaltraining.Moreover, less thanhalfof the fewwhodohaveexperienceof trainingwithinthe formalvocationaleducationtraining(VET)sector;havetakenanykindofexamination,whilenonehasanykindofcertification.Theyhavevirtuallynoknowledgeofwhat formalvocationaleducationandtrainingmightbeavailabletothem.Itappearsthatskillsdevelopmenttakesplacealmostexclusivelythroughinformallearningprocesses.HereisasampleportraitofstreetfoodvendorsfromNewDelhi:andonefromCoimbatore.

Asampleportrait:LalaRam,58,runshisbusinessatSaketCommunityCentre,inNewDelhi.Hisfatherstartedthestall19yearsagoandheworkedwithhisfatherfromanearlyage.Theentirefamilyworksinthebusiness.Thefoodispreparedbyhiswifeathome,andheandhisnephewsellit.Nowrittenaccountsaremaintained.LalaRamhasnootherworkersapartfromhisfamily.Thestallisopeneverydayoftheweekfrom10a.m.to10p.m.Theyhavenot undergone any training for this and do notwant any.He says he iswilling to teachsomeonehowtocookiftheywanttolearnfromhim.Thesnacksaresoldatregularmarketprices.Thepricemayvaryaccordingtothecostofrawmaterials.

5.2.2.2CaseStudy2:Coimbatore,TamilNadu66

Coimbatoreisthemedium-sizedcityinthesouthernstateofTamilNadu.Inthesaidstudy,apoolofthirtystreetfoodvendorswasconsidered.Intermsofgender,streetvendorsinCoimbatore include bothmen andwomen. These vendors are homogeneous in terms offormalqualifications;morethantwo-thirdsofthemhaveanupperprimaryorsecondary

65 Pilz, M., Uma, G., & Venkatram, R. (2015). Skills development in the informal sector in India: The case of street food vendors. International Review of Education, 61(2), 191-209. 66 Pilz, M., Uma, G., & Venkatram, R. (2015). Skills development in the informal sector in India: The case of street food vendors. International Review of Education, 61(2), 191-209.

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qualification. None of these vendors in Coimbatore has received any kind of formalvocationaltraining.Theyhavevirtuallynoknowledgeofwhatformalvocationaleducationandtrainingmightbeavailabletothem.Itappearsthatskillsdevelopmenttakesplacealmostexclusively through informal learningprocesses.Here is a sample portraitof street foodvendorsfromCoimbatore:

Asampleportrait:OmPal,aged42,isanativeofUttarPradeshandrunsastationarystallatLawley Road, Coimbatore. He is educated up to Standard 8 and speaks three languages,includingEnglish.Hiswifeencouragedhimandtaughthimtocookarangeoffast-fooddishescommercially.Hestartedhisbusinessin2006andhasabranchatanothercommercialarearun by his son. He was previously working in a local sweet shop and has eight years ’experience. His former employer taught him to prepare 320 different types of sweets;mostly,heacquiredhisskillsthroughobservationand ‘‘ learningbydoing ’’ .Herecordshisdaily transactions inhisdiary.Hehasnoloanrepaymentobligations.Hedoesnothavealicense.Heishappythathiscustomersbelievethatthefoodheservesishygienicandhispricesarecheaperthanthoseofthecompetitorstallinhislocality

5.2.2.3CaseStudy3:Madurai,TamilNadu67

Majorityofstreetfoodvendorsofferedreadytoeat(RTE)cookedfooditemsanddishesinwhich themost commonly sold RTE street foodswere rice-based products (idli, dhosai,paniyaram,pongal,andfriedricedishes),milletbasedproducts(pearlmilletporridgeandfingermilletporridge),wheat-basedproducts(poori,parota,andchapatti)andpulse-basedproducts(vada).

Allofthestreetfoodvendorswerepoor;porridgevendorsandespeciallyhawkerswerethemost marginalized groups and fared poorly on all socio-economic indicators. Femalevendors were found in greater proportions within these more marginalized vendingcategories.Asperthestudy,majorityofthestreetvendors(98%)werefromlowercastes,includingscheduledcaste(SC),backwardclass(BC),andotherbackwardclasses(OBC).Alargemajorityofporridgevendors(92%)wereinpossessionofaGreenBPL(BelowPovertyLine) card, which confirms their poor economic status. The intensity of their poverty isfurtherwitnessedbythelackofmaterialassetstheyowned,asnoneofthemconductedtheiroperationsonownedland,andonly19%hadamotorcycle.

Porridge vendors had very few qualifications in terms of formal education and training.Whilemalevendorshadmoreeducationthanfemalevendors,educationlevelswerelowforbothsexes.Ofallporridgevendors,83%hadobtainedlessthanagrade11educationand40%reportedthattheywereilliterate.Porridgevendors,thoughscoredbetterthenhawkersdidinmostsocio-economiccategories,theyweretheleastlikelyamongallvendorstohaveaccesstoabankaccount(16.7%)ortohavemembershipstatuswithanNGOorself-help 67 Patel, K., Guenther, D., Wiebe, K., & Seburn, R. A. (2014). Promoting food security and livelihoods for urban poor through the informal sector: a case study of street food vendors in Madurai, Tamil Nadu, India. Food security, 6(6), 861-878.

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group (16.7%). These statistics lend support to the notion that porridge vendors arepredominately poor, and have also been excluded from development interventions thattargetmoremarginalizedgroups,suchasfemalehawkers.

Themajorityofporridgevendorswere30-59yearsold,yetdespitetheiragemosthadbeeninthebusinessfor10yearsorless.Almosthalf(43%)oftheporridgevendorsstudiedwereruralmigrantswhocamefromruralpartsofMaduraidistrictaswellasthenearbyTheni,Sivaganga,andRamanathapuramdistrictsinsouthernTamilNadu.

However,migrantporridgevendorshadanadvantage inovercoming these challengesastheirnovelmillet-basedproductdidnotfaceanyresistancefromothervendorswhoweresellingverydifferentRTEfoodproducts.Thus,porridgevendorswhopursuedthisemergingbusinessopportunityfoundfewerbarrierstoentry.

Duetointensecompetitionamongstvendors,thecostofporridgeinMaduraiissetatINR10perserving,makingitoneofthecheapeststreetfoodoptionsavailabletoconsumers.Duringpeakseason(FebruarythroughOctober),vendorsreportedanaverageof60customersperday(420perweek),resultinginrevenuesofaroundINR4200perweek.Costsformaterials,transportation, and bribe payments to local officials brought their profits down toapproximatelyINR1100perweek.Inordertokeepcostsdown,vendorsemployedanumberofdifferentstrategieswhenpurchasingmillet.This includedbuyingmillet inbulk fromawholesaleronalessfrequentbasisor,insomecases,purchasingdirectlyfromafarmer.

Porridgevendingisexclusivelyafamilybusinessinwhichnoneofthemhiredanyoutsidelabourandallworkwasdonebymembersoftheporridgevendor’shousehold.Duringthecoldrainyseason,porridgesalesdropduetolessfoottrafficandreduceddemandforpearlmilletporridge.Althoughporridgevendorsaretechnicallymobile,theytendtooperatefromasinglelocation.Becauseofthestationarynatureofporridgevending,deliveryservicesarelesspopularamongporridgevendorsthanotherstreetfoodvendors.Porridgevendorsalsochoosetoremaininthesamedailylocationduetotheterritorialaspectsoftheindustry.Bykeeping to their turf, vendorsavoid confrontationwith competitorsandareable to formstrongernetworksofreciprocitywithothernon-competitorvendors.Additionally,theyarebetterabletoformrelationshipswiththeindividualpoliceofficersandofficialswhomightotherwiseevictthemfortrafficoffencesorvendingwithoutalicense.Nearlyallenterprises(95%)hadwomenworkingat them,oftenas unpaid family labour.Femalevendorsalsoreportedhigherincidencesofharassment,forcedshutdowns,andthepaymentofbribestopoliceandauthorities.Femaleporridgevendorsshowedmoreofadesiretoexpandtheirenterprisethandidtheirmalecounterparts.

MorethanathirdofallstreetvendorsinMaduraifacedsomeformofharassment,includingincreased bribe payments, relocation, and threats of being shut down. An even greaterproportionoffemalestreetvendors(40%)reportedharassmentbythestateadministrationduringthesameperiod.

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5.2.3MarketVendors

5.2.3.1CaseStudy1:Surat,Gujrat68

SuratisoneofthefastestgrowingcitiesofthestateofGujaratinIndia.ThenumberoffemalestreetvendorsfoundinSuratcityislessvis-à-vismale.Nearlyhalfofthevendorsareintheagegroupof33-59years.Abouthalfofthestreetvendorsbelongto35-54age-groupsandone-thirdvendorsfallundertheage-groupof25-34years.Majorityofthesevendorshave2-4 members in their family. Larger family sizes are more prevalent among the clothvendors,cosmeticproductvendors,andamongvendorssellingmiscellaneousitems.Smallfamilysizeismoreprevalentamongthevegetableandwoodenitemsellers.

Literacytrendsamongthestreetvendors,showthatthemoreilliteratevendorshavesmallerbusinesses like fruit stalls.More than90%ofall surveyedvendorsare literate, andhavestudiedat leastup to5thgrade.Manyof the vendorshave started theirbusiness in thismarket, or have been second or third generation vendors in this market. Most of thevegetable,fruitjuices,cloth,footwear,bags,cosmeticsandwoodenitemvendors,havecometothemarketsmorethan15yearsago.Alargenumberofthevendorsweresingleearningmembersintheirhousewhileonefifthvendorshavetwoworkingpersonsintheirhouse.Alargenumberofvendorsengagedinthisoccupationbecauseit’stheirfamilyoccupation.

Largenumberofvendorsbuygoodsfromwholesalemarketwhileonefourthvendorsfromsupermarkets.Lessthanonefifthofthevendorsarepayingrentforthespaceusedbythem.Almosthalfofthevendorshavepaidfineinthepastagainsthalfofthevendorswhoneverpaidfine.Thesevendorshaveeithertakenloanfromthemoneylendersonhighinterestrateorhavebeensupportedbytheirfamily/relatives/friends.Somevendorshavebeentakinggoodsfromwholesalersoragentsoncredit.Morethanhalfofthehawkingunitsaremobileinnaturewhileonethirdunitsarestationaryandveryfewcomeunderotherscategory.Onethirdofthevendorsaresellingtheirgoodsonsittinggroundwithsheet,handcartbecomessecondandkioskorstallsarethethirdoption.

Asperthem,establishedmarketisanimportantfactorforvending.Somebelieveboth,highresidentialdensityandestablishedmarketplaceareimportantfactors.Veryfewvendorsarememberofanyvendororganization.Mostofthevendorswanttobuyashop,somewantstorentashopandfewvendorswanttogetrentedhandcart.Majorityofthevendorsdon’twanttheirson/daughterscontinuethistradeduetoinsufficientearningdespiteofhardwork.Halfofthevendorsreportedthattheyarefacingproblemstocontinuedoingbusiness.Outofhalfofvendorsonethirdfacingproblemofharassmentbyauthorities,onethirdfacingproblem of eviction and few of them are facing problem of conflict with pedestrians,confiscationofgoodsandextortionbyauthority.Around60%ofthetotalvendors,onethirdexpectspacewithlicenseID,onefifthexpectonlyspace,8%expectspacewithbasicfacilities 68 Ray, C. N., & Mishra, A. (2011). Vendors and informal sector: a case-study of street vendors of Surat City. Centre for Urban Equity, CEPT University.

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likewater and sanitation, 5% expect only license ID and few of them expect only basicfacilities fromthesuratmunicipalcorporation(SMC). Ingeneral, three fourthof thetotalvendorsdonotagreetorelocatefromoriginalplacewhereasonefifthofthevendorsagreedonly if they are shifted to nearby places and their requirements are taken care in newlocation.

5.2.3.2CaseStudy2:Kashmir,Jammu&Kashmir69

This case study captures the lives of street venders in theKashmir valley of Jammu andKashmir.Majorityofthesevendorshailfrompoorfamiliesandworkseventotenhoursdaily.A vendor starts early in the morning with the day’s purchase. The marketing place isinvariablyfarfromhisresidence.Bringinglargesacksofvegetablesandfruitsandloadingtheminarickshawcartisatediousjob.Arranging,cleaning,sorting,weighinganddealingwithcustomersisnoteasy.Hawkersareonthemovefromonelanetoanotherirrespectiveoftheheat,wind,rainandcold.Callingoutloudtoattractbuyers,consumestimeandenergy.

Thelargestconcentrationofvendorsisintheagegroup16-35yearswhichindicatesthatitinvolvesenormousphysical labour.Themalevendorsoutnumber femalevendorsalso inliteracylevel.Majorityofthemalevendorshavestudiedupto12thstandardwhilemorethanhalfofthefemalevendorsareilliterateandresthavestudiedupto12thstandard.Allthefamilymembersareengageddirectlyorindirectlyinthesaidactivities.Immigrantsarealsopart of the said group and have come from places like Tibet, Bihar, Bengal, Assam andCalcuttaetc.

Moststreetvendorssellitemsproducedbyhome-basedandsmall-scaleindustries.Theyareconstantly harassed by the authorities. The local bodies conduct eviction drives andsometimesconfiscatetheirgoods.Besidesthesesuddenraids,streetvendorsnormallyhavetoregularlybribetheauthoritiesinordertocarryouttheirbusinessonthestreets.

These vendors got into vending because of various reasons viz. lack of employmentopportunities;noearningmember in the family; lower investment;andno/lowskill.Thedemand in their respective area has been seasonal. There is no significant differencebetweentheearningsofmaleandfemalevendors.Thesevendorsaresatisfiedwiththeirpresentearningsandarenotwillingtochangetheiroccupation.

5.2.3.3CaseStudy3:Yeola,Maharashtra70

Yeola town is a Taluka place in Nasik district and located on a border of three districtsnamely: Ahmednagar, Nasik, and Aurangabad. The area comes under Khandesh andNorthern Maharashtra region. Yeola is surrounded by Kopargaon Taluka (Southside),NandgaonTaluka(Northside),VaijapurTaluka(Eastside)ChandwadTaluka(Westside).It

69 Bhat, G. M., & Nengroo, A. H. (2013). Urban informal sector: A case study of street vendors in Kashmir. International Journal of Management & Business Studies, 3(1), 112-115. 70 Patil, A. V., Gogte, A. J. C., & Talnikar, A. K. (2019). Study of Informal Sector (Street Vendors) in Central Market Area of Yeola, Maharashtra (India) and their Integration in Market Architecture. International Journal of Applied Engineering Research, 14(13), 3022-3027.

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caters124villagesunderTalukahead.HolySaintRaghujiBabawasthemainpersonbehindtheriseofYeolatown.MunicipalCouncilofYeolaistheoldestinIndiawhichwasformedin1857.

YeolaiswellknownforTraditionalMaharashtrian“Paithani”saree.Currently,inYeolamanyPaithaniweaversareworkingindependentlyandearningtheirlivelihood.ThistraditionalPaithaniweavingBusinesshasgivenemploymenttomanyskilledandunskilledpeople.Thisbusinesshasgenerated several small-scaleactivities like threadpreparation,bundlingofthreads,threadcoloring,etc.MostofthePaithanibusinessrunsinYeolagaothanareaduetoeasyandefficientlinkagewithassociatedactivitiesrelatedtoPaithaniweaving.Yeolahasalargegaothanareahavingnarrowlanesandcompactresidentialandcommercialunits.ManyPaithaniweaversaresellingPaithani’sfromtheirhomesonlywhilefewarehavingshopsand showrooms on narrow lanes. Hence, most streets in gaothan areas always remaincongestedwithvehiclesandpedestrians.

InYeola,themajorconcentrationofstreetvendorswasfoundinthecentralmarketareaoftownwhichcomprisesoftwomainmarketsviz.DailyMarketandWeeklyMarket.Majorityofthevendorswerefromagegroup20-30and31-40.Unemploymentwasfoundtobethereasonforstreetvending.MajorityofmalevendorswereintothisbusinessasmarketareasareindensecommercialzoneoftheYeolatown.However,femalescouldbeseeninWeeklymarketi.e.,onTuesday.Mostofthemhadprimaryeducationonly.Reportedly,theaverageincomewasRs.10000/-permonth.

Nearly76%ofthestreetvendorswereengagedinthesaidbusinessfrom0-30years.Asperthestudy,approximately22%vendors investedRs.2000toRs.4000/-andfewinvestedmoreforsettinguptheirsellingunit,i.e.,temporarystall,handcartetc.Manyvendorsapprox.34%hadmobilesellingunitwhileothers42%hadstationarytype.Mostofthestreetvendorsweresellinggoodsonsittinggroundwithsheet,HandcartbecomessecondandStallorkioskisthethirdoption.Approximately38-40%streetvendorsweresittingongroundincentralmarketareaandsomemobile streetvendorswhogenerally foundalongstreetsabuttingcentralmarketareaviahandcarts.

MajorityofDailymarketvendorsapprox.88%incentralmarketareawerereadytomoveasperMunicipalcouncil’sdecisionastheywerenothavinganyproperfacilitiesandallocatedspace in current market. So, they were expecting a positive development by municipalCouncil.Remaining12%vendorswereafraidoflosingtheircurrentbusinessiftheywouldgetrelocated.Theywerealsoexpectinginfrastructurefacilitiesandfixedallocatedspacebuttheywereinadilemmaandhencerefusingtomoveifrelocatedonanotherplace.Whereasinweeklymarket, approximately 62%vendorswere ready tomove and remaining 38%werenotwillingtomovefromcurrentplace.

ThevendorsincentralmarketareaofTownstatedthatthemarketisanimportantfactorforcreationofdemand. Someof themwouldbelieve thathigh traffic andpedestriandensity

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increasesthedemandforgoods inparticular locality.Somevendors fromweeklymarketareaapprox.58%reportedthatfestivalslikePola,Diwali,Sankrant,Dasara,Gudhipadawa,RamazanEidfetchesmaximumpeople.

5.2.4ChallengesfacedbyIndianmicro-entrepreneurs

FollowingchallengesaredrawnonthebasisofreviewofcasestudiesfromIndianinformalsector:

! SkillGap

! Asperthestudiesinthecontextofstreetvendorsincludingfoodvendors,majorityofthemhadnoformalvocationaltraining.Reportedly,majorityofthemwerenotawareaboutformalvocationaleducationandtraining.! Most of the case studies concluded that skill development takes place almostexclusivelythroughinformallearningprocesses.! Absence of Mobility: due to gained specialisation in a particular trade due to longerinvolvementandlackoftrainingandskilldevelopmentprogramsfortheentrepreneursandworkers.

! Capital&ResourceCrunch

! Thesestreetvendorsreportedlyhaveeithertakenloanfromthemoneylendersonhighinterestrateorhavebeensupportedbytheirfamily/relatives/friends.Somevendorshavebeentakinggoodsfromwholesalersoragentsoncredit.Theyhadbeenstrugglingingettingaccesstocreditfortheirrespectiveeconomicactivity.! Withlimitedcapital,lowcapacityandirregular,scantyanddrawnoutturnoverduetodeclining demand, the resource generation process has been slowed downsignificantly. The problem could have beenmitigated by the formal credit system.However, such forces are inoperativemostly because the smaller units suffer fromabsenceofcollateralrequiredforinstitutionalloans.Inmanycases,theentrepreneursareharassedbybankofficialsandareunabletogetbankloanevenafterprovingtheircredit-worthinessunlesstheygreasetheirpalms.! InfrastructuralProblemsandeconomicactivity-specificProblemswerealsoreportedwhichcanbelinkedwiththeresourcecrunch.! Majorityoftheseinformalentrepreneurshadnoaccesstoabankaccount.Theyalsohadissuesregardingregistrationandcreditaccessibility.Invariablytheynoaccesstoeitherrawmaterialormarket.

! HarassmentbyAuthorities

! Varioustypesand levelsofharassmentbyauthoritieswerealsobeingreportedviz.eviction, conflictwithpedestrians, confiscationof goodsandextortionbyauthority.

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The street vendors particularly opined that they were constantly harassed by theauthorities and sometimes the local bodies conduct eviction drives and sometimesconfiscate theirgoods.Besides these sudden raids, streetvendorsnormallyhave toregularlybribetheauthoritiesinordertocarryouttheirbusinessonthestreets.! Reportedly,TherewerevoicesfordirectrelationshipwiththeUrbanLocalBodiesforpaymentoffeesandotherduesandforimmediatediscontinuanceofthepracticeoffarmingoutofTehbazari(fee)tocontractorsandotherintermediaries,asitresultsinexploitationofstreetvendorsbyanti-socialelements.IthasbeentheirexperiencethatTehbazari (fee) contracts are captured by themafia enjoying political/bureaucraticpatronages,whoexploitthestreetvendorswithimpunity71.

! Protection

! Lackofadequatephysicalprotectionofworkersinsomeoftheinformalmanufacturingsector.Thelackofmedicationandproperhealth-carefacilitieswerealsotheconcerns.

! InadequateDemand

! Itwasalsooneoftheconcernssharedacross.Mostofthestudiesreportedthatlackofmarketopportunitiesisoneofthemajorconcerns.

5.3WorkingModeofPrivateOrganizationsThis section explores working mode of private organizations and identifies variouscharacteristics of informal enterprise through a comparative analysis with formalenterprises. Incomparisonto formalenterprises, informalenterpriseshave feweror lessvaluablefactorsofproductionotherthantheirownlabor,e.g.,capital,landandtechnology.Formalenterpriseshavemorebargainingpowertodemandtheirshareofvalue-addedvis-a-visinformalenterprises.Thevalueoftheirproduction,isoftencapturedbyemployeesandintermediariesacrossthesupplychain,andespecially,thefirmsatthefocalofsupplychain.Though, the definitions andmeasures of productivity vary across sectors, there are fewdirectmeasuresoftheproductivityincaseoftheinformalenterprises,e.g.,theproductivityofastreettrader,whodependsonhowmuchsalesoccurredinagivenperiodoftime.Inthisexample,productivityhaslittletodowiththelabor,capital,equipment,ortechnology,ratherit has more to do with market access, demand aggregation, purchasing power, and theintensity of competition. The term “productivity” is likely to be qualitatively different invariedscenario,e.g.,theamountofcropproducedbyafarmerproducesonacertainacreoflandvs.thenumberofgarmentsproducedbyanindustrialoutworkerathome.

71 http://dcmsme.gov.in/Street%20Vendors%20policy.pdf

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Theinformalenterprisescanbecharacterizedwithfollowingfeatureswhicharecompiledfromvarioussourcesthatmaynotbeexhaustive72.

! Informal enterprises are characterizedwith lowerproductivity compared to formalsector,irrespectiveofitscontributioninemploymentgenerationandofwhatmeasureofproductivityisused.! Thereisoftenashortageofcapitalwhichisrequiredtostartanewbusinessaswellastorunanexistingbusiness. Inboththescenario, fund isrequiredwhichoften leadtoborrowing.Thescaleofsuchenterprises,thusislowerandithaslesserliquidity.! Thereisalsoaseasonalityandvolatilityofdemandofwhattheypurelyproduceforlocalmarketswhichisfurtherconstrainedbythelowratesreceivedastheytypicallyfacenarrowandlowerqualitymarkets,andthustypicallytendtohavelessinformationaboutsuchmarkets.! Informalenterprisesreportedlylackinmarketingandotherinfrastructuralfacilitiessuchastransport,storageandotherservices.! Skills and technological development, are not very much reported by informalenterprises. In many cases, it has been clearly seen that access to more discerningmarketshasresultedingreaterskillortrainingrequirements,butunorganizedsectoroperatorswhoarenotabletoaccesstrainingbecauseoflackofmotivation,accessorresources get left out of upgrading possibilities. Similar considerations also hold fortechnologyupgradationaswell.! Theseenterprisesendupwithpracticallynooptionbuttodispose-offtheirproductsortodiscontinueofferingservices,incaseofrejectionbycustomers.Giventheunequalbargainingstrengthofsuchfirms,therisksharingisalsounevenwhichresultsintonothavingpersonalincomeforseveralmonthsorevenyears.! Morethanhalfoftheself-employedstarttheirbusinesseswithapreparationperiodoflessthansixmonthsandwithnobusinessexperience.! Mostofthebusinessesinaninformalsector,reportedlyfacecompetitionfromlargeunitswhichareprimarilyformalenterprises.! Theworkingconditionsarepooranditofferscomparativelylowerwagestoworkers.Itisevidentthatthereareinsufficientlabourlawsinthisregard.It,howeverwitnessesanexcessiveseasonalityofemployment.! IthasPoorhumancapitalbase(intermsofeducation,skillandtraining)aswellaslowermobilisation status of thework force vis-a-vis formal enterprises. Theworkers havelimitedornoeducationorotherrequiredskills.

72 e.g., Shaw, A. (1990). Mukherjee, D. (2004); Ray, C. N., & Mishra, A. (2011); Bhat, G. M., & Nengroo, A. H. (2013); Basole, A. and Basu, D. (2014); Choudhury, P., and Mukhuti, M. (2017); Nandakumar, V. P. (2018); Patil, A. V., Gogte, A. J. C., & Talnikar, A. K. (2019) etc. Detailed citation is available in the section on references.

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! There has been absence of social security measures and welfare legislations.Negationofsocialstandardsandworkerrightsanddenialofminimumwagesarealsoevident. Social stratification on the basis of castes and sub-castes, is evident in suchenterprises,specificallyinruralareas.Historically,therehasbeeninstancesof“bondedlabour”primarilyduetolowincomes&permanentindebtedness.

The comparative analysis between formal and informal enterprises, apprise about theworkingmodeofprivateorganisations.Theaforementioneddiscussionisinsyncthesection5.2, inwhich reviewof various case studies in the context of Indian informal sector andsubsequentidentificationofvariouschallenges,arereported.

5.4InternationalBestPracticesThissectionreportsandhighlightssomeofthebestinternationalpracticeswithrespecttoformalisation of informal sector, inwhich select case studieswere drawn from the saidcontext.Thebasis for thisselectionwastheattemptsmadebyrespectivecountry for theformalisation of informal sector. Most of these cases had a clear indication about Govt.interventions.Thesaidinterventionsprimarilyrevolvearoundtaxreforms,certificationandaccreditationandtrainingandeducationaswellascreditsupport.

5.4.1TheSouthAfricanExperience73

TherapidexpansionofSouthAfrica’snewblackbourgeoisiehassignificantlyalteredthecountry’s class structure. Simultaneously, the state and private sectors have embarkeduponconcertedprogramstoprivatizeandderegulatethehithertoheavilybureaucratizedeconomy,andtoensurethesurvivalofcapitalismasthedominantmodeofproduction.Sucha program featured thepromotionof black business through the semi-formalizationofinformal manufacturing activities in industrial parks where the environment is verydifferent from that in the segregated urban townships fromwhere they originated. Thepromotion of black-run informal businesses within industrial parks in white areas hasinitiallyhadlargelybeneficialeffectsonthem.Thederegulatedenvironment,incentivesandsupportfacilitiesprovidedbytheparkshaveassisteddevelopmentbypartiallyovercomingexisting constraints such as restrictive regulations and the lack capital and technology.Moreover,awayfromtherestrictionsimposedbythepovertyofthetownshipenvironment,thefirmshavebenefitedfromwideraccessandnewopportunitiesfordiversificationandexpansion.

Moreover, little evidence was found to support the view that informal sector wassubordinated to and exploited by the more powerful formal sector. On contrary, thenoteworthy level of subcontractingwas found to contribute significantly to increased

73 Us, V. (2006). Integrating the informal sector into the formal economy: Some policy implications. Socioeconomic Journal, (2006-1).

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turnoverandtheregularityandreliabilityofincomeformanyfirms.Thesesmallfirmsthusseemedgenerallycomplementaryratherthansubservienttotheformalsector.

5.4.2TheMexicanExperience74

Between1993and1994,thegovernmentofMexicoCityimplementedthemostambitiousmarketconstructionprogramsincethe1960sinthedowntownareknownastheHistoricalCenter.Thisarea,designatedasaculturalandhistoricallandmarkbytheUNESCO,hasbeenuntilrecentlytakenoverbymorethan10,000streetvendorsthatdisloyallycompetedwithformal commercial businesses, evaded taxation, sold contraband goods, and presented ahealththreatforthegeneralpublicduetolackofsanitaryfacilitiesandhealthdepartmentsupervisionoffoodstalls.

Themarketconstructionprogramwasthereforedesignedtoremovevendorsfromthestreet,tomakethevendorssubjecttotaxcodesandhealthregulations.Theplanningofthemarket program was taken over by an agency- COABASTO (Coordinacion de Abasto yComercioPopular),whichwasgivenfullauthoritytonegotiatecreditguaranteestosecurefinancial backing for the project. A special credit institution, the Fondo de DesarolloEconomicoySocialdelDistritofederal(FONDEDF)wasopenedasasubsidiaryofNacionalFinanciero,S.A.–astatebank,tomanagethefinancialsideoftheprogram,allocatingabout175millionUSdollarsat1994exchangerates,whilestillmostofthefinancingwasprovidedtheBancoNacionaldelComercioInterior,anotherstatebank.

Sincestreetvendorsgenerallyneitherhadaproofof their incomenorweretheyableorwillingtoputupotherpropertyasacollateraltothedebttheyweretoincurwhichrangesbetweenUS$5,000-10,000dependingonthesizeandtypeofstall,ofwhich10percentwastobepaidasadownpayment,withmonthlyinstalmentsextendedtoover6years,thecityhadtofunctionastheguarantorofallthefinancialcreditsprovidedbythemarketprogram.Thusthemarketprogramexposedthecitytoincuratremendousfinancialrisk.

5.4.3TheBrazilExperience75

5.4.3.1SIMPLESNACIONAL2

In the spirit of articles 146, 170 and 179 of the federal constitution, which establishpreferential treatment formicro and small enterprises, in the early 1990s several policyinitiatives sought to streamline and standardise the regulations for small and micro-enterprisesinthecountry.In1996,theSimplesFederalLaw9317simplifiedtaxregulationformicroandsmallenterprisesbycreatinganintegratedsystemforthepaymentoftaxandsocialsecuritycontributions.Thislawallowedtheunificationoffivedifferentfederaltaxesplustheemployer’scontributiontosocialsecurityintoonesinglepayment.Theamountpaid

74 Cross, J. (1995). Formalizing the informal economy: the case of street vendors in Mexico City. Cairo, The American University, Department of Sociology, Anthropology and Psychology. 75 http://www.brasildamudanca.com.br/en/microeconomia/what-was-simple-now-super-simples.; ILO Report - Policies for formalisation of SME in Brazil

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byeachenterprisedependedonthelevelofannualsalesandthetypeofeconomicactivity.Thesystemexemptedsmallbusinessesfromhavingtomaintainaccountingledgers.Onitsown,however,thislawturnedouttohavelittleimpactontheformalizationofMSEs.Asof2000, formalizationpickedupsignificantlywiththepassingofacomplementary law(LeiComplementar123,2006),whichbecameknownas thegeneral law formicroandsmallenterprises.ThislawcreatedanupgradedversionofSIMPLESFederal,knownasSimplesNacional, which helped to further reduce bureaucracy, combining eight different taxesaffecting small firms into one single payment. Firms eligible under Simples National,sometimesknownasSuperSimples,are(i)microbusinesseswithgrossannualincomeofuptoBRL360,000and(ii)smallbusinesseswithgrossannualincomerangingfromBRL360,000toBRL3.6million.SincetheSimplesNationalcameintoeffectinJuly2007,replacingSimplesFederal,allcompaniesthatwanttosubscribetothesystem,havetoregisterwiththenationaltaxauthority(SuperReceitaFederal).9SimplesNationalallowscompaniestofileasinglesimplifiedannualtaxdeclaration,replacingthetaxandsocialsecuritydeclarationsthattheyuntilthenhadtopresentatthefederal,state,andmunicipallevelswithamonthlypaymentwhichvariesaccordingtotheeconomicactivity.Thegenerallaw,moreover,exemptsmicroandsmall enterprises frompayingadditionalsocial contributionsrequiredat the federallevel,andreducesafewotherfiscalobligations.

The implementation of Simples National required the cooperation of states andmunicipalities,which under the previous Simples Federal continued to levy taxes on themovementofmerchandiseandservices(ImpostosobreOperaçõesRelativasàCirculaçãodeMercadorias), interstate and inter-municipal transport and communications services(ServiçosdeTransporteInterestadualeInter-municipaledeComunicação,ICMS),andotherservices(ImpostosobreServiçosdeQualquerNatureza,ISS).ForthenewsystemtotakeeffecteachstatehadtoadaptitsownlegislationandsignagreementswiththeReceitaFederal.ThesameprocedurewasrequiredatthemunicipallevelinrelationtotheISStax.

5.4.3.2SEBRAE

TheBrazilianmicroandsmallenterprisesupportagency(ServicioBrasileñodeApoyoalasMicro y Pequeñas Empresas), fundedmainly through company deductions onwages, hasplayed a central role in the strengthening and formalisation of micro and small firms.SEBRAE, which operates autonomously since 1990, is the main small enterprisedevelopmentsupportbody,offeringassistanceintechnologydevelopment,marketaccess,credit guaranteesand local economicdevelopment, amongstothers. SEBRAEhas takenadecentralised approach that enables it to respond appropriately to different regionalconditions through over 700 support centres spread throughout the country. In 2013,SEBRAEprovidedassistancetomicroandsmallenterprises,eitherindividuallyoringroups,on1.5millionoccasions.SEBRAE’smandate,however,goesbeyondtechnicalandfinancialassistance to micro and small enterprises. Its mission to promote a competitive andsustainablemicroandsmallenterprisesectorinbroadtermsalsogivesitaroleinthedesign

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andimplementationoftheregulatoryframeworkformicroandsmallenterprises.Intermsofpublicpolicies,SEBRAEhasnotonlyplayedaleadingroleinthedesignofthegenerallawonmicroandsmallenterprises(LeiGeraldaMicroePequenaEmpresa),buthasalsotrainedpublicofficialsinapplyingthelaw,particularlyatthemunicipallevel.SEBRAE,thenationalconfederationofmunicipalities(ConfederaçãoNacionaldeMunicípios,CNM)andthenationalassociationofmayors(FrenteNacionaldePrefeitos,FNP)joinedeffortstocreateanationalnetwork of local development agents, thereby enhancing cooperation between localgovernments and technical support bodies in the creation of a favourable businessenvironmentformicroandsmallenterprises.

5.4.3.3SUPERSIMPLES

TheSupersimplestookeffectin2007,unifyingeighttaxes(sixfederal,onestateandonemunicipal),dramaticallyreducingthetaxburdenandencouragingopennessandlegalisingofmillionsofsmallbusinesses.AccordingtotheDepartmentofMicroandSmallCompanies,there are now 8.7 million such companies, between micro and small enterprises andindividualmicroentrepreneurs,responsiblefortaxcollectionsof$228billionbetween2007and2013.

5.4.4TheKenyaExperience76

The informal dairy sector makes a huge contribution to Kenya’s national economy andgenerates 70%of the 40,000 jobs in dairymarketing and processing. Less than 14%ofKenya’smilk reaches the formal (meaning, pasteurisedmilk) sector: the rest is sold byunorganised, small-scale businesses in informal markets or consumed directly at home.Thereisamisperceptionthatmilksoldintheinformalsectorismoreofahealthhazardthanpasteurisedmilkintheformalsector.AlthoughmostmilkinKenyadoesnotmeetfoodsafetystandards,destroyinginformalmilkandbanningorcriminalisingvendorsonthebasisonpoor foodsafetycouldhavenegative implications forhealthandnutrition,particularly inchildren.WiththesheernumberofinformalsmalloperatorsintheKenyandairymarket,itis almost impossible tomonitorand regulate the industryusingexistingapproachesandmechanisms.Largeoperatorsandinterestgroupswhohaveavestedinterestinformalisingmarkets will also try to influence regulation in their own favour. Policymakers need towithstandpressurefromthesevestedinterests,whichcanworkagainstmoreprogressive,effectiveandinclusivepolicies.

AfteraminorrevisionofKenya’sdairypolicyin2004,theKenyaDairyBoard(KDB),whichregulatesthesector,wasabletooffersmall-scalemilkvendorsafacilitatedroutetolicensingthrough their training and certification (T&C) scheme. KDB worked with SITE, a localnongovernmentalorganisation,tolaunchtheschemeatanumberofpilotsitesin2006withsupport from an international donor (DFID). The T&C approach aims for progressive

76 Blackmore, E., Alonso, S., & Grace, D. (2015). Legitimising informal markets: a case study of the dairy sector in Kenya. (https://pubs.iied.org/pdfs/17316IIED.pdf)

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registration and formalisation of informal businesses, while upgrading traders ’milkhandling practices to address safety concerns. Under the scheme, accredited businessdevelopment service providers (BDS) offer training on hygienic milk handling, qualitycontrolandentrepreneurship.Withlowfeesthatthetraderscanpaythemselves,theT&Cschemewasdesignedtobeaffordableandsustainable,andnotreliantondonorfunding.Thetraining is short to avoid loss of earnings, and tailored to vendors ’realities, providingguidance on milk safety practices that they have the power to change. There are clearfinancial incentives for both training providers and traders to engage. Trainees gain acertificatethatfacilitatesaccesstoaKDBlicence,whichisneededtolegallysellrawmilk.The training stresses how improvements in handling and hygienewill increase businesswhilealsoreducingmilklossandtransactioncosts.Italsoemphasisesthelinkbetweensaferandhigherqualitymilkandhigherreturns.TrainersarepaidfortheguidancetheyprovideandareaccreditedbyKDB,offeringthemacompetitiveadvantagerelativetootherserviceprovidersinthecountry.

Followinginferencesaredrawnonthebasisofreviewofcasestudiesfrominformalsectoracrossglobewhereformalisationofinformaleconomyhasbeenattempted:

! Promotion of black business through the semi-formalisation of informalmanufacturing activities in industrial parks in South Africa. The deregulatedenvironment, incentives and support facilities provided by the parks have assisteddevelopmentbypartiallyovercomingexistingconstraintssuchasrestrictiveregulationsandthelackcapitalandtechnology.! ThemarketconstructionprogrambythegovernmentofMexicoCityinthedowntown.The saidmarket, knownas theHistoricalCenter,hasapresenceofmore than10000street vendors. The Mexican govt. function as guarantor of all the financial creditsprovidedbythemarketprogramsincestreetvendorsneitherhadaproofoftheirincomenorweretheyableorwillingtoputupotherpropertyascollateraltothedebt.However,thesaidmarketprogramexposedthecitytoincuratremendousfinancialrisk.! EstablishmentofaglobalnetworkcalledWomeninInformalEmployment:GlobalisingandOrganising(WEIGO)whichhasaffiliatesinover25countriesandhasprioritisedfiveareasininformalsectorviz.urbanpoliciestopromoteandprotectstreetvendors,globaltrade and investment policies to maximise opportunities and minimise threatsassociatedwithglobalisation forhome-basedworkers,socialprotectionmeasures forwomen who work in the informal economy, organisation of women in the informaleconomyandtheirrepresentationinrelevantpolicymakingbodiesandinstitutionsatthelocal,nationalandinternationallevels,andstatisticsonthesizeandcontributionoftheinformaleconomy.! Creation of an integrated system for the payment of tax and social securitycontributions by Brazilian govt., called Simples Nacional which helped in reducing

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bureaucracy, combining eight different taxes affecting small firms into one singlepayment.This systemallowed firms to file a single simplifiedannual taxdeclaration,replacingthetaxandsocialsecuritydeclarationsthattheyuntilthenhadtopresentatthefederal,state,andmunicipallevelswithamonthlypaymentwhichvariesaccordingtotheeconomicactivity.! TheBrazilianmicroandsmallenterprisesupportagencyknownasServicioBrasileñodeApoyo a las Micro y Pequeñas Empresas (SEBRAE) was set up as small enterprisedevelopmentsupportbodywhichoffersassistanceintechnologydevelopment,marketaccess,creditguaranteesandlocaleconomicdevelopment,amongstothers.! Kenya’s revised dairy policy in 2004 was able to offer small-scale milk vendors afacilitated route to licensing through their training and certification (T&C) scheme.Under this scheme, accredited business development service providers (BDS) offertraining on hygienic milk handling, quality control and entrepreneurship. Thetraining stresses how improvements in handling and hygiene will increase businesswhilealsoreducingmilklossandtransactioncosts.

5.5ConcludingRemarksTheafore-mentionedtextwhereinthereviewofvariouscasestudiesfromIndiaaswellasacrossglobe,drawnfromacademicliterature,wereattempted,clearlypointsoutthattherelationship between law, regulations and their impact on informal sector has beenineffectiveandmisguided.Therefore,havingasynergisticapproachbetween/amongthemhasremainedapolicyissue.

The intention to pull the levers for the desired growth of the informal economy wasconstrainedinitsimplementationduetoineffectiveimplementationofmacro-economicandsocialpolicies,absenceofconducivelegalandinstitutionalframeworksandduetothelackofpropergovernance.Asitisevidentthattheinformaleconomyrepresentsgroupswhoseprimary and often only source of livelihood is through informal enterprises whichhistorically has been unprivileged and disadvantaged. Thiswarrants for improvement incapacityforadvocacybyenforcementagencies,labourdepartmentsandlocalcommitteesetc. The said advocacy can take many forms e.g., collective bargaining, subcontractingprovisions, employer-employee relationships, compliances like preventive occupationalsafety,healthpoliciesandmeasuresetc.Itisdesirablethatthesaidcapacityimprovementmighttakecareofthegovernanceissues.

It is also important to note that a favourable regulatory environment enables informalbusinessestoformaliseinasteadymanner.Ifawell-designed,transparent,accountableandcommunicableregulationsareinplace,thesaidformalisationislikelytobefacilitatedwhichcanalsoboostsystematiccompetitiveness.Therefore,thesynergisticeffectoftheregulatoryframeworkanditsinternalconsistency(whetherornot)canprovideasignificantincentive(ordisincentive)forpromotingtransitiontowardsformalisation.

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Itisalsoevidentfromthetextthatthepresenceofwomenininformalsectorisnotinferior.However,theirsufferingsareatthehighersidevis-a-vistheirmalecounterpartsandwhichhas been limiting their growth. Historically they had limited access to credit, skills,technology, networks, business information and markets etc. Therefore, an appropriategovernmentsupportisdesirablewhichcantakeformofwomenspecificentrepreneurshipdevelopment programs and workshops. Expectedly, the said interventions are likely toresult in strong growth-oriented businesses which can significantly reduce poverty. Anintegrated approach that is sensitive to gender differences is required in order to equipwomen entrepreneurs with the means to enable them to shift from marginal incomegenerationtoprofitablebusiness.Atthemicrolevel,thisincludescombiningprovisionofskills trainingwithbasicbusinessdevelopmentandothersoftskillswhich inmanycasesmayincludeliteracy.

Ingeneral,almosteverycasestudyishintingaboutthestrongneedfordeveloping,designingand conducting the training and awareness sessions on simplifying, harmonising andreducing the cost and procedures for business registration and promoting “one-stop”business registration mechanisms for increased recognition and integration of informaleconomyunits.Further,up-skillingisamustforsurvivalandgrowthofinformalunits.Withformalandinformalsectoreconomy,consumershavelesschoice.Inthedevelopedworld,consumers can typically buy either very expensive, high-quality goods and services likethose found in rich countries or cheap, low-quality goods and services from informalenterprises.Theybuylowqualitygoodswithoutknowledgeofthehazardsandrisks.Inthisprocess, goods and services targeted at the middle market (which represent a sizeableconsumer population across the world) are missing. Farrell (2004) mentioned thatconsumersmay,forexample,haveachoiceonlybetweensupersafepasteurisedmilkorrawmilk,luxuriousdwellingsorshanties,expensivemodernshoppingmallsortinymom-and-pop shops, expensiveWestern cars or motorcycles and bicycles. The small and midsizebusinessesthatmightdevelopproductstomeettheneedsofmiddle-marketconsumersaremostly informal, lackingtheabilityand incentivesto fill thegap.This ispossible throughselective and partial formalisation of informal enterpriseswith theirwillingness and bycommunicatingbenefitsoftheformalisationtothemintheirlanguage.

In totality, the assessment of the regulatory framework is essential with respect to itsadequacy,affordabilityandefficacyinthecontextofIndianinformalsector.Thisisrequirednotonlytopreserveanddevelopthejob-creationpotentialaswellastosustainandgrowitscontribution to the overall Indian economy. However, it is also suggested that a heavy-handedapproachtoformalisationisunlikelytowork.Light-touchapproachesthatrequireminimalpolicychangessuchasvoluntarytrainingandcertificationschemescan improveandhelptheinformalsectormovealongapathwaytowardsformalisation.Suchapproachesaremoreaffordableandacceptablethantryingtomakeradical,structuralchangestotheinformalsector.

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Policy Recommendations and Framework for MSDE to Support Formalization of Informal Enterprises through Entrepreneurship

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Chapter6-PolicyRecommendationsandFrameworkforMSDEtoSupportFormalizationofInformal

EnterprisesthroughEntrepreneurship

“WhileUdyogAadhaaroffersasimplemodeofregistration,itisusuallynotenough.Often,moreisneedede.g.,ShopsandEstablishments,PAN,GST,etc.Lackofformalizationimpactsthesectorintermsofdevelopmentandalsoimpactsinavailingcreditfromfinancialinstitutionslikebanksandintermsofpolicymaking

aswellasdevelopmentinterventions.”-RBIReportofexpertcommitteeon

Micro,SmallandMediumEnterprises77

6.1IntroductionInformalsectorunitsareanimportantpartoftheeconomyandtheirpotentialtodrivetheeconomy can be augmented if they become part of the formal economy. It is pivotal toprovideimpetusandsupporttowardsformalizationandentrepreneurshipisonewaytodothe same. The informal sector is often depicted as a transitory or incubatory space forentrepreneurial activities. However, formany, especiallywomen, it can also represent aspaceofvulnerabilitycharacterizedbydiscontinuouscareerslinkedtoreproductiveroles,poor education and ill-health (Ulrichs 2016). Informal Sector Units mainly comprise ofenterprisesnotmandatorilycoveredunderanyofthelegislations(acts,lawsandrules)ofthe country such as social protection/welfare, company registration legislation, labourlegislationorunderthetaxnet;andexcludingillicitactivities.GiventhespreadofinformalsectorinIndia(68.9%78),whichismarredwithlowproductivityandpoorwages,itiscrucialforGovernmentpoliciesandprograms toaimat informalenterpriseswhich can supportthem tomove towards formalization. There are few things that extant literature tells uswhichhaveemergedtobeuniversallytrueinthecontextofformalizationviz:

• Formalizationofinformalsector(labourandenterprises)isagamutofactivitieswhichdemandmulti-stakeholdercoordinationforitsoperationalization.Formalizationprocessencompass complexities and onboarding in terms of registration and taxation, legalrecognition,infrastructuresupport,socialprotectionandotherbenefits.Thecomplexityof formalizationprocessesstem fromthe fact that formalization isnotonlyabout theinformalsectormakingeffortstowardsformalizationbutalsogovernmentmakingiteasyandcreatingpullmechanismsforformalizationofinformalsector.Wheneithersideofthis two-way exchange does not happen efficiently then complexity in formalizationarises. For example, formalization projects fail when governments ask informalworkers/enterprisestoregisterandpaytaxesandtolls(manyinformalworkersalready

77https://rbidocs.rbi.org.in/rdocs/PublicationReport/Pdfs/MSMES24062019465CF8CB30594AC29A7A010E8A2A034C.PDF 78 73rd round NSSO Unincorporated Non-Agricultural Enterprises (Excluding Construction) survey 2015-16 unit level data

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paytaxes)withoutgivinginformalactorsthebenefitsthatformalworkers/enterprisesenjoy.

• Mythsabouttheinformaleconomy(suchastheinformaleconomydoesnotcontributetothe overall economy) must be replaced with realities (informality is not necessarilysynonymous with illegality) before smart, effective, sustainable policies can bedeveloped.

• Formalizationmeansdifferent things fordifferent groups:While all informalworkersshareasetofdemands—e.g.freedomfromharassmentandfear,therighttoorganize,legalstanding,socialprotectionandeconomicrights—eachsectorhasspecificneeds.Forexample,thecasestudiesbasedandprimaryresearchconductedduringthisstudyreveals:o Forstreetvendors,formalizationinvolvessecureaccesstopublicspace,licensesto

sell,andidentitycardsandinfrastructure(e.g.water,electricity,sanitation)support.o Forwastepickers,accesstowaste,contractsandremunerationfrommunicipalities

andhealthissuesarehighpriorities.o Fordomesticworkers,decentlivingandworkingconditions,alivingwage,timeoff,

andsick/maternityleaveandpensionsareimportant,asisacommitmentthattheirworkplaces(privatehomes)besubjecttoinspection.

o Forhome-basedworkers, secure transparentcontracts thatprovide fairpricesorpiece-rates,basicinfrastructureandnoforcedrelocationareimportant.

The informalsector iscomprisedofan“uppertier”anda“lowertier”(Fields,2005).Theuppertiercomprisestheworkerswhovoluntarilychoosetobeinformalandthelowertierconsistsofindividualswhocannotaffordtobeunemployedbutdonothaveaccesstomoreproductiveemploymentineithertheformalortheinformalsector.

The informally employed can further be classified into groups, based on the status ofemployment.Among thoseself-employed it ispossible todistinguish: anentrepreneurialclass among the self-employed, micro-entrepreneurs and own-account workers with nointention of, or scope for, potential growth, and unpaid familyworkers. Among informalwageemployeesthereisalsoawiderangeofworkers,includingregularwageemployeesinthe informal sector, casual and day labourers in the informal sector, and other wageemployees, including informal sector enterprises, without employment-based protection(JüttinganddeLaiglesia,2009).

Informality is often considered both a social challenge and an economic challenge.Informalityisasocialchallengebecauseinformalemploymentisoftenassociatedwithlowearnings, low-quality jobsandpoverty(JüttinganddeLaiglesia,2009).Withoutaccesstosocialsecuritymechanisms, informalworkersareparticularlyvulnerableandfacesevererisks,particularlyintimesofcrisis(OECD,2012).Registrationimprovestheworksecurityof micro-entrepreneurs, increasing their ability to establish property rights over theirinvestmentsandseeklegalprotection.Informalityisalsoaneconomicchallenge,asitaffects

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publicrevenuesandfirmproductivity.Asaresultofinformalitythetaxbaseissmallandhightaxeshavetobeleviedonasubsetoffirms,usuallythemostproductiveones.Moreover,competition tends to be distorted in a business environment that does not sufficientlyrewardformalization.

Thisdesk studywasstarted in2019withanaim to createadocument that informsandadvices MoSDE to provide Support for Formalising the Informal Sector throughEntrepreneurship Promotion. For promoting formalization at a policy level what wasimportantwasacuspofexistingliteratureanddataabouttheinformalsector,inferencescoming from that extant data, learnings from challenges faced during formalization,stakeholdersinvolvedandpossiblepolicyway-forwards.Thischaptersummarizesallbutlastpartandintendstofocusindetailonthelastparti.e.policyway-forwardsbasedondata,literature,challengesfacedduringformalizationandstakeholdersinvolved.

Based on the data collected from different sources and compiled in this report, chapterpresentsfollowinginitsdifferentsection.Section6.1ofthechapterisintroduction.Section6.2 presents a brief about ecosystems of MoSDE. Section 6.3 presents the SuggestedFramework, Approaches, Actions Points andWorking Plan forMoSDE for the process offormalization.

6.1.1ExistingLiterature

Informalitytakesvariousformsindifferentcontexts,andnewformsofinformalityemergeovertime(withinacountry).Therearemanyperspectivesofinformalitysuchasthecapitalviewofformalization,labourviewofformalization,technologicalperspective,andageneralperceptionofcitizensworkingwithorintheinformalsectorofaneconomy.In2011,theDonorCommitteeforEnterpriseDevelopmentsuggestedaclassificationintoninedifferentbusiness environment domains (DCED, 2011): Business registration and licensing, Taxpolicy and administration, Landownership and titling, Labour and labour-related issues,Judicialreform,Intellectualpropertyrights,Improvedaccesstofinancialservices,Accesstoinformationaboutbusinessregulationandrules,Incentivesforreformandcommunicatingthesetoinformalenterprises.

Accordingtoexistingliterature,therearefourbroadwaystostimulatethetransitionofinformalenterprisestoformaleconomyviz:

• Informalenterprises(andespeciallyunofficialenterprisesthathavethepotentialtobecomepartoftheformaleconomy)maybemotivatedtoformalizebyloweringthecostsofbecoming(andremaining)formal.Thisincludesentrycosts,taxes,feesandsocialcontributions,andcostsofcompliance.

• Another way to motivate informal enterprises to formalize, is by improving thebenefitsofbeingformal.Thiscanbeobtainedbyreducingthebureaucracyandout-

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ofpocketexpensesinvolvedwithobtainingapermanentlocation,gettingaccesstobusinessdevelopmentservicesandnewmarkets.

• Thedevelopmentoftheformaleconomymaybestimulatedbyimprovingthegeneralbusinessenvironment.Amongstothers,thisimpliesthatpoliciestolowercostsandimprove the benefits of formalization (asmentioned in the previous two bullets)shouldalsotargetformalfirms.

• Strengtheninglawenforcement

Butforgovernmentandalliedstakeholderstoachieveefficacyindoingsotheyneedtohaveafocussedapproachandforthatchurningofexistingdataandderivationoffocus/prioritysectorsisimportant.ThisisexactlywhatwasdoneinChapter3.

6.1.2PrioritySub-SectorstoFocusupon

Inchapter3,itwasseenthatthevariousManufacturing(M),Trade(T)andotherservices(S)sectorshavebeenrankedonthebasisofindividualsup-parameter(GVAPW,GVAPEandgenderbasedinclusivitycriteriarespectively).ButforgettinganoverallpictureoftheorderofpriorityoffocusacombinedoverviewofranksofGVAPW,GVAPE,genderbasedinclusivityandnumberofworkers(employmentdata)iscritical.Takingaverageofranksisnottrivialandhenceanensemblebasedfeatureselection(FS)methodologycanbeused.

Theprioritizedsub-sectors/activitiesinthelargersectors–Manufacturing/Trade/Servicesinastate-wise(alongwithadditionalsecondaryinformationforeachprioritysubsectoratstate/UTlevel)isgivenintheAnnexure2.AsummarytableofthesameisgiveninTable6.1.Thistablehasallthesubsectorsascolumnnamesandthenamesofstates/UTsastherownames.Thelastrowinthetableiscumulativefrequencytosumthecountofoccurrencesofaparticularactivity/subsectorandmaybeusedforprioritizationoffocussub-sectors.The“Y”inthetableexplainsthepresenceorabsenceofaparticularactivity/subsectorinthetopranks(aspertherankingscalculated)fortheparticularstate/U.T.

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Table6.1SummaryofPrioritizedSub-Sectors/ActivitiesineachofthethreesectorsacrossallStates/U.T.sinIndiaSTATE/UT M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M13 M14 M15 M16 M17 M18 M19 M20 M21 M22 M23 M24 M25 T1 T2 T3 T4 S1 S2 S3 S4 S5 S6 S7 S8 S9 S10 S11 S12 S13 S14 S15

AndhraPradesh Y Y Y Y Y Y Y Y Y Jammu&Kashmir Y Y Y Y Y Y Y Y Y HimachalPradesh Y Y Y Y Y Y Y Y Punjab Y Y Y Y Y Y Y Y YChandigarh Y Y Y Y Y Y Y Y YUttarakhand Y Y Y Y Y Y Y Y Y Haryana Y Y Y Y Y Y Y Y Y Delhi Y Y Y Y Y Y Y Y Y Rajasthan Y Y Y Y Y Y Y Y Y UttarPradesh Y Y Y Y Y Y Y Y Y Bihar Y Y Y Y Y Y Y Y Y Sikkim Y Y Y Y Y Y Y Y Y ArunachalPradesh Y Y Y Y Y Y Y Y Y Nagaland Y Y Y Y Y Y Y Y Y Manipur Y Y Y Y Y Y Y Y Y Mizoram Y Y Y Y Y Y Y Y Y Tripura Y Y Y Y Y Y Y Y Y Meghalaya Y Y Y Y Y Y Y Y Y Assam Y Y Y Y Y Y Y Y Y WestBengal Y Y Y Y Y Y Y Y Y Jharkhand Y Y Y Y Y Y Y Y Y Odisha Y Y Y Y Y Y Y Y Y Chhattisgarh Y Y Y Y Y Y Y Y Y MadhyaPradesh Y Y Y Y Y Y Y Y Y Gujarat Y Y Y Y Y Y Y Y Y DamanandDiu Y Y Y Y Y Y Y Y Y DadraandNagarHaveli Y Y Y Y Y Y Y Y Y Maharashtra Y Y Y Y Y Y Y Y Y Karnataka Y Y Y Y Y Y Y Y Y Goa Y Y Y Y Y Y Y Y Y Lakshadweep Y Y Y Y Y Y Y Y Y Kerala Y Y Y Y Y Y Y Y Y TamilNadu Y Y Y Y Y Y Y Y Y Puducherry Y Y Y Y Y Y Y Y Y AndamanandNicobarIslands Y Y Y Y Y Y Y Y FrequencyCount 0 15 3 0 12 8 1 4 3 14 1 5 1 10 17 2 9 1 6 4 3 0 4 9 7 9 5 31 25 15 9 2 0 0 1 7 0 3 2 8 2 27 26 2

IntraSector(M/T/S)Rank 23 2 15 23 4 8 19 12 15 3 19 11 19 5 1 18 6 19 10 12 15 23 12 6 9 3 4 1 2 3 4 8 13 13 12 6 13 7 8 5 8 1 2 8

ThedetailsofthistableareisavailableasAnnexure2withsupplementalinformationinAnnexure3(SourceofData:Calculationsbyauthorsbasedon67thand73rdRoundsofNSSO)

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Forfurtherunderstandingandderivingmeaningfulinferencesfromthesummarydataofthepriority table given in Table 6.1, it deemed necessary that we rank the cumulativefrequencies of the chapters and come up with sets of focussed priorities w.r.t theactivities/subsectorsasshowninTable6.279.

Thewaytointerpretthistablewillbe:Row1i.e.FirstSetofPriorityencompassfocusonM15 (Manufacture of other non-metallic mineral products), M2 (Manufacture of foodproducts),M10(Printingandreproductionofrecordedmedia),M5(Manufactureoftextiles),M14(Manufactureofrubberandplasticsproducts),M17(Manufactureoffabricatedmetalproducts), M24 (Other manufacturing), M6 (Manufacture of wearing apparel) frommanufacturingsector,T3(Otherwholesaletrade),T4(Otherretailtrade)fromTradesectorandS13(Education),S14(HumanHealthandSocialWork),S1(Accommodation),S2(Foodserviceactivities),S11(Professional,ScientificandTechnicalactivities)inServicessector.Similarlyrowtwoandthreecanbeinterpreted.

Table6.2ThreesetsofprioritiesthatcouldbefocusedbyMOSDE(Fullformsinthefootnote) Manufacturing Trade ServicesFirstSetofPriority M15,M2,M10,M5,M14,M17,M24,M6 T3,T4 S13,S14,S1,S2,S11SecondSetofPriority M25,M19,M12,M8,M20,M23,M9,M3,M21 T1 S7,S9,S10,S12,S15,S3ThirdSetofPriority M16,M7,M11,M18,M1,M4,13,M22 T2 S6,S5,S4,S8

Toincorporatethewomenentrepreneurdata,informationfromthesixtheconomiccensus–particularlyfocussingonwomenentrepreneurshipinproprietaryownershipwereaddedtocomeupwithawomenentrepreneurdataforprioritizationofsectors/sub-sectorsandactivities with number of establishments under women entrepreneurship in India andnumberofpersonsemployedinestablishmentsunderwomenentrepreneurshipinIndiaastheprimecriteria(Table6.3).

79MANUFACTURING: M1: Cotton ginning, cleaning and bailing, M2: Manufacture of food products, M3: Manufacture of beverages, M4: Manufacture of tobacco products, M5: Manufacture of textiles, M6: Manufacture of wearing apparel, M7: Manufacture of leather and related products, M8: Manufacture of wood and products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials, M9: Manufacture of paper and paper products, M10: Printing and reproduction of recorded media, M11:Manufacture of coke and refined petroleum products, M12: Manufacture of chemicals and chemical products, M13:Manufacture of pharmaceuticals, medicinal chemical and botanical products, M14: Manufacture of rubber and plastics products, M15: Manufacture of other non-metallic mineral products, M16: Manufacture of basic metals, M17: Manufacture of fabricated metal products, except machinery and equipment, M18: Manufacture of computer, electronic and optical products, M19: Manufacture of electrical equipment, M20: Manufacture of machinery and equipment n.e.c., M21: Manufacture of motor vehicles, trailers and semi-trailers, M22: Manufacture of other transport equipment, M23: Manufacture of furniture, M24: Other manufacturing, M25: Repair and installation of machinery and equipment TRADE: T1: Trade and repair of motor vehicles and motor cycles, T2: Activities of commission agents, T3: Other wholesale trade, T4: Other retail trade SERVICES: S1: Accommodation, S2: Food service activities, S3: Land transport, S4: Water transport, S5: Warehousing and storage, S6:Support activities for transportation, postal and courier activities, S7:Information and Communication, S8: Financial service activities except insurance and pension funding, S9: Other financial activities, S10: Real estate activities, S11: Professional, Scientific and Technical activities, S12: Administrative and support service activities, S13: Education, S14: Human Health and Social work, S15: Other community, social and personal service activities

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Table6.3CalculationofPriorityofvariousnon-agriculturalactivitiesbasedonwomenentrepreneurshipdata

BroadActivities(NonAgricultural) TotalNumberOfEstablishmentsUnderWomenEntrepreneurshipInIndia

TotalNumberOfPersonsEmployedInEstablishmentsUnderWomenEntrepreneurship

WithoutHiredWorkers


Total


RankonbasisofNumberofEstablishments

WithoutHiredWorkers


Total


Rankonbasisofno.ofPeopleEmployed

OverallRankusing2criteria(establishments+employment)

05.MiningandQuarrying 4009 3820 7829 0.1 18 5616 24176 29792 0.22 17 1806Manufacturing 2099355 300108 2399463 29.8 1 2650723 1297571 3948294 29.36 1 107.Electricity,Gas,SteamandAirConditioningSupply 957 2366 3323 0.04 19 1218 18099 19317 0.14 19 1908.WaterSupply,Sewerage,WasteManagementandRemediationActivities 5860 4284 10144 0.13 17 7128 12761 19889 0.15 18 17

09.Construction 33261 13764 47025 0.58 10 42587 55107 97694 0.73 11 1010.WholeSaleTrade,RetailTradeandRepairofMotorVehiclesandMotorCycles 14000 16237 30237 0.38 13 18852 56592 75444 0.56 12 13

11.WholeSaleTrade(NotCoveredinItem-10Above) 31581 17067 48648 0.6 9 43147 63297 106444 0.79 10 912.RetailTrade(NotCoveredinItem-10Above) 1159414 272788 1432202 17.79 2 1432474 765440 2197914 16.34 2 213.TransportationandStorage 88623 36084 124707 1.55 6 106097 107940 214037 1.59 7 614.AccommodationandFoodServiceActivities 148988 74107 223095 2.77 4 207342 259542 466884 3.47 5 415.InformationandCommunication 11142 8711 19853 0.25 15 13809 44821 58630 0.44 14 1516.FinancialandInsuranceActivities 54578 21693 76271 0.95 7 96331 88491 184822 1.37 8 717.RealEstateActivities 41570 4484 46054 0.57 11 46041 13656 59697 0.44 14 1118.Professional,ScientificandTechnicalActivities 15080 15601 30681 0.38 13 18765 56293 75058 0.56 12 1319.AdministrativeandSupportServiceActivities 27018 18246 45264 0.56 12 34000 81946 115946 0.86 9 1220.Education 113751 103723 217474 2.7 5 133134 605720 738854 5.49 3 521.HumanHealthandSocialWorkActivities 32407 42988 75395 0.94 8 41899 180186 222085 1.65 6 822.ArtsEntertainment,SportsandAmusementandRecreation 9113 9439 18552 0.23 16 11865 30026 41891 0.31 16 16

23.OtherServiceActivitiesnotElsewhereClassified 275107 157728 432835 5.38 3 330647 391493 722140 5.37 4 3Sub-TotalNon-AgriculturalActivities 4165814 1123238 5289052 65.7

5241675 4153157 9394832 69.86

Sub-TotalAgriculturalActivities 2531540 230227 2761767 34.3 3432282 621068 4053350 30.14

Total 6697354 1353465 8050819 100 8673957 4774225 13448182 100

(numberofestablishmentsandnumberofpeopleworkinginthoseestablishments)using6thEconomicCensusdatadownloadedfromhttps://www.indiastat.com/economy-data/8/economic-census/15008/economic-census-2012-2013/859489/stats.aspx

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FromthecalculationsdoneinTable6.3,thefollowingprioritization(inorderofmulti-criterionranking)ofactivities(non-agricultural)basedonwomenentrepreneurshipdatafromthe6theconomiccensus:1. Manufacturing2. RetailTrade3. OtherServiceActivitiesnotElsewhereClassified4. AccommodationandFoodServiceActivities5. Education6. TransportationandStorage7. FinancialandInsuranceActivities8. HumanHealthandSocialWorkActivities9. WholeSaleTrade10. Construction11. RealEstateActivities12. AdministrativeandSupportServiceActivities13. WholeSaleTrade,RetailTradeandRepairofMotorVehiclesandMotorCycles14. Professional,ScientificandTechnicalActivities15. InformationandCommunication16. ArtsEntertainment,SportsandAmusementandRecreation17. WaterSupply,Sewerage,WasteManagementandRemediationActivities18. MiningandQuarrying19. Electricity,Gas,SteamandAirConditioningSupply

ComparingthisprioritizationwiththeprioritizationdoneinTable6.1wecanseethatfewsectorsare commonandemergingas thepossiblekey focusareas forpromotingformalization initiatives by MoSDE and allied stakeholder namely: Retail Trade,AccommodationandFoodServices,TransportationandStorage (Logistics),Education(Services), Health and Social Welfare (Services), Financial and Insurance Activities,WholeSaleTradeandRealEstateActivities.Abovearesimplythesectorsandprioritiesthathavebeencalculateddeductively.Werandomlyselectedfewofthesesectorsalongwithfewadditionalalliedsectoranddidasmallprimarydatacollectionandanalysistasktofurtherconfirmtheseprioritysectors.

6.1.3InsightsfromPrimaryData

Thissectionpresentsa summaryof theprimarydata collected toenrich thisdesktopresearch. Six sets of data were collected using semi-structured questionnaire thatgathereddatafrominformalenterprises.OnesetofdatawascollectedwiththehelpofMSDE/NIESBUD/IIE80 from the informal sectors of food, wood and tailoring (61responsesintotal).RemainingsetsofdatawerecollectedbyTeamMDIfromtheDelhiNCRregionpertainingtotheinformalsectorsofplantnursery,coachinginstitutes,crècheandbicyclerepairshops;eateriesanddhabas81;automobilerepairshopsandgarages;beauty salons and construction and fabricated construction material. The questions

80 https://www.msde.gov.in/IIE.html 81 https://en.wikipedia.org/wiki/Dhaba: Dhaba is a roadside restaurant in the Indian subcontinent. They are on highways, generally serve local cuisine, and also serve as truck stops. They are most commonly found next to petrol stations, and most are open 24 hours a day. Since many Indian truck drivers are of Punjabi descent, and Punjabi food and music are popular throughout India, the word dhaba has come to represent any restaurant that serves Punjabi food, especially the heavily spiced and fried Punjabi fare preferred by many truck drivers.

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rangedfromgeneralinformation,demographicstospecificdetailsfocusingonthecapitalandlaborsideoftheinformalenterprises82-focusingonopportunitiesandchallengesfacedbytheinformalsector.DetailedanalysisingiveninAnnexure4ofthisreportandsummaryinthefollowingparagraph.

Indian informal economy, like any other, is a multifaceted and diverse phenomenon.Thus, each situation in the informal sector poses different challenges and solutions.Today,theinformaleconomyismarredbylowwages,seasonalunemployment,absenceofbargainingskills,lackofaccesstocreditandinabilitytoaccessgovernmentschemesandpolicieswhichhamperprospectsofgrowth.Table6.4encompassmajorhighlights(summarized)fromtheprimarydatathatwascollectedandanalysed(inadditiontothesecondarydataandcasestudies):

Table6.4Majorhighlightssummarizedfromtheprimarydata

Sector (SectorCode as perNSSOdata)

SampleDemographics

SampleCharacteristics Issues and Challenges (inthe context offormalization)

Livelihood andSustainabilityAugmentationOpportunities

Food(M2) Agegroupof20to46yearsoldAverage monthlyincomeofthesaidsample is Rs.21,940, of whichhighest monthlyincome reportedisRs.60,000whilethe lowestmonthlyincomeisRs.2,000

Majority of the shopsrun in a self-ownedspaceNoneoftheseshopsareregistered under anyforum, group orassociation.Payments are acceptedandmademostlyincashLimited digital walletusage and pucca billusage

• Majority areaware/familiar withsome governmentschemeswhichcanhelpthem improve theirbusiness but very fewavail the benefit for it(mostly in terms ofloans)

• Mostrespondentsdonotlook forward toexploring new marketsfor theirproducts/services

• Lack of documents &collateral were thechallengesfacedbythemfor accessing requiredcapital for capex andlack of documents anddelayinreceiptwerethechallenges formaintaining therequiredopex

Enabling foodpreparation andprocessing furthershealthy families andsustainablelivelihoods83

Wood(M8) Agegroupof20to64yearsoldAverage monthlyincome was Rs.22,360, of whichhighest monthlyincome reportedwas Rs. 40,000while the lowestmonthly incomewasRs.10,000

Most informalenterpriseswere familybusinessesThese shops do employworkers and theseworkersarepaidincashonly.96% of them use theirpersonal mobiles fortheirbusiness, ofwhich72% carry a smartphone.Noneofthemhascomputer and 48% ofthem own a two-wheeler.Mostoftherespondentsmaintained some formofbusinessrecords

Traditionalknowledge,conservationofagro-ecosystems,augmented earningsandlivelihood84

Tailoring(M6) Agegroupof22to52yearsoldAverage monthlyincomeofthesaidsample was Rs.14,000, of which

Noneoftheseshopsareregistered under anyforum, group orassociation. Those whorun their shop in arented space, pay the

Based on low or noraw materialpurchaseandenablesruralandsemi-urbanlivelihood resilience

82 Jeemol Unni, 2018. "Formalization of the Informal Economy: Perspectives of Capital and Labour," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 61(1), pages 87-103, March. 83 http://www.fao.org/3/y5113e/y5113e05.htm 84 Pandey, N., Garg, A. K., Malhotra, R., & Pandey, D. N. (2007). Linking local knowledge to global markets: livelihoods improvement through woodcarving in India. World Development, 1-9.

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highest monthlyincome reportedwas Rs. 25,000while the lowestmonthly incomewasRs.4,500

rent in cash only andthey don’t get anyreceiptforthesame.Nomobile wallets usedand only 18% ofrespondentsmaintainedbusinessrecords

with swift-to-achievebreakevenpoints85

Plant Nurseries(M13)

Agegroupfrom19to50yearsIncome rangesbetweenRs.10,000 and Rs.70,000

-

Low-carbonresilience andClimate changemitigation are byproducts of thiseconomicactivity86

CoachingInstitutes(S13)


Offeringdiscountstogetmore business onregular basis to ourregular customershowever, duringfestivals, marriageseasonbusinessgoesupwith advance bookingsforpartiesetc

Contributes towardsinclusive andequitable qualityeducation andpromote lifelonglearningopportunities

Creche(S14)


Mostcrechesarehome-runandinformalunits

Creches provide safeand caring sheltersforyoungchildrenofworking women andalso provide analternate source ofemployment87

Bicycle repairshops(S6)


Bicyclerepairshopswasrun by people wholearnedthecraftofworkonthejob.

Overlooked as adevelopmenttool,thebicycle can driveglobal progress.Comparedtowalking,bicycle riders cancarry five times asmuch cargo in just aquarterofthetime.Ahigh-quality bicyclein adevelopingruralarea is a powerful,cross-cuttingintervention thatimmediatelyimproves livelihoodsand educational andhealthcareoutcomes88

Eateries &Dhabha(S2)


No registration done tostart this business.Hyper localcompetitionis another majorcharacteristic Familymembers an essentialpart of the businessoperations

Street food providesa flexible yetprofitable source ofincome, This highlydecentralized fooddistribution systemprovides affordable,nutritious andculturally acceptedfood items tailoredespecially to theneeds of poorerurban dwellers. It

85 https://yemen.un.org/sites/default/files/2019-09/Livelihoods%20Impact%20Assessment%202019.pdf 86 http://ioraecological.com/success_stories/creating-sustainable-livelihoods-through-nursery-establishment/ 87 https://www.giveindia.org/program/Support-livelihood-for-women-living-in-construction-sites 88 https://worldbicyclerelief.org/wp-content/uploads/2019/11/World-Bicycle-Relief-Mobility-and-the-SDGs-3.pdf

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operatesonthebasisofresourceefficiency,lowwasteoutputandlow greenhouse gasemissions.89

AutomobileRepair andGarages(T1)


Most of them haveworkedforfewyearsinthe shop, learnttechniques ofworkandthen after few yearsstartedtheirownshop.Most of respondentsweremigrants.Manyofthem did not possessnecessarydocumentstoavail loan facility.Another reason forrefusalof loanbybankswaspoorbankbalance

Enabling of mobilitynot only augmentsearnings of theinformal enterprisebutalsotheeconomyoftheregioninwhichthegarageexists

Beauty Salons(S15)


Most of them haveworkedforfewyearsinthe salons, learnttechniques of facial andgroomingworkandthenafter few years startedtheirownSalon.

A critical source ofdecent work andeconomic growth forinformal womenentrepreneurs

Constructionand fabricatedconstructionmaterialbusiness(T3)

Agegroupfrom26to60yearsIncome rangesbetween Rs.5,000andRs.100,000

Most of the informalentrepreneurs in thissector deal in cash intheir receipts andexpenses and mobilewalletsareusedonly inextreme cases (such aswhenaclientinsistsandisnotpaying)

Tradeinconstructionmaterial, real estate,infrastructure, andurbandevelopmentisparamount forsustainabilityandforprovision oflivelihood – in theinformalsector90

Additionalinsightsregardingkeycharacteristicsandchallengesfacedbyinformalunits(andfor theprocessof formalization)canbesemanticallyaggregated intobroadsub-headsuchasNeedforSkillstomakeNetworksandCollectives,NeedforDigitalSkillSets,Need for Skill/Knowledge about Legalities of the sector and Need for FinancialManagementSkills.DetailofthesamehavebeenshowninBox6.1.

BOX6.1GAPSTHATNEEDTOBEADDRESSED

• NeedforSkillstomakeNetworksandCollectiveso Most of the informal economy entrepreneurs are not a member of any

industryassociation. Industryassociationsoftenaugment the social capitaland value accrued through networking for an informal economyentrepreneur.

o Another insight revealed from primary data was - most of the informalentrepreneurs have responded that they have regular local demand. Sincefulfilmentof localdemand reliesa loton informalnetworksandmodesofoperation, informal enterprises sometimes due to this reason also havelessenedmotivationtoformalizetheirsetups.Thoughthistrendhasbegunto

89 Dittrich, C. (2017). Street food, food safety and sustainability in an emerging mega city: insights from an empirical study in Hyderabad, India. In Work, Institutions and Sustainable Livelihood (pp. 227-248). Palgrave Macmillan, Singapore. 90 Goubran, S. (2019). On the role of construction in achieving the SDGs. Journal of sustainability research, 1(2).

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change–particularlywithenterprisesthatarepartofthee-commercevaluechaininoneformoftheother–butformalizationisalongway.

• NeedforDigitalSkillSetso Majorityoftherespondentsownsmartphone.Thisisapositivetrendtowards

telecommobilityenablinggreaterconnectivitytoinformalentrepreneurandopportunity for digital initiatives. Post demonetization in India, alternatechannelsofpayments(sendingandreceiving)areontheriseespeciallythoseare mobile enabled. This finding is in resonance with increase in use ofsmartphonesbyinformalentrepreneurs.

• NeedforSkill/KnowledgeaboutLegalitiesofthesectoro Mostinformalentrepreneurswereunsurewhethertheywereauthorizedto

do a particular economic activity in the respective region or not. Say forexample for operating a food stall or being listed on a food deliveryaggregation portal, there could be rules/regulations in place that mightdemandadherencetoparticularstandardsorqualityauditsbysomeagenciessuchasFSSAI(FoodSafetyandStandardsAuthorityofIndia)etc.

o With respect tohelp fromGovernmentPolicies– twobusinesses thathavebenefitted from external economic environment changes and governmentpolicieshavebeenplantnurseries(Eg:forpollutionmitigation)andcoachingcentres(policyeg:RTE)

o Most of these informal economy workers/enterprises face expansionsproblemssincee-commerceportalssuchasAmazon/PaytmmallsnecessitatedigitalskillsandGSTregistration

• NeedforFinancialandMarketingManagementSkillso Aviableorganization(formalor informal)hastogenerateenoughrevenue

overtimetocoverthecostsofallfactorsofproductionandfundsunderitscommand,while being able at all points in time to honour the contractualobligations implied by its liabilities. This requires knowledge aboutmaintenanceoffundstosupportoperationalexpenses.Thisisalsooneoftheareaswhereininformaleconomyentrepreneursfacemostchallengestherebymakingitanidealdimensionforgovernmenttointervene.

o Majority respondents said“no” for invoices for theirbusiness transactions.Thisisoneofthekeyfeaturesofinformaleconomy

o Asisevidentfromtheresponses,thekacchabillstillsupersedespakkabill.Thishappensduetomanyreasons–oneofthembeingtaxevasion91

Theaforementioneddiscussiononinsightsviaprimarydatatowardscharacteristicsandneedsofinformalsectorpavewayfordeliberationsontheexistingchallengesfacedbyinformalsectortowardsformalization.

91 https://www.tribuneindia.com/news/himachal/gst-kutcha-bill-still-preferred/504434.html

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6.1.4ChallengesfacedduringFormalization

According to the73rd roundofNational SampleSurvey (NSS), thereare63.39millionMSMEsinthecountry.However,alargenumberoftheseenterprisesexistintheinformalsector and are not registered with any statutory authority. Reasons for lack ofregistrationaremanyandvaried.Fornano/household typeofenterprises, in theirview, not obtaining registration is a way of circumventing the official machinery,paperwork,costsandrentexpenses.

Figure6.1Challengesfacedbyinformalenterprisesthataffecttheprocessof

formalization92

Not only the review of extant literature but also the national and international casestudies covered in chapter five, clearly points out some of the major challenges intransmutationof informalunits to formalunits throughentrepreneurshippromotion.ThishavebeenvisuallyrepresentedinFigure6.1.

Definingvarioussub-componentsofthechallengesoutlinedinFigure6.1:

a. State and local taxes: the higher the tax rates, the higher are the incentives toevadeandoperateinformally

b. Economic uncertainty: Increased uncertainty suppresses investment and thuslimits opportunities, which restricts informal units from moving towardsformalisation.Itplaysasignificantroleinentrepreneur’sdecisionofmovingfrominformalitytowardsformalisation.

c. Declineincustomerspending:Whiletriangulatingfindingsfromsecondarycasestudies, we found that the entrepreneurs are willing to move towardsformalisationiftheircustomerbaseandturnoverexpanded

d. Regulatoryburdens:Theinformalenterprisescultivatebecauseofthegovernmentregulationsthatentrepreneursbelieveareburdensome

e. Costoftechnology:mostoftheunitsoperatinginformallyworkedusingjugaad93

92 Source: Created by authors based on case studies covered in this chapter and by referring to Sunanda Jha, Dinabandhu Bag, (2018) "Why do informal service enterprises remain informal? A RIDIT approach", Journal of Small Business and Enterprise Development, https://doi.org/10.1108/ JSBED-01-2018-0009 93 Jugaad: a flexible approach to problem solving that innovatively uses limited resources (Oxford Dictionary).

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technology,themostfamoustermsinthecontextoffrugal(novel)informalsectoroperationsinIndia94.Theyarenotawareofthelatesttechnologyusingwhichtheycanupgradetheirbusinessandincreasetheirproductivity.Oneoftheperceptionsof the owners was if they register they will have to buy new machines, andconsiderthesafetyoftheworkers.Purchasingnewequipmentwouldattractsomeinvestment,increasingtheircostofoperation.

f. Competition:Themotiveofformalisationistoreduceunfaircompetition95butthestandard perception among the units operating informally is that theircompetitionincreaseswithformalisation.Iftheyformalise,theyneedtofollowalltheregulationsimposedbythegovernment.Duetowhichtheircostofoperationincreasesandalsotheircompetitionwithotherunitsincreases.

g. Perceivedlevelofcorruption:Manyofthesurveyedenterpriseschosetoremaininformal due to the level of corruption they faced due to which they have aperceptionthatthewholeprocessisfilledwithcrime,andateverystagetheyneedtobribetogetthelicence.Severalpastscholarstooconfirmthesefindings96.

h. Lack of capital: The informal unit lacks working capital, and as registrationinvolvescost,tinyunitsavoidformalisation.Thesurvivalistentrepreneursdonotwanttospendiftheyarenotgettinganybenefitinstantly97.Thisperceptionisoneoftheprincipalreasonsforfirmsremaininginformal.

i. Cost of training workers: One of the common perceptions among theentrepreneurs was that they need to train the workers on newmethods andtechnologyiftheymovetowardsformalising,astheywouldberequiredtofollowthe minimum qualification or acquired skill benchmark. The informal unitsconsider training workers as a burden which would increase their cost ofoperation, rather than finding the benefits of training and its impact onproductivity.

j. Costofemployees:Theregisteredunitsonhiringformalemployeesneedtofollowthe basic rules of givingminimumbenefits to the employees (minimumwage,medicalbenefits,etc.)Theyconsiderthistooasacostwhichwouldincreaseiftheymovetowardsformalisation.AccordingtoLabourDepartmentnotification(Delhi,3March2017)98,theminimumrateofwagesisINR13,350permonthandINR513 per day, whereas the informal entrepreneurs are payingmuch below theminimumbenchmark

k. Lackofawareness:Mostoftheenterprisesoperatinginformallywereunawareofthefactthateventheyneededtoberegistered,theylackedinformationonhowtoregisterandwereuninformedofthebenefitsofregistration.

l. LackofTransactionData:Asthescaleoftheoperationofinformalunitswassmall,

94 Kumar, H. and Bhaduri, S. (2014), “Jugaad to grassroot innovations: understanding the landscape of the informal sector innovations in India”, African Journal of Science, Technology, Innovation and Development, Vol. 6 No. 1, pp. 13-22. 95 Levenson, A. and Maloney, W. (1998), “The informal sector, firm dynamics and institutional participation”, working paper series, The World Bank, Mexico, 30 September. 96 Schneider, F. and Enste, D.H. (2000), “Shadow economies: size, causes, and consequences”, Journal of Economic Literature, Vol. 38 No. 1, pp. 77-114. 97 Farazi, S. (2014), “Informal firms and financial inclusion: status and determinants”, Journal of International Commerce, Economics and Policy, Vol. 5 No. 3, pp. 1-28. 98 F.No.ADM(HQ)/DDMA/ORDER/2010/75, http://it.delhigovt.nic.in/writereaddata/egaz201751244.pdf

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theydidnotevenmanagerecordsoftheirtransactions.m. Taxmorality: the taxmorality captures thewillingnesswithwhich individuals

leavetheofficialeconomyandentertheillegitimate(untaxed)economy99

The aforementioned challenges focusmainly on the enterprise (economicunit)perspectivebutconsiderationofthelabour(job/employment)challengesisalsoimportant and there are few challenges that span acrossboth these categories.Basedondiscussionsinchapter5andkeepinginviewanddemandandsupplychallengesinthecontextofsustainabilityfollowingchallengescategoriesintosemanticallysimilarabstractcategoriesisgivenasfollows:

I. FinancialDimension1. LackofCapitalandResources2. EconomicUncertaintyandInsurance

II. InfrastructureDimension1. LowProductivity2. Lackinmarketingandotherinfrastructuralfacilities3. Volatiledemand4. LackofProtection(safety,familywelfareandhealthcare)5. Competitionfromestablishedplayers

III. KnowledgeDimension1. Skillgap2. Limitedaccesstogovernmentschemes3. No/limitedbusinessexperience4. AccesstoDigitalSkillsandDigitalSupportSchemes/Programmes

6.1.5Support/PoliciesandStakeholdersforFormalizationofInformalSector

The section presents an overview of the support/policies provided to theemployees/unitsintheinformalsectorwhichmaypossiblyhelptransforminformalunitstowards formalization by various actors/stakeholders. This includes key actors thatsupport the informal sector including such as – Central and StateGovernments/Ministries,largescaleNGOs,SocialImpactEnterprises,PrivateSectorCSRActivities,TechnologyFirmsetc.andagencieswhicharecarryingouttherelatedgroundlevelsupportandimplementationactivities.Thesupportsincludemeasureslikeskilling,reskilling&upskillingdevelopmenttrainingof theentrepreneurs,recognitionofpriorlearning(RPL),easeofdoingbusiness,financialsupport,newandimprovedtechnologyimplementation,oranyothermeasurewhichhelpstheinformalsectortowardscapacitybuildingandpromotingthemtocomeunderthepurviewofformalsector.

ThesestakeholdersspearheadedwithMoSDEwillbepivotalinthejourneyfrominformalto formal economy for enterprises. Summarized details of main categories ofstakeholders and the schemes/initiatives through which they are impacting the

99 Frey, B.S. and Weck-Hanneman, H. (1984), “The hidden economy as an ‘unobserved’ variable”, European Economic Review, Vol. 26 Nos 1-2, pp. 33-53.

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formalizationecosystemareasfollows(inTable6.5):

Table6.5SummaryofStakeholder’ssupportandpoliciestowardsenablingtheinformalsector’scapacityandpromotion

Actors Policy/Initiative/Actor FinancialCapital

InfrastructuralandTechnologicalCapital

KnowledgeCapital

Others

Government ThePradhanMantriRojgarProtsahanYojana(PMRPY)

✓ ✓ ✓PradhanMantriShramYogiMaan-dhan ✓

CreditFacilitationThroughBank ✓

BillDiscounting ✓

PradhanMantriMUDRAYojana(PMMY) ✓

CreditGuaranteeFundSchemeforMICROANDSMALLENTERPRISES ✓

MicroCredit(MC)forSHGs ✓

EntrepreneurshipSkillDevelopmentProgrammes(ESDPs)

✓

ManagementDevelopmentProgrammes(MDPs)

✓

AssistancetoTrainingInstitutionsScheme(ATIScheme)

✓ ✓

SkillUpgradation&QualityImprovementandMahilaCoirYojana(MCY)

✓ ✓

MarketingDevelopmentAssistanceScheme

✓ ✓EnterpriseDevelopmentCenters

✓ ✓

PanditDeendayalUpadhyayShramevJayateKaryakram

✓

MarketingAssistance&TechnologyUpgradation

✓

ZEDScheme

✓ ✓ ✓EntrepreneurialandManagerialDevelopmentofSMEsthroughIncubators

✓ ✓

LeanManufacturingCompetitivenessScheme(LMCS)forMSMEs

✓ ✓

MakeinIndia ✓ ✓ ✓ ✓SkillIndia

✓ ✓

StartupIndia ✓

✓NationalHandicraftDevelopmentProgramme(NHDP)

✓ ✓ ✓

IndianFootwear,Leather&AccessoriesDevelopmentProgramme ✓ ✓

HumanResourceDevelopment(HRD)sub-scheme

✓ ✓

IntegratedDevelopmentofLeatherSector(IDLS)sub-scheme

✓

✓EstablishmentofInstitutionalFacilitiessub-scheme

✓

MegaLeather,FootwearandAccessoriesCluster(MLFAC)sub-scheme

✓LeatherTechnology,InnovationandEnvironmentalIssuessub-scheme

✓

PromotionofIndianBrandsinLeather,FootwearandAccessoriesSectorsub-scheme

✓

DevelopmentoftheElectronicsSystemDesignandManufacturing(ESDM)sector

✓

TechnologyandQualityUpgradationSupporttoMSMEs ✓ ✓

Sagarmalascheme

✓

NationalWaterwaysAct

✓

SuperiorTechnologyandDigitalIndia

✓

PradhanMantriJeevanJyotiBimaYojana ✓ ✓

PradhanMantriSurakshaBimaYojana ✓ ✓

SmallFarmerAgri-BusinessConsortium(SFAC)assistancetocoldstorage

✓

NationalHorticultureMission(NHM)

✓

AgriculturalandProcessedFoodProductsExportDevelopmentAuthority(APEDA)assistanceforcoldchain

✓

AamAadmiBimaYojana ✓

NationalUrbanTransportPolicy2014

✓

AtalMissionforRejuvenationandUrbanTransportation

✓

AutomotiveMissionPlan–2016-26

✓

SmartCitiesMission

✓

FameIndiaScheme

✓

VoluntaryVehicleModernization/Endofthelifepolicy

✓

AdditionalEmploymentIncentiveforLeather,FootwearandAccessoriesSectorsub-scheme

✓

PhasedManufacturingProgramme(PMP)

✓

TheNationalPolicyofElectronics2019(NPE2019)recentlyreplacedthepolicybookof2012

✓

Amendedtechnologyupgradationfundscheme(ATUFS)

✓

SchemeforIntegratedTextileParks(SITP)

✓

SchemeforCapacityBuildinginTextileSector

✓

SwarnjayantiGramSwarajgarYojana(SGSY)

✓

✓IntegratedProcessingDevelopmentScheme(IPDS)

✓

✓

MerchandiseExportfromIndiaScheme(MEIS)

✓Sub-MissiononPolytechnics,ApprenticeshipTraining

✓

DeenDayalUppadhyayaGrameenKaushalYojna(DDU-GKY)

✓ ✓CraftsmanTrainingSchemesImplementedthroughIndustrialTrainingInstitute

✓

NationalUrbanLivelihoodMission

✓

Bachelorofvocationaldegreeinuniversities

✓

CommunityColleges,JanShikshanSansthan

✓

PardhanMantriKaushalVikasYojna(PMKVY)

✓ ✓SeekhoaurKamao(Learn&Earn)

✓ ✓

UpgradingtheSkillsandTraininginTraditionalArts/CraftsforDevelopment(USTTAD)

✓ ✓

MaulanaAzadNationalAcademyforSkills

✓ ✓ ✓NaiManzil

✓

169

PunjabIndustrialandBusinessDevelopmentPolicy2017 ✓ ✓ ✓

ChandigarhIncubationandCo-WorkingStartupSchemeDocument ✓ ✓ ✓

UttarakhandStateStart-upPolicy-2018 ✓ ✓ ✓

HaryanaEntrepreneur&StartupPolicy-2017 ✓ ✓ ✓

LakshadweepPolicyofDevelopment,2018 ✓ ✓ ✓

JharkhandSustainableMicaPolicy

✓

OdishaMadhuBabuPensionYojana2020 ✓

AndhraPradeshIndustrialDevelopmentPolicy2020-23

✓

LargeScale

NGOsFordFoundation ✓

✓

ShreniCommunityTrust ✓

✓UtthanMahiti

✓ ✓

ShroffsFoundationTrust

✓

MittiKeRang ✓

✓

SuccessFoundation(NGOarmofViztarInternational)

✓

FoundationforSustainableDevelopment(FSD)

✓

Makaam

✓ ✓SEWA

✓ ✓

AzadFoundation

✓ ✓Snehalaya

✓ ✓

NationalHawkerFederation(NHF) ✓ ✓

✓Bill&MelindaGatesFoundation ✓ ✓

Nexharvest

✓ ✓ ✓WIEGO

✓

✓

CLAP

✓

✓Nirmana

✓

✓

Swaniti

✓ ✓

Goonj ✓ ✓

✓RAHI

✓

NYDHEE

✓

✓OXFAMIndia

✓

✓

SocialImpact

Enterprises

AgroStar

✓

AltumCredo ✓

Appachi

✓

ArohanFinancialServicesLtd ✓

Butterfields

✓

EkGaon

✓

ErgosGrainbank ✓

G.V.Meditech

✓HasiruDalaInnovations

✓

Let'sRecycle

✓ReMaterials

✓

PrivateSectorCSRActivities

DairyFarmInitiative(Abbott)

✓ ✓

AdityaBirlaRuralTechPark/YashogamiSkillsTrainingCentre

✓

AdityaBirlaFashionEnterpreneurshipProgram

✓ ✓

AsianPaintsVocationalProgramme

✓

BajajEducationInitiative/IISERsupportprogramme

✓ ✓

BMWSkillDevelopmentProgramme

✓

CastrolSarathi/CastrolEklavyaprogramme

✓ ✓

Cipla-SEDIpartnershipProgramme

✓

DaburVocationalTrainingProgramme

✓

Dr.LalPathlabsRPEDProgramme

✓

GoldmanSachs10000SmallBusiness/10000WomenProgramme ✓ ✓ ✓

ICICIRSETIProgramme

✓ ✓

JSWSkillsSchool

✓

KohlerPlumbingAcademy

✓

OlaFoundationInitiatives

✓

PepsicoAgriculturalInitiatives

✓

PidiliteInitiativesforFarmers

✓

TataTeaProgrammesforTeaPlantationFarmers

✓GocoopPlatform

✓

TechnologyFirms

PayPalSellerProtectionforIntangibles ✓

FlipkartGrowthCapitalProgram ✓ ✓

FlipkartHealthInsurance ✓

IntelDigitalSkillsforIndia

✓

GoogleInternetSaathi

✓ ✓

PaytmtieupwithNCTI ✓ ✓ ✓ ✓AmazonKalaHaat

✓

✓

AlibabaGlobalSMEEnablementProgramme

✓

FlipkartWalmartVriddhiSupplierDevelopmentProgram

✓

FlipkartSamarthProgramme

✓

FacebookSMEIndiaCouncil

✓

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6.2.Ministryof SkillDevelopmentandEntrepreneurship (MoSDE)&SkillEcosystem6.2.1Introduction

MoSDE is responsible for co-ordination of all skill development efforts across India,removalofdisconnectbetweendemandandsupplyofskilledmanpower,buildingthevocational and technical training framework, skill up-gradation and building of newskills.Itisaidedintheseinitiativesbythefollowingviz.

• DirectorateGeneralofTraining(DGT)• NationalSkillDevelopmentAgency(NSDA)• NationalCouncilforVocationalEducationandTraining(NCVET)• NationalSkillDevelopmentCorporation(NSDC)• NationalSkillDevelopmentFund(NSDF)• 38SectorSkillCouncils(SSCs)• 33NationalSkillTrainingInstitutes(NSTIs/NSTI(w))• 15000IndustrialTrainingInstitutes(ITIs)underDGT• 187trainingpartnersregisteredwithNSDC• JanShikshaSansthan(JSS)

Besidestheaforementioned,MoSDEalsohascollaborativeandspecialprojectssuchasTata-IndianInstituteofSkills,Mumbai,CentresofExcellence(suchasSIDACOdisha)etc.TheMinistryalsointendstoworkwiththeexistingnetworkofskilldevelopmentcentres,universitiesandotheralliancesinthefield.Further,collaborationswithrelevantCentralMinistries,Stategovernments,internationalorganizations,industryandNGOshavebeeninitiated for multi-level engagement and more impactful implementation of skilldevelopmentefforts.MoSDEhasbeenactivelyinvolvedinthe

6.2.2MajorSchemes,Programs,InitiativesandProjects

TherearetwoinwhichMoSDEcanfurthertheformalizationofinformalsector:Bolt-ontoexistingschemes,programs,initiativesandprojectsorproposednewones.Followingis an overview of the major existing schemes, programs, initiatives and projects ofMoSDE:

SANKALP: Skill Acquisition and Knowledge Awareness for Livelihood Promotion(“SANKALP”)isaprogrammeoftheMinistryofSkillDevelopmentwithloanassistancefromtheWorldBank. Itaimsto improveshort termskill trainingqualitativelyandquantitativelythroughstrengtheninginstitutions,bringinbettermarketconnectivityandinclusionofmarginalisedsectionsofthesociety.SANKALPwaslaunchedon19thJanuary2018andhasatenuretillMarch2023.

PMKVY3.0:PradhanMantriKaushalVikasYojana(PMKVY)istheflagshipschemeofthe Ministry of Skill Development & Entrepreneurship (MSDE) implemented byNational Skill Development Corporation. The objective of this Skill CertificationSchemeistoenablealargenumberofIndianyouthtotakeupindustry-relevantskill

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training thatwill help them in securing a better livelihood. Individualswith priorlearningexperienceorskillswillalsobeassessedandcertifiedunderRecognitionofPriorLearning(RPL).Thethirdphaseoftheschemeisdesignedtowardsmakingskilldevelopmentmoredemand-drivenanddecentralised in itsapproach,with focusondigitaltechnologyandIndustry4.0skills.Inthethirdphase,DistrictSkillCommittees(DSCs),undertheguidanceofStateSkillDevelopmentMissions(SSDM),shallplayakeyroleinaddressingtheskillgapandassessingdemandatthedistrictlevel.PMKVY3.0envisagesencouraginghealthy competitionbetweenstatesbymakingavailableincreasedallocationtothosestatesthatperformbetter.

CraftsmenTrainingScheme:TheCraftsmenTrainingScheme(CTS)wasintroducedbytheGovernmentofIndiainyear1950toensureasteadyflowofskilledworkersindifferenttradesforthedomesticindustry,toraisequantitativelyandqualitativelytheindustrial production by systematic training, to reduce unemployment among theeducated youth by providing them employable skills, to cultivate and nurture atechnical and industrial attitude in the minds of younger generation. Presently,training coursesunder theCraftsmenTrainingSchemearebeingoffered throughanetworkof15,042ITIs(Govt.2,738+Private12,304)locatedalloverthecountrywithtotaltraineesenrolled22.82lakhs(inthetradesof1yearand2yeardurations)onNCVTMISportalwithanobjectivetoprovideskilledworkforcetotheindustryin138NSQFcomplianttrades.

ModelITIScheme:UnderthisScheme,anexistingITIinaStateisbeingupgradedasModel ITI which will be evolved as an institution showcasing the best practices,efficient and high quality training delivery and sustainable and effective industryrelationshipby:• Becoming a demand center for local industries for its expertise and best

performanceintraining.• Betterengagementwithlocalindustries• SigningflexiMoUwithindustrytoconducttrainingprogramtomeetspecificskill

requirement of the Industry. For such approved courses, examination /assessmentandcertificationwillbedonebyNCVT

• Trainingofunorganizedsectorworkers.• Trainingofexistingindustrialworkforce

PMUmeed (Forthcoming by MoSDE): PM Udyam Mitra Excellence inEntrepreneurshipDevelopment(PMUmeed)Schemewillbeademanddrivenschemeandstateswillhavetopitchintoidentifypotentialentrepreneursandventuresthatwouldbeextendedsupport.ThesupportunderPMUmeedSchemewillbeextendedfor18monthsaftercompletionofa2monthentrepreneurshipdevelopmenttraining.There is need to help create an enabling ecosystem for budding and existingentrepreneurs so that new businesses can absorb the unemployed aswell as newentrantsinthejobmarket.Broadlytwocategoriesofbeneficiaries:

• Supportfornewentrylevelentrepreneurs• Supportforexistingentrepreneurs

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NATS:TheNationalApprenticeshipTrainingScheme,launchedin2016,isaone-yearprogrammeofferedatcentral,stateandprivateorganisationsequippingtechnicallyqualifiedyouthwithpracticalknowledgeandskillsrequiredintheirfieldofwork.Theapprenticesareimpartedtrainingbytheorganizationsattheirplaceofwork.Duringtheapprenticeship,candidatesarepaidastipend,50%ofwhichisreimbursabletotheemployerfromthegovernment.

DDU-GKY(withMoRD):DDU-GKYisuniquely focusedonruralyouthbetweentheagesof15and35years frompoor families.Asapartof theSkill Indiacampaign,itplays an instrumental role in supporting the social and economic programs of thegovernment like the Make In India, Digital India, Smart Cities and Start-Up India,Stand-UpIndiacampaigns.

STRIVE: Skills Strengthening for Industrial Value Enhancement (STRIVE) is a newWorldBankfundedprojectthataimsatcreatingawarenessthroughindustryclusters/geographical chambers thatwould address the challenge of involvement ofmicro,Small and Medium-sized Enterprises (MSMEs). The Project would also aim atintegratingandenhancingdeliveryqualityofITIs.InordertoensureachievementofoutcometheseITIwouldbecompetitivelyselectedforupgradationunderthescheme.

PMYUVA(inassociationwithMUDRA):PradhanMantriYUVAYojana(PM-YUVA)isthe initiative of Ministry of Skill Development and Entrepreneurship (MSDE) onentrepreneurship education and training, advocacy and easy access toentrepreneurshipsupportnetworktoover7lakhyouthtoinitiatemaximumstart-upsoverfiveyears.Thetwoprimeobjectivesoftheschemeare:-1)Educateandequippotential and early stage entrepreneurs 2)Connect entrepreneurs in enablingnetworksofpeers,mentors,incubators,fundingandbusinessservices.

Theaforementionedpolicy/scheme/projectinitiativesofMoSDEhavehadanenablingimpact towards formalization of informal sector especially when working with on-ground stakeholders. Figure 6.2 visualizes the way current initiatives of capacitydevelopmentofMoSDEwithsupportfromotherstakeholdersisenablingaddressingofchallenges faced by informal economy (enterprises and employees) and also the gapareas that need augmented focusofMoSDE in entirety (shown ingreen boxes in lastcolumn)orpartially(showninorangeboxesinlastcolumn).

6.2.3NationalPolicyforSkillDevelopmentandEntrepreneurship2015

According to National Policy for Skill Development and Entrepreneurship 2015 ofMoSDE, vibrant entrepreneurship requires support from an enabling ecosystem ofculture, finance, expertise, infrastructure, skills and business friendly regulation. Thispolicyframework,cognizantoftheneedforthefullecosystemtobepresenttounlockentrepreneurialpotential,proposedanine-partentrepreneurshipstrategy:

• EducateandequippotentialandearlystageentrepreneursacrossIndia(KnowledgeDimension)

• Connectentrepreneurstopeers,mentorsandincubators(KnowledgeDimension)• SupportentrepreneursthroughEntrepreneurshipHubs(InfrastructureDimension&

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FinancialDimension)• Catalyzeacultureshifttoencourageentrepreneurship(KnowledgeDimension)• Encourage entrepreneurship among under-represented groups (Knowledge

Dimension)• PromoteEntrepreneurshipamongstWomen(KnowledgeDimension)• Improveeaseofdoingbusiness(InfrastructureDimension)• Improveaccesstofinance(FinancialDimension)• Foster social entrepreneurship and grassroots innovations (Infrastructure

Dimension)

Figure6.2presentsthepossibleapproachthemesforMoSDE’sinterventionandmappingwithexistingMoSDE’sinitiativesincludingtheNationalPolicyforSkillDevelopmentandEntrepreneurship2015.ThearrowsdepictthemappingwithexistingMoSDEinitiativesandthepinkcoloredboxesunderapproachthemeinthefigure6.2depictmappingwiththeNationalPolicyforSkillDevelopmentandEntrepreneurship2015.

Figure6.2MappingofcurrentinitiativesofcapacitydevelopmentofMoSDEwithsupportfromotherstakeholdersinenablingaddressingofchallengesfacedbyinformaleconomy

The samepolicy document also envisaged a framework for skill augmentationwhichincludedfivecomponents,sevenfoundationsandastate-of-the-artdigitalinfrastructure;possibleactionplaninthecontextofstrategicprioritiesandkeyinitiativestakenbythe

174

differentarmsoftheMoSDE.Abriefofthisframeworkofskilldevelopmentisgivenasfollows:

Components:Frameworkhadfivecomponentsasgiven inthe followingtable6.5viz.create, correct, certify, connect and catalyze. The last one, i.e., catalyze(entrepreneurship) will be the starting point of support and incentive-basedinterventionsthatwillleadtoformalizationofinformalsector.

Foundations:Theaforementionedfivecomponentsaresupportedby7foundations,i.e.,(i)Synergyacrossministries,departments,&industry,(ii)mobilizationandengagemententrepreneurs / trainers/ skill seekers/ content developers etc., (iii) local and globalpartnerships,(iv)outreach&advocacy,(v)ICT-Enablement(Technology&technologyproviders), (vi) faculty/ trainers, and (vii) disadvantaged regions, communities andpeople.

Table6.5:FivecomponentsofSkillDevelopmentframeworkofMoSDE(Source:NationalPolicyforSkillDevelopmentandEntrepreneurship2015)

Create Correct Certify Connect CatalyzePipeline ofSkilledPersons

Align supplywith demand byup skilling andre-skilling

Global/CommonStandards

Match supplywithdemand

Entrepreneurship

6.2.4 Key beneficiaries to focus for proposed formalization framework and keychallengesfacedbyinformalsectorBesides the priority sectors identified in section 6.1 the following audience could belooked at by MoSDE for optimizing andmaximising the impact of formalization andentrepreneurshippromotionthroughcapacitybuilding:

Capacity Building for MicroEntrepreneurs/Enterprises: As per World bank,Microenterprises can be defined differently, depending on country’s stage ofdevelopment, policy objectives, and administration.” In Indian context, microenterprises are those enterprises which have investments up to INR 1 crore andturnoveroflessthanINR5crore100.Growthinmicroenterprisesisimportantbecauseit is an important source for employment generation and growth of the country.Limitedemploymentopportunitiesclubbedwithhighpopulationintheagriculturalsectorandthemodernmanufacturingsectorsleavesavastmassofthelabourwithoutanyproductiveemployment.Microenterprisesplayan important role inemployingthe surplus labour force productively. Key needs of formalization for micro-enterprisesareincreasingtheaggregateoutput,enablingefficientuseoflabourandcapital,initiatingindigenousenterpriseandimprovingthedistributionofincome.Keychallenges troubling microenterprises and their formalization include high cost of

100 https://economictimes.indiatimes.com/small-biz/sme-sector/finance-minister-announces-revised-msme-definitions-no-different-between-manufacturing-and-service-enterprises/articleshow/75717694.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

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capital, inadequateinfrastructuralfacilities,primitivetechnologyandlimitedaccesstoinputandoutputmarkets101.

Micro-entrepreneurship is being increasingly recognized as one of the prominentwaysofpovertyalleviationandincomegenerationandgovernmentscanfocusonthedevelopment of sector specific technology to support microenterprises. Twoimportantmoderating factors that are going tomake technology all the useful forformalizationeffortsarestressonoveralluserexperienceandsupportforvernacularlanguages. Capacity building initiatives, keeping in mind the aforementioned twofeatures,willhelpinfurtheringofutilityofskillingandtherebyformalizationinthisstrata.

Capacity building for Mass Entrepreneurship (Nano Entrepreneurs): MassEntrepreneursandthoseentrepreneurswhohireor improvethe incomesof5pluspeople,uselocalinputsorsolvelocalproblems.Thepercentageofmassentrepreneursin India is 11% in comparison with global percentages of 30-40%102. Thesemassentrepreneursarea'missingmiddle'weoftendon'ttalkabout-thosefallingbetweenself-employment and the fast-growing start-upswho are celebrated. These are themassentrepreneurs,ornano-entrepreneurs,orthosewhostartasmallbusinessandhirethreetofivepeople.Empoweringthemthroughpolicyinterventionisyetanotherarea of vast opportunity103. Certain problems faced by mass entrepreneurs asmentionedinthereportbyGAME104encompass:Paucityofoperationalizationoflongterm funding, aspiration mismatch between entrepreneur and the supportorganizationtryingtohelpthem(incubator/accelerator)andmobilizationofpotentialentrepreneurs.AsurveycommissionedbyTheIndusEntrepreneurs(TiE),Chennai,inassociationwithGlobalAllianceforMassEntrepreneurship(GAME)highlightedthatminimal digitisation of accounting and poor cash flow management are commonbarriersthataffectedmassentrepreneursfromaccessingformalcredit105.

CapacityBuildingforWomenEntrepreneurs:

Unliketheirmalecounterparts(Williams2009),manywomenentrepreneursinIndiaoperate within the informal economy neither out of choice nor as a path toformalization,butasawaytopositionthemselveswithincontextsshapedbynormsandexpectationsaroundrolesandfamily(Babbittetal.2015;WilliamsandGurtoo2011).Theideaofengagementinentrepreneurialactivitiesintheinformaleconomyas an ‘opportunity’ incorrectly portrays the nature ofwomen entrepreneurship indevelopingcountries,whichismoretypicallycharacterizedbytheneedforsurvivalandtosupportlivelihoods.Thisportrayaldownplaystherealitiesofwomen’sbusinesschoicesanddecisionsinthesecontexts,wherecontingenciessuchasenvironmentalrisk,economicinstability,socialconflictandfamilymorbidityarethenorm(London

101 Bhattacharya, S., & Londhe, B. R. (2014). Micro entrepreneurship: Sources of finance & related constraints. Procedia Economics and Finance, 11, 775-783. 102 https://massentrepreneurship.org/ 103 https://www.businesstoday.in/top-story/funding-lack-of-aspiration-clog-up-nano-entrepreneurship/story/338598.html 104 https://massentrepreneurship.org/research-reports/ 105 https://www.thehindubusinessline.com/economy/mass-enterprises-provide-stable-job-opportunities-survey/article29924670.ece

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etal.2014).Forwomenthisprogressionfrominformaltoformaleconomyiscriticalsinceitrepresentsvariousrisks,includingalossofnetworks,traditionalroles,statusandidentity,renderingsuccessmorelikebetrayalthanachievement(NevesandDuToit2012).Furtherevidencesuggestsprogressioncandelegitimizetraditionalsocialpositions as a result of changed status due to success (De Vita et al. 2014). Soformalizationprocessincaseofwomenentrepreneursneedstobedonekeepinginmindthesesocialimplicationsandchallengesaswell.

CapacitybuildingforYouthentrepreneurs:YouthformasizeablepercentageoftheIndiandemographic.Youthcanbecategorizedintogroupsbasedonage:theformativestage of pre-entrepreneurship (15-19 years), the growth stage of buddingentrepreneurs(20-25years),andtheprimestageofemergententrepreneurs(26-29years)e.g.themomenttostartseriouslywithabusiness.Additionally,theagecategoryof 10- 15 years, can be added, labelling this as the awareness stage ofentrepreneurship.

Youthsturnouttobepartofthegigandplatformeconomy.Professionalisationandskilling gaps always interrupt the process of formalisation. Status(class/gender/caste)alsomattersherealot.

Youthhavetheirownchallengeswhichformbarrierstoformalizationforthem:lackof awareness, lack of priorwork and entrepreneurship experience, fewer financialresources,limitedbusinessnetworksandbusiness-relatedsocialcapitaletc.

Formalizationapproachesneedalsotobecomplementedbytacitlearningwithpeersandnetworks.Thesemayinvolve,forexample:

• Partnershipinvolvement:meetingswithfinanciers,banks,landlords,incubators,tradeandprofessionalorganisations

• Mentoring with peers – young people who have actually started and run abusiness

• Face-to-faceinteractioneffective• Connectingyouthwithknowledgenetwork106

AclosepartnershipwithMinistryofEducationforcreatingabridgeandinter-operabilitybetweenformalandvocationaleducationneedstobefurthered.

6.3 Frameworks and Approaches for MoSDE for formalization ofinformalsectorForenabling journey frominformalsector to the formalsectorandfor formulationofapproaches by either capacity development, funding support or incentives such assimplifyingproceduresandhand-holding, it isimportant toknit theexistingeffortsofministry (MoSDE) in this direction along with partners and allied stakeholders withthemesandapproachesthatwouldfacilitateformalization.Thatiswhereinintheexisting

106 https://www.oecd.org/cfe/leed/SummaryReportSeminarYouthEntrepreneurshipRev.pdf

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skilldevelopmentecosystemscomesintoplaypavingapathforanincrementalupdateonthelinesofenablingformalization.Thesuggestedframeworkhastwopartstoitviz.framework towards formalization of informal sector through entrepreneurshippromotion(Section6.3.1)andskillingroutesforenterpriseaswellaslabourpartoftheframework. Secondpart being framework forefficient addressing of challenges facedinformalsector(Section6.3.2).

6.3.1 Framework of formalization of informal sector through entrepreneurshippromotionandskillingecosystem

Framework for formalization of informal sector (labour and enterprise) throughskillecosystem and entrepreneurial ecosystem is presented in fig 6.3. The framework isguided by taking into consideration the two prevalentworldviews of formalization –formalizationofinformalenterprisesandformalizationoflabour.Therearesimilaritiesand differences in themeans and routes of formalization for both these factions. Thevariouscomponentsoftheframeworkareguidedbythedeskresearch(mostlysecondaryresearchinnature)ofthisstudy–triangulatedwithlimitedsampleprimarydata.Theframework has been developed keeping in mind the existing challenges, needs andavailablesupportarms,channelsandroutestokeepitasclosetotherealitieson-ground.ThisframeworkwillactasaguidingframeworkforthesupplementaryframeworkgiveninSection6.3.2.Theframeworkgiveninsection6.3.2issupplementarytothiscurrentsection’s framework since this current framework is more ‘need-based andformalization’ focused. It mainly emphasizes the transmutation and progress ofinformal sector actor (enterprise/labour) to the formal sector via an augmentedearning/livelihoodopportunity.The supplemental framework in section6.3.2 ismore‘addressing informal sector’s challenges’ focused - emphasizing on what support(policy/program/scheme/collaboration level) can be provided to informal sector toaddresstheexistingchallenges–intermsofexistingandnewpolicyinitiatives.

The basic approach in the current framework across both the factions encompassescertain common steps viz. mobilization, advocacy and onboarding; mentoring andhandholding;skilling,accesstomarketandbetterlivelihood.Oneimportantcaveatheretokeepinmindisthatthoughthereareconceptlevelsimilaritiesinboththeroutesofformalization (enterprise as well as labour) the operationalization of each of theseconceptsineachoftheroutescanhaveadistinctandseparatemeaning.Forexample:nature of mobilization and quantum of mobilization efforts in case of informalenterprises is different from mobilization in the case of informal labour. Mobilizingresources,definingeligibilitycriteria,settingbenefitlevels,reachingouttoindividuals,registeringeligiblebeneficiariesanddeliveringsupport incaseof informallabour isamore challenging task than doing the same in case of informal enterprises. On thecontraryifaninitialtouchpointhasbeenestablishedwiththeinformalsectorlabour–in terms of training/skilling camps and initiatives – thenmobilization, advocacy andonboarding works better for them than for the enterprises. Similar is the case withmentoringandhandholding.

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Mentoringisaprocessoftacittransmissionofknowledge,socialcapitalandpsychosocialsupport.Handholdinginvolvescarefulsupportandguidanceduringprocedural,technicalorbusinessprocesses.Forinformallabour,mentoringandhandholdingleadstowork,career or professional upgradation. For informal enterprises, mentoring andhandholdingleadstobetterbusinessdecisionmaking.

Thenextsteptowardsformalizationistoextendadvantagesaccruedbymentoringandhandholding through relevant skilling processes. The proposed nature of skilling isdifferentincaseofinformalentrepreneursandforinformallabor.Theskillingapproachfor informal entrepreneurs includes four setsnamely technical skills, entrepreneurialskills,digitalskills,andskillsofnetworking.Theskillingapproachfor informal labourincludes three sets namely technical skills, employability skills and digital skills.Technicalskillingincaseofaninformalentrepreneurwillinvolvetechnicalconceptsandindependentprojectswhereas technical skilling in caseof informal labourwillhaveamorevocationalapproachwithcomprehensivetechnicalcontent.Similaristhecasewithentrepreneurskillinganddigitalskillingforaninformalentrepreneurandemployabilityskillinganddigitalskillingforinformallabour.

For formalizationof informal labour, theskillingwillbe followedwithapprenticeshipwhichwouldfurtherleadtobetterincomeandhigherpossibilityofemploymentwiththesupportofaccesstoemploymentmarketsandaccesstocertificationofnew(andoldskillsthrough RPL). It will helpworkforce to have access to job opportunities and gettingcertificateoftheirskillswhichwillenhancetheiracceptabilityamongenterpriseswheretheyareseekingjobs.Inturnitwillenhancetheirlivelihoodandsocialstatus.

Forformalizationofinformalentrepreneurs-posttheskillingprocess–anentrepreneurcould choose to operate his unit individually or operate it by being part of aconsortium/association/network.Thecallthetwoapproachesastheindividualandthenetwork routes respectively. The idea here is to make the informal entrepreneurunderstand the importance of social capital (such as increased bargaining capacity –collective bargaining and collective access to market). However, since efficacy ofnetworkingskillsisahighlycontextdrivenandsubjectivematterhenceaninsomecaseindividualroutemightalsobetaken.Throughindividualroutestheentrepreneurswilldevelopabilitytoworkandaccessmarketsatlocallevel,nationalandinternationallevelfortheirproductsandservicesandaccesstocreditsourcessupportedandlaunchedbygovernmentfinancialinstitutions,&processesofgettingcreditfromthesesourcesandalso to takeadvantagesof variouspromotional interventionsbygovernment (State&Central).Thenetworkingrouteswillequipentrepreneurs forcollectivebargaining forcredit and markets for their product and services. For Example: The network willenhancetheskillsofentrepreneursforpoolingtheirproductsandthroughdigitalskillsfindingbigbuyersinthemarketwhoarenotonlyreadytobuytheirproductsbutreadyto augment their businesses further by providing access to better technology andmanufacturingprocesses.Itwillenhancetheirincomeandlivelihoodandwillmotivateothertobeonboardintoecosystemandbepartofformalenterprises.

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Hereitisimportanttonotethatformalizationisagradualand,inmostcases,aglaciallyslowprocess. Operating in informal economyhas its ownmerits (tax avoidance) anddemerits (social security) in the perspective of an informal economy actor(labour/enterprise).Achancetogetabetterandrespectablelivelihoodforselfandfamilyalong with upliftment in ability to earn or ability to get a job are one of the basicmotivatorsandpre-cursorstoformalization.Onceaninformaleconomyactoriscertainabout the tangiblebenefitsof formalization routesproposedvia the framework– thepossibilityof the informaleconomyactor leveragingoneof the formaleconomytouchpointstoentertheformaleconomyincreasemanifoldtimes.

For informal entrepreneurs these formal economy touchpoints could be – Getting anUdyogAadharNumber (which further facilitates business developmentopportunitieswithgovernment,cheaperloans,taxrebates),gettinganeGEMregistrationdone(tohaveaccess to Indian government’s e-market Place), registration with a governmentdepartment,taxpaymentetc.Thistouchpointswillnotonlyresultintoformalizationbutalsoaninclusivegrowthviatheentrepreneurialecosystem.

For informal labour the formal economy touchpoints could be – registration withAatamanirbhar Skilled Employee EmployerMapping (ASEEM) ofMoSDE, registrationwithgovernmentdepartment, taxpayment, registrationwithagigeconomyplatform.Lowandmediumskillsgigplatformsandontheriseandwillplayanimportantrole(intimestocome)withrespecttoformalizationofinformallabor.

Theentrepreneurialandskillingroutesthathavebeendescribedinthissectionwillworkbestiniterations.Theprocessstepswillcontinuetorepeatitselfwiththedevelopmentofnewtechnologies,withtheemergencenewdemandofqualityproductsandservices,with the emergence of new markets, with the emergence of new demand fromconsumers,evolvingdigitalsystems,andnewopportunitiescreatedbythegovernmentby changing policies at regional, national and international level. This iteration willenableonething– immediateearningsoremployabilitybenefit in theshort termandformalizationinthemid-longterm.

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Figure6.3:Proposedframeworktowardsformalizationofinformalsectorthroughentrepreneurshippromotionandskillingroutes107

107 For the purpose of this report LIVELIHOOD is defined as capabilities, material and social resources and activities required for a means of living. Reference: https://www.ilo.org/asia/WCMS_224123/lang--en/index.htm

MOBILIZATION,

ADVOCACY &

ONBOARDING

MENTORING AND

HANDHOLDING

AUGMENTED

EARNINGS

FORMAL ECONOMY TOUCHPOINT

e.g. UdYog Aadhar.

eGEM, Registration with

a Government

Department, Tax

payment, Inclusion via

Financial Technology

ACCESS TO CREDIT

ACCESS TO MARKET

ENTREPRENEURIAL SKILLING

DIGITAL SKILLING

TECHNICAL SKILLING

CONTINUOUS DEVELOPMENT OF ALREADY BUILT CAPACITY

MENTORING AND

HANDHOLDINGAPPRENTICESHIP

DIGITAL SKILLING

TECHNICAL SKILLING

CONTINUOUS DEVELOPMENT OF ALREADY BUILT CAPACITY

FORMAL ECONOMY TOUCHPOINT

e.g. ASEEM, Registration

with a Government

Department, Tax

payment, Inclusion via

Low-Medium skill Gig

Economy

ENTREPRENEUR/ENTERPRISE FORMALIZATION ROUTE

LABOUR FORMALIZATION ROUTE – THROUGH SKILLING

FORMALIZATION

THROUGH SKILL

AND

ENTREPRENEURIAL

ECOSYSTEM

MOBILIZATION,

ADVOCACY &

ONBOARDING

DENOTES CONNECT WITH 2015 ENTREPRENEURSHIP POLICY OF MSDE

EMPLOYABILITY SKILLINGINCREASED

EMPLOYABILITY

ACCESS TO JOB MELA

(EMPLOYMENT MARKET)

ACCESS TO

CERTIFICATE

LIVELIHOODS

LIVELIHOODS

SKILLING FOR NETWORKING

INDIVIDUAL ROUTE

NETWORK ROUTE

AUGMENTED

EARNINGS

COLLECTIVE

BARGAINING FOR

ACCESS TO CREDIT

COLLECTIVE

ACCESS TO MARKET

LIVELIHOODS

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The secondary data (based on published sources) based case studies, as detailed in

Chapter5,helpedusinunderstandingthechallenges,bestpracticesandroutestakenby

informalsectoracrossIndiaandoutsideIndiaforformalization.Summaryoftheinsights

ashasbeenshowninTable6.6willallowtovisualizetheempirical(infield)application

oftheproposedformalizationframeworkviaitstworoutes–Entrepreneur/Enterprise

formalizationrouteandLabourformalizationroute.

Table6.6InsightsfromSecondaryCaseStudiesandconnectwiththeproposedformalizationframework

CaseStudyInferencesintermsofchallengesandissues

InterventionsFacilitatingFormalization

DominantRoutetoFormalization

CaseStudy1:Thana-Belapur,Maharashtra

Unauthorizedwaste-

recyclingunitswhichare

backwardlylinkedwith

largeplants

MentoringAnd

Handholding;

EntrepreneurialSkillingEnterpriseFormalization

RouteLaborintensive

operations

TechnicalSkilling;

Apprenticeship

Lackofadequatephysical

protectionofworkersEntrepreneurialSkilling

CaseStudy2:Durgapur,West

Bengal

Inadequateanddeclining

demandEntrepreneurialSkilling

EnterpriseFormalization

Route

Limitedcapitalandlow

capacityEntrepreneurialSkilling

Infrastructuralchallenges EntrepreneurialSkilling

Absenceofcollateralto

availcreditAccessToCredit

Harassmentbybank

officialforcreditAccessToCredit

Absenceofmobilitydue

tolongerinvolvementina

particulartrade

AccessToMarket

CaseStudy3:Assam

Majorityofunitswererun

bytheentrepreneurs

withoutanytraining

MentoringAnd

Handholding;

EntrepreneurialSkilling


Route

Workerswithpoor

literacylevelSkilling;Apprenticeship

Non-existenceofthe

backwardlinkagewith

theformalsector

MentoringAnd

Handholding;


CaseStudy4:HandloomWeaving,

Bhagalpur,Bihar

Weavers,reportedlyare

poorandilliterate,thus

lackbargainingpower.

Skilling;Apprenticeship

LabourFormalization

Route

Lowcapacity

MentoringAnd

Handholding;


Lackofmarket

opportunitiesAccessToMarket

Failureofthegovernment

tocontrolthesupply,

distributionand

marketingoperationsand

toarrangeancillary

facilitiestotheweavers

MentoringAnd

Handholding

182

CaseStudy5–NewDelhiStreetFoodVendors

Noknowledgeabout

formalvocational

educationandtraining

Mobilization,Advocacy

&Onboarding

LabourFormalization

Route

Skilldevelopment

exclusivelythrough

informallearning

processes


Lackofentrepreneurial

skill

MentoringAnd

Handholding;

CaseStudy6–Coimbatore,TamilNadu-StreetFoodVendors

Lackofformalvocational

training

MentoringAnd

Handholding;

LabourFormalization

Route

Noknowledgeabout

formalvocational

educationandtraining


&Onboarding

Skilldevelopment

exclusivelythrough

informallearning

processes



skill

MentoringAnd

Handholding;


CaseStudy7–Madurai,TamilNadu–StreetFoodVendors

Noaccesstoformalcredit

systemAccessToCredit


Route

Absenceofmobilitydue

tolongerinvolvementina

particulartrade

AccessToMarket

Reportedlyharassment,

forcedshutdowns,and

thepaymentofbribesto

policeandauthorities


&Onboarding

Seasonaldemand AccessToMarket

CaseStudy8–Madurai,TamilNadu–StreetFoodVendors

Noaccesstoformalcredit

systemAccessToCredit

Reportedlyharassment

byauthorities,eviction

threats,problemof

conflictwithpedestrians,

andconfiscationofgoods

andextortionby

authority.


&Onboarding

Absenceofmobility AccessToMarket

CaseStudy9–Surat,Gujarat

(MarketVendors)

Reportedlyharassment

byauthorities,eviction

threats,problemof

conflictwithpedestrians,

andconfiscationofgoods

andextortionby

authority.


&OnboardingEnterpriseFormalization

Route


skillEntrepreneurialSkilling

Absenceofmobility AccessToMarket

CaseStudy10–Kashmir,JammuandKashmir

(MarketVendors)

Lackofinfrastructural

facilities


&OnboardingEnterpriseFormalization

RouteLackoffixedallocated

space


&Onboarding

Seasonaldemand AccessToMarket

183

6.3.2Frameworktowardsaddressingofchallengesofinformalsector

The approach mainly encompasses three things viz. 1. the journey from the key

challenges faced by informal economy entrepreneurs (job/employment view) and

enterprises (unit view) and 2. how the existing stakeholders have addressed these

challengesand3.Whataretheprevalentgapsstillwaitingtobeaddressed.Itsthesegaps

thatformbasisoftheapproachandforthcomingframeworkandroadmap.Thegapshelp

usingettingtoabasketofapproachcategories/themesinwhichcurrentinitiativesof

diverse stakeholders have been focussed upon to address the challenges of informal

entrepreneurs and enterprises and wherein MoSDE along with the respective

prominent/appropriatestakeholderineachoftheseapproachthemeandalongwitha

suitable technological solution can march ahead towards promotion of formalization

throughentrepreneurship).

Thesectionhasbeenarrangedasfollows:Thekeychallengefacedtowardsformalization

ofinformalenterpriseand/orjobspearheadsthestartofeachsub-sectionfollowedby

thekeystakeholders’effortsinthatareaandgapwaitingtobeaddressed.Thesegapsare

an avenue/starting-point for theMoSDE to direct their efforts in resonancewith the

prioritysectorsalreadydiscussed.TheoperationalideaistosummariseAS-ISoverview

ofexistingeffortsbyMoSDEdiversestakeholdersforaddressingthatparticularchallenge

and also coalesce these efforts into thematic groups of government and non-

governmentmechanismsthatformtheconstituentsoftheframeworkthatemergesin

section6.3.2andtheoperationalroadmapgiveninsection6.3.3.Also,forgreaterclarity,

the challenges have also been arranged in three broad dimensions viz. financial

dimension,infrastructuredimensionandknowledgedimensiontoyieldagreaterclarity

inwayforwardandavenueofinterventionpossible.

184

Figure6.4ProposedFrameworktowardsaddressingofchallengesofinformalsectorthroughcapacitybuilding,capacitydevelopmentandentrepreneurshippromotion

CURRENT CHALLENGES

FINANCIAL

DIMENSION

INFRASTRUCTURE

DIMENSION

KNOWLEDGE

DIMENSION

Lack of Capital and

Resources

Economic Uncertainty and

Insurance

Low Productivity

Lack in marketing and

other infrastructural

facilities

Volatile Demand

Lack of Protection

Competition from

established players

Skill gap

Limited Access to

Government Schemes

No/Limited business

experience

PMYUVA, PMUmeed

----

SANKALP, Model ITI scheme

PMKVY 3.0 (especially via

Kaushal & Erozgaar Mela)

ASEEM Portal

PMKVY (eg:PDOT),Skill India

STRIVE

SANKALP, PMKVY 3.0,

DDU-GKY, Craftsmen

Training Scheme, STRIVE

----

SANKALP, PMKVY 3.0,

DDU-GKY, NATS, STRIVE

MoSDE’s CURRENT

INITIATIVES

Facilitation of Credit

Targeted Taxes

Economic Sustainability

Initiatives

Focus on Quality

Physical Infrastructure

Digital Infrastructure

Market Access and

entrepreneur connect

International avenues for

selling

Contracting with

Government

Livelihood Sufficiency

Correct Skilling

Trade Specific Mentors

Technical Skill Upgrade

RPL and Skill Certification

Service Vouchers

APPROACH THEMES FOR

MoSDE’S INTERVENTION

TRAINING (CAPACITY BUILDING)

RECOMMENDATION & COLLABORATION

FOR CATALYSING FORMALIZATION



TRAINING

(CAPACITY DEVELOPMENT)



TRAINING


TRAINING






TRAINING


MENTORING

TECHNOLOGY TRANSFER

CERTIFICATION

DEMAND SIDE INCENTIVE

NATURE OF CAPACITY

BUILDING INTERVENTION

FOR MoSDE

FINANCIAL LITERACY TRAINING IN VERNACULAR & E-MODE

ALONG WITH TRAINING OF BANK & PROJECT MODALITIES (DPR)

RECOMMENDATION TO AND COLLABORATION WITH MINISTRY

OF FINANCE, MINISTRY OF CORPORATE AFFAIRS, RBI

RECOMMENDATION TO AND COLLABORATION WITH NBFCS &

DECENTRALIZED SERVICE AGGREGATORS, INSURANCE PROVIDER

AND REGULATORS, LOCAL ADMINISTRATION

TRAINING FOCUSSED ON ECONOMIES OF SCALE AND SCOPE,

SERVICE AND PRODUCT QUALITY

RECOMMENDATION TO AND COLLABORATION WITH STATE

GOVERNMENTS AND SUPPLY CHAIN AND LOGISTICS COMPANIES

DIGITAL LITERACY TRAINING IN VERNACULAR & E-MODE

TRAINING FOCUSSED ON CUSTOMER-CONSUMER OUTREACH,

INTERVIEWING & NETWORKING

TRAINING AND CERTIFICATION OF INDIAN WORKFORCE KEEN ON

OVERSEAS EMPLOYMENT IN SELECT SECTORS AND JOB ROLES

TRAINING & HANDHOLDING WITH PRE-CREATED VERNACULAR

TEMPLATES FOR ONBOARDING ON eGEM & OTHER GOV. PORTALS

RECOMMENDATION TO AND COLLABORATION WITH MINISTRY

OF LABOUR, LEGAL FIRMS, NGOS, m-HEALTH STARTUPS

STANDARDIZATION, ACCOUNTABILITY AND VERNACULAR

DISSEMINATION OF IDENTIFIED PRIORITY SECTORS’ SPECIFIC SKILLS

ONE-TO-ONE & ONE-TO-MANY MENTORING OF BENEFICIARIES FOR

TRADE-SPECIFIC HANDHOLDING &TRANFER OF TACIT KNOWLEDGE

EXCHANGE OF TECHNICAL KNOWHOW, SKILLS AND EXPERIENCE

THROUGH it is - SKILL PROGRAMMES & INCUBATION

RECOGNITION OF PRIOR LEARNING AND CERTIFICATION OF SKILLS FOR

DOMESTIC AND GLOBAL EMPLOYMENT AND UNIT ESTABLISHMENT

SERVICE VOUCHERS CAN HELP INCENTIVIZE DEMAND SIDE TO AVAIL

SERVICES OF INFORMAL SECTOR (Eg. VIA REFUNDS/CASHBACKS)

PROPOSED CAPACITY

BUILDING INTERVENTION

FOR MoSDE

Facilitating access of

Government Services

TRAINING


TRAINING FOR LEARNING ABOUT DIVERSE GOV SERVICES AND SCHEMES

AND THEIR BENEFITS. USE OF POSTERS FOR AWARENESS – PASTED AT

RATION SHOPS WHERE INFORMAL SECTOR’S FOOTFALL IS MORE

Entrepreneurial

Motivation & Orientation

MENTORINGPROMOTION OF FORMAL WAGE EMPLOYMENT AND

ENTREPRENEURSHIP

DENOTES CONNECT WITH 2015 ENTREPRENEURSHIP POLICY OF MSDE

Access to Digital Skills and

Digital Support Schemes /

Programs

DGT in partnership with

MICROSOFT AND

NASSCOM

185

6.3.2.1AS-ISAnalysisoftheKeyChallengesofFormalization

Thissub-sectiondescribestheexistinginitiatives,majorstakeholders,limitations/areasofimprovementandkeyapproachthemesforthechallengesfacedbytheinformalsector.The challenges have been classified in terms of the semantic categories of finance,infrastructureandknowledgedimensions.

6.3.2.1.1LackofCapitalandResources[FinancialDimension]

ExistingInitiatives

• PMYUVA,FutureProgrammesonEntrepreneurshipbyMoSDE• CreditGuaranteeFundSchemeForMicroandSmallEnterprises• CreditfacilitationthroughBank• PradhanMantriMUDRAYojana• Microcreditthroughself-helpgroups

MajorStakeholders

• Central and State Governments/Ministries: MoSDE, Ministry of MSME, NSIC,SIDBI,NEDFi

• LargeScaleNGOs:FordFoundation,AzadFoundation• SocialImpactEnterprises:BillandMelindagatesfoundation,AltumCredo• Private Sector CSR: Goldman Sachs, Walmart Vriddhi Supplier Development

Program

Limitations/AreasofImprovement

• Majorcreditschemesformicro,smallandmediumscaleenterpriseslinkedtotheirformalizationstatus(circularfallacy)anddocumentavailability-leavinginformalsectorunabletoreapbenefits–especiallywomenandyouthtransitioningfromschoolagetoadulthood.

KeyApproachthemes(governmentandnon-governmentmechanisms)

a) FacilitationofCreditb) TargetedTaxes

6.3.2.1.2EconomicUncertaintyandInsurance[FinancialDimension]

ExistingInitiatives

• PradhanMantriSurakshaBimaYojana• AamAadmiBimaYojana• EmergencyCreditLineExtensionfor100%collateralfreeloanstoMSMEs• LowerInterestRateLoanstoMSMEs• Insuranceforemergentsituations

MajorStakeholders

186

• Central and State Governments/Ministries: Government Insurance regulatorybodies

• Large Scale NGOs: - Shreni Community Trust, Mitti Ke Rang, Foundation forSustainableDevelopment,Nirmana,Goonj,OXFAMIndia

• PrivateSectorCSR:OlaFoundation,PayPal• Technology Firms: Decentralized service aggregator platforms (which can

provideinsuranceatsourceorattimeofplatformon-boardingatminimalornocost)

Limitations/AreasofImprovement

• Majorwelfareandalliedschemesformicro,smallandmediumscaleenterpriseslinked to their formalization status (circular fallacy) leaving informalentrepreneursunabletoreapbenefits–especiallywomenandyouthtransitioningfromschoolagetoadulthood.

• FinancialServiceactivitieswithlittlefocusonpensionfundingandinsurance• FindingemploymentforgrowingnumberofworkersunderthePMRPYscheme


a)EconomicSustainabilityInitiatives

6.3.2.1.3LowProductivity[FinancialDimension]

ExistingInitiatives

• SANKALP,ModelITIScheme(MoSDE)• ZED(ZeroEffectandZeroDefect)• CreditLinkedCapitalSubsidyScheme(CLCSS)forTechnologyUpgradation• Leanmanufacturingcompetitivenessscheme(LMCS)forMSMEs

MajorStakeholders

• Central and State Governments/Ministries: Ministry of MSME, NationalMonitoringandImplementingUnit(NMIU)

• LargeScaleNGOs:Nexharvest,Agrostar• PrivateSectorCSR:PepsiCoIndia

Limitations/AreasofImprovement:

• Leakageanddelaysinreceivingpaymentscausemitigatedoperatingcashintheinformalsectorandtherebycausingcompromisesonproductivity

• Lackofqualityacrosstraditionalandmoderninformalindustriesstillneedstobeaddressed

• SchemessuchasCLCSSonlyappliestoenterprisesthathaveobtainedatermloanfromtheapprovedlistoffinancialinstitutionstoinvestinmachinery

• Infrastructurechallenges,affordabilityofmachinestoimproveperformance


187

a) FocusonQualityb) Tradespecificmentorsc) Servicevouchers

6.3.2.1.4 Lack in marketing and other infrastructural facilities [InfrastructureDimension]

ExistingInitiatives

• PMKVY3.0(EspeciallyviaKaushalandeRozgaarMelas)-MoSDE• DairyFarmInitiative(Abbott)• AdityaBirlaFashionEntrepreneurshipProgram• BajajEducationInitiative/IISERsupportprogramme• GoldmanSachs10000SmallBusiness/10000WomenProgramme• FlipkartGrowthCapitalProgram• PaytmtieupwithNCTI• AmazonKalaHaat• FlipkartWalmartVriddhiSupplierDevelopmentProgram• FlipkartSamarthProgramme• Start-upVillageEntrepreneurshipProgramme(SVEP)• ExportpromotioninitiativesbyMinistryofMSME

MajorStakeholders

• CentralandStateGovernments/Ministries:MoSDE,MinistryofMSME• LargeScaleNGOs:NationalHawkerFederation• PrivateSectorCSR:Amazon,Flipkart• TechnologyFirms:DigitalMarketingPlatforms

Limitations/AreasofImprovement:• Mostaidinthisregardprovidedbygovernmentextendstoexhibitionsandtrade

fairs.Lacksassistanceinbuildingonlinepresencewhichisneedofthehourandfuture.Lackofbrandingadvisory

• Solutionsprovidebylocalgovernmentaredifficulttoaccess• Solutions provided by technology companies are too expensive for small

businessesintheinformalsectorandinformalentrepreneursalsolackawarenessaboutthesame

KeyApproachthemes(governmentandnon-governmentmechanisms)a) PhysicalInfrastructure

6.3.2.1.5Volatiledemand[InfrastructureDimension]

ExistingInitiatives• ASEEMbyMoSDE• NexharvestEnterpriseDevelopmentCentres

188

MajorStakeholders• CentralandStateGovernments/Ministries:MoSDE• LargeScaleNGOs:Nationalhawkerfederation• SocialImpactEnterprises:BillMelindaGatesFoundations

Limitations/AreasofImprovement• Inability to retain price sensitive customers and failure to create newdemand

leadingtolossofmarketshare/sales• Limitationsonbusinessreachforlocalvendorsandfarmersleadingtoshutting

shops• MosteCommercefirmsneedformalizationforonboarding• Governmente-marketplacerequiresformalizationforonboarding• Lackofinformation,leadingtopoordemandprediction• Mostsupportschemesdonotaddressseasonalproductsandqualityissues


a)Internationalavenuesforsellingb)ContractingwithGovernment

6.2.1.1.6LackofProtection(safety,familywelfareandhealthcare)[InfrastructureDimension]

ExistingInitiatives• PMKVY(eg:PDOT),SkillIndia-MoSDE• PradhanMantriJanArogyaYojana(PMJAY)• MissionIndradhanush• AyushmanBharat• PanditDeendayalUpadhyayShramevJayateKaryakram

MajorStakeholders• CentralandStateGovernments/Ministries:MoSDE,MinistryofHealth,Ministryof

Ayush,MinistryofLabour• LargeScaleNGOs:OxfamIndia,GVMeditech• SocialImpactEnterprises:BillMelindaGatesFoundation,VillageCapital• PrivateSectorCSR:TataTeaandHUL

Limitations/AreasofImprovement• Caste system isonemajor obstacle in formalization of informal entrepreneurs

(particularlyintheruralareas)whereinworkneedstobedone• Limitedresources• Corruption• Limitedawarenessaboutwelfareschemes

KeyApproachthemes(governmentandnon-governmentmechanisms)a) LivelihoodSufficiency

189

6.3.2.1.7Competitionfromestablishedplayers[InfrastructureDimension]

ExistingInitiatives• STRIVE-MoSDE• LeanManufacturingCompetitivenessScheme(LMCS)• ZEDscheme• MakeinIndiainitiative• TechnologyandQualityUpgradationSupporttoMSMEs

MajorStakeholders• CentralandStateGovernments/Ministries:MoSDE• PrivateSectorCSR:Gocoop,Paytm

Limitations/AreasofImprovement• Inabilitytoachieveeconomiesofscaleandscope• Blackmarketing• Nodirectstrategyforcompetitiveadvantage

KeyApproachthemes(governmentandnon-governmentmechanisms)a)Internationalavenuesforsellingb)ContractingwithGovernment

6.3.2.1.8Skillgap[KnowledgeDimension]

ExistingInitiatives• SANKALP,PMKVY3,DDU-GKY,CraftsmenTrainingScheme,STRIVE-MoSDE• EntrepreneurshipSkillDevelopmentProgrammes(ESDPs)• NationalSkillDevelopmentMission• PradhanMantriKaushalVikasYojana(PMKVY)

MajorStakeholders• CentralandStateGovernments/Ministries:MoSDE,MinistryofEducation• Large Scale NGOs: - Utthan Mahiti, Shroffs Foundation Trust, Mitti Ke Rang,

Success Foundation, MAKAAM; Self-Employed Women's Association (SEWA);AZADFOUNDATION,Appachi,

• PrivateSectorCSR:AbbottpartneredwithPrabhatdiarylimited,CastrolSarathiand Castrol Eklavya Programme, ICICI with Rural Self Employment TrainingInstitute (RSETIs),TheAdityaBirlaRuralTechnologyPark,AsianPaints,BMWruns Skill Development Livelihood program, Cipla, Dr Lal pathlabs, JSW skillsschool,TheKohlerPlumbingAcademy(KPA),Google:InternetSaathi

Limitations/AreasofImprovement• Theschemehasbeensuccessfulinattractingalotoftrainees,buttheon-ground

impact of transmutation of the same to actual informal enterprises beingformalizedandentrepreneurshipbeingpromotedisyettoshow

KeyApproachthemes(governmentandnon-governmentmechanisms)a)CorrectSkilling

190

b)TechnicalSkillUpgradec)RPLandskillcertification

6.3.2.1.9LimitedAccesstoGovernmentSchemes[KnowledgeDimension]

ExistingInitiatives• PardhanMantriKaushalVikasYojna• ShramaveJayateYojna

MajorStakeholders• CentralandStateGovernments/Ministries:MinistryofMinorityAffairs,Ministry

ofHealth,MinistryofLabourandEmployment• LargeScaleNGOs:ShroffsFoundationTrust,Snehalaya,MAKAAM;Self-Employed

Women'sAssociation(SEWA);AzadFoundation,WIEGO

Limitations/AreasofImprovement• Awarenessaboutgovernmentschemesandfacilitationofbeneficiaryonboarding

intherespectivegovernmentscheme/support-initiative

KeyApproachthemes(governmentandnon-governmentmechanisms)a) LivelihoodSufficiencyb) FacilitationofaccessofGovernmentServices

6.3.2.1.10No/Limitedbusinessexperience[KnowledgeDimension]

ExistingInitiatives• SANKALP,PMKVY3,DDU-GKY,NATS,STRIVE-MoSDE• ManagementDevelopmentProgrammes(MDPs)• AssistancetoTrainingInstitutionsScheme(ATIScheme)• NaiManzil• Upgrading the Skills and Training in Traditional Arts/ Crafts for Development

(USTTAD)

MajorStakeholders• Central and State Governments/Ministries: Ministry of MSME, Ministry of

Minorityaffairs,MinistryofEducation,Sectorskillcouncils

Limitations/AreasofImprovement• Noplacetoapplytheconceptsthatarebeingtaughtbymostoftheexistingskills

initiatives.Projects,Smalltermassignments,Internshipsarenotpresent• Mostprogrammesoftrainingfocussedonformalsector• Lackofawareness• Relevanceandpracticalapplicabilityoftrainingmaterialabigconcern• Outdatedskills,PoorMonitoringofTrainingprogrammesintermsofpragmatic

relevance• Employment opportunities (temporary as well as permanent) another big

concernarea

191

KeyApproachthemes(governmentandnon-governmentmechanisms)a) MarketAccessandEntrepreneurConnectb) ServiceVouchersc) Entrepreneurialmotivationandorientation

6.3.2.1.11 Access to Digital Skills and Digital Support Schemes / Programs[KnowledgeDimension]ExistingInitiatives:DigitalSkillingspearheadedbyDGTinpartnershipwithMicrosoftandNASSCOMMajorStakeholders

• CentralandStateGovernments/Ministries:MoSDE,MEITY• PrivateSector:OrganizationssuchasMicrosoft,NASSCOMetc.

Limitations/AreasofImprovement:• Widercoverageintermsofregionsandgender• Vernacularlanguagesupport• Standardisationoftrainingmaterials

KeyapproachTheme:a) DigitalInfrastructure

6.3.2.2EmergentFrameworkforAddressingofChallengesofInformalSector

Thekeythingthatisachievedviaemergenceofthisframework(figure6.4)istheconnectchallenges and emergent categories of government and non-government approachesbasedonexistingeffortstowardsformalizationthroughentrepreneurshipbydiversesetofstakeholder.Thisframeworkalsodelineatesthecategoriesofgovernmentandnon-government approaches detailing wherein MoSDE will spearhead with whichstakeholder.Theframeworkalsospursdeliberationaboutpossibleinitiativesthatcouldbe taken by varied stakeholders for addressing gaps in formalization andentrepreneurshippromotion.Fromthesetheoperationalroadmapwithapproachwiseinitiativeswithstakeholdersconcernedandtimelineandpossibletemporalprioritywillfollow.

Policymakers seeking formalization and entrepreneurship promotion are facedwithchoices.Thecentralchoiceistoeitherfollowalowregulationrouteortofollowahigh‘‘support’’route.Thelowregulationroutefocusespolicyupontwoareas.Thefirstistoenablethestartingofabusinessto takeplaceasquicklyandcheaplyaspossible.Thesecondistominimisethenumberandseverityofregulationsuponthatbusinesswhilstitistrading.TheUSisseenastheexemplarlowregulationcountry.Thealternativepolicyisforgovernmenttoprovide‘‘support’’tonewandsmallfirms,fundedbythetaxpayer.Itcanbeintheformofinformation,advice,training,orfinancetonewfirmsorexistingsmall firms.EUcountrieshave traditionally favoured ‘‘support’’ policies.This leads toincentives spread over demand and supply sides. Herein it is also important tounderstandthepossiblesituationsandscenarioswhereinloweringregulationbarriers

192

orenablement (via incentives)worksandhow(because this isprimarilyhowMoSDEwouldbeenablinginformalentrepreneursfromanentrepreneurshipside).SeeTable6.7:

Table6.7Linkingentrepreneurialgroupswithpolicyoptions(Hypothesized)108

Thefirsttwocategoriesofentrepreneursinthefirstcolumnarenascententrepreneurs–definedasindividualstakingactivestepstostartabusiness–withadistinctionbeingmadebetweennecessityandopportunityentrepreneurs.Thisdistinction is importantfromthe inclusionperspectivethatwascovered inchapter3.Thethirdgrouparetheactualentrepreneursdefinedasindividualsactuallyrunningabusiness.Thisthirdgroupconsistsof newly established young businesses, aswell as established SMEsor smallfirms.

Theoretically,nascententrepreneurswillbelessinfluencedbybarrierstogrowththanby barriers to entry on the grounds that nascents are less likely to have businessexperience.Apossibledistinctionisthatopportunitynascentsmayhavehighergrowthexpectationsthannecessitynascentsandsomaybemore likely tobedeterred if theythinktheyarelikelytobepreventedfromtheirbusinessreachingoptimalsize.

Summarisedapproachesforenablingaddressingofkeychallengesinformalizationaregroupedinsemanticallycoherentdimensionsaregivenbelow:

I. FinanceDimensiona. FacilitationofCredit(SupplyandDemandSide)b. TargetedTaxes(DemandSide)c. EconomicSustainabilityInitiatives(DemandSide)

II. InfrastructureDimensiona. FocusonQuality(SupplySide)b. PhysicalInfrastructure(SupplySide)c. DigitalInfrastructure(SupplySide)d. MarketAccessandEntrepreneurconnect(SupplyandDemandSide)e. Internationalavenuesforselling(SupplySide)f. ContractingwithGovernment(SupplySide)g. LivelihoodSufficiency(SupplyandDemandSide)

III. KnowledgeDimensiona. CorrectSkilling(SupplySide)b. Trade-specificmentors(SupplyandDemandSide)c. TechnicalSkillUpgrades(SupplySide)

108

Van Stel, A., Storey, D. J., & Thurik, A. R. (2007). The effect of business regulations on nascent and young business

entrepreneurship. Small business economics, 28(2-3), 171-186.

193

d. RPLandskillcertification(SupplySide)e. ServiceVouchers(DemandSide)f. FacilitationofAvailingofGovernmentServices(SupplySide)g. Entrepreneurialmotivationandorientation(SupplySide)

Itisimportanttopayfocusonthesupplyanddemandsideperspectivewhenconsideringeachoftheaforementionedapproaches.Supplysidecanfurtherbeclassifiedintotwosubheads viz. supply of products/services by economic units (informal enterprises) andsupplyoflabour/skillsbyinformalsectorlabour.Similarly,demandsidecanbeclassifiedinto two sub heads viz. demand of products/services by economic units (informalenterprises)anddemandoflabour/skillsbyinformalsectorlabour.

6.3.2.2.1FacilitationofAccesstoCredit(SupplyandDemandSide)

WorkingPlan(ProposedAreasofInterventionforMoSDE):

• CAPACITYBUILDING:Financialliteracytoinformalsectortraineeswithafocuson bank and credit modalities, cyber-security and project management (eg:preparationofDPRforavailingcreditetc)

• MoSDE can collaborate with existing P2P platforms operational in India frompaymentandlendingperspective.MinistrycanstartwitheasingonboardingandpossiblyusingmuchsimpleryetrobusteKYCmechanismsforassessing,assigningand updating credit worthiness ofmicro/nano andwomen entrepreneurs andmakingthemavailableshort-andlong-termcredit

o Timeframe:3yearso Priority:High

• MoSDEcanpartnerwithcollateralmanagementSaaSfirms(eg.CloudMargin)andemergentbusinesslendingplatforms

o Timeframe:2yearso Priority:Low

• PartnerwithemergingstartupssuchasAgroStarandEkGaonthatareaimedtoprovidecommonplatformtofarmersCreditLinkedCapitalSubsidySchemeforTechnology

o Timeframe:2yearso Priority:Medium

6.3.2.2.2TargetedTaxes(DemandSide)

WorkingPlan(ProposedAreasofInterventionforMoSDE)

RECOMMNDATIONANDCOLLABORATION:Targetedtaxesworkeitherbyusingdeterrence measures to increase the costs of non-compliance (‘sticks’) i.e.continuingtostayininformalsectorand/orbymakingtheconductofdeclaredwork more beneficial and easier (‘carrots’). MOSDE can achieve this bycollaboratingatapolicymakinglevelwithMinistryofFinanceandRBI


194

KeyPartners:MinistryofFinanceandMinistryofCorporateAffairs,RBI,MEITY,LocalDistrictAdministrations

6.3.2.2.3EconomicSustainabilityInitiatives(DemandSide)

WorkingPlan(ProposedAreasofInterventionforMoSDE):• Vernacularfinancialliteracyandpartnershipwithrelevantinsuranceandallied

bodiestoofferspecializedplansfornano,youthandwomenentrepreneursandotheralliedbeneficiariescurrentlyininformalsector

o Timeframe:2Yearso Priority:High

• MoSDE can enable first line of informal entrepreneurs by standardising andcollaboratingoutreachinregion/areaspecificfleamarketsandpartneringwithUrbanlocalbodies


• RecommendationandCollaborationforCatalyzingFormalization

Key Partners: NBFCs and Decentralized Service Aggregators/Platforms, InsuranceProviderandinsuranceregulators,LocalAdministration,UrbanLocalBodies

TechnologicalIntervention/InnovationsproposedforMoSDE:• Creationofappbasedrepositoryoffinancialliteracyresourcesforinformalsector

learnerswithself-helpfeaturesandvernacularlanguagetranslations

6.3.2.2.4FocusonQuality(SupplySide)


• Collaborate with corporates and established organisations to offer assistanceregardingbest supply chainpractices tominimisewastage.Thismight includesoftware and other digital tools’ use in manufacturing. Focus needs to be onenablingthevaluechainsandsupplychainsofprioritysectors.

o Timeframe:3Yearso Priority:High

• Provision of access to quality production facilities (government owned andprivate) to learn and produce quality good at a reasonable price to identifiedprioritysectors


• ProvisionofLeanmanufacturingcounsellorsandconsultantstoinformalsectortoaugmentqualityandproductivity


• EnterpriseResearchCentres - toraisestandardsofevaluationanddisseminatebest practices across network of businesses; Collaborating with trustedintermediariessuchasAccountants,tradebodiestopropagatebestpractices

195


KeyPartners:ITIs,CIPETs,EducationalInstitutions,PrivateCompanies(whoarereadytoenrolasanMoSDE-approvedqualitycentre),accountants,tradebodies,associations,sectorcouncils

TechnologicalIntervention/InnovationsproposedforMOSDE:GISbasedlinkingofneedyinformal entrepreneurwithMoSDE approved/empanelled nearest tooling/productioncentreatasubsidizedornocost

6.3.2.2.5PhysicalInfrastructure(SupplySide)

RECOMMENDATIONANDCOLLABORATIONWITHOTHERSTAKEHOLDERS• Public Private Partnerships with private firms for physical infrastructure

provisiono Timeframe:2yearso Priority:High

• Partnershipwith state and centre level government bodies for subsidized andexpedited electricity, water, land allocation and respectable space for doingbusiness


KeyPartners:CentralandStateGovernment,UrbanLocalBodies

TechnologicalIntervention/InnovationsproposedforMoSDE:• MoSDEcanpartneroract as anaggregatorofphysical infrastructureprovider

detailsusingGISbased indexing inanapptoenable informalentrepreneurstoaccessthedesiredinfrastructureeasily

6.3.2.2.6DigitalInfrastructure(SupplySide)


• Digitalskillscapacitybuildingo Timeframe:2yearso Priority:Medium

• Working with Creative Studios and private sector Digital Marketing firms to“Donateanhour”oftheirexpertisetocreatequalitydigitalmarketingcontentandalsohelppotential informalentrepreneursto learnandreapbenefitsofDigitalMarketing


KeyPartners:Telecomcompanies,CreativeStudiosandDigitalMarketingfirms

TechnologicalIntervention/InnovationsproposedforMOSDE:

196

• MoSDEcanalsousethedemographicandeconomicdataatanindividualorfirmlevel (in informal sector) to auto-populate and generate no-code website andsocialmedia profiles by usingRPA (robotic process automation) in vernacularlanguageforbeneficiaries

6.3.2.2.7MarketAccessandEntrepreneurConnect(SupplyandDemandSide)

WorkingPlan(ProposedAreasofInterventionforMOSDE):

• Entrepreneurial skill development (furthering and connecting to the policyinitiativesproposedaspartofNationalEntrepreneurshipPolicy2015ofMoSDE)


• ForTraditionalandartisanalinformalsectorentrepreneurs–MoSDEcanpartnerwith platforms such as GoCoop to provide efficient logistics (supply chainenrichment)andalliedvalueaddedfeatures


KeyPartners:Digitalplatforms,EducationalInstitutions

6.3.2.2.8Internationalavenuesforselling(SupplySide)

WorkingPlan(ProposedAreasofInterventionforMOSDE)

• MoSDE can select, vet, certify products/services of top informal sectorentrepreneurs and promote it by issuance of service vouchers in internationalmarket forcreating first instanceofcontactandanentrymode intothe formaleconomy(furtheringandconnectingtothepolicyinitiativesproposedaspartofNationalEntrepreneurshipPolicy2015ofMoSDE)


• Team up with big private players like Amazon to look at the possibility ofexportingthecommodities/servicesofinformalentrepreneurs


Key Partners: Ministry of External Affairs, Technology Companies such as Amazon,Walmart

TechnologicalIntervention/InnovationsproposedforMoSDE:

• A demand-supply (matchmaking) portal on the lines of ASEEM that connectsdemandofgoods/servicesininternationalmarketswithsupplyfromtheinformalsectoronboardedwithMoSDE

6.3.2.2.9ContractingwithGovernment(SupplySide)

WorkingPlan(ProposedAreasofInterventionforMOSDE)

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• MoSDE can create specific skilling programmes for assisting informalentrepreneurstowardse-tenderingande-procurement


• MoSDEcancreateautomatedhelp(forexampleavernacularchatbot)forassistinginformalentrepreneurstowardse-tenderingande-procurement


KeyPartners:MinistryofCommerceandIndustry,MinistryofFinance

6.3.2.2.10LivelihoodSufficiency(SupplyandDemandSide)

RECOMMENDATIONANDCOLLABORATIONBYMoSDEwithotherstakeholders:

• To prevent harassment and to promote social welfare amongst informalentrepreneurs amobile based digital complaint filing,proof upload, resolutiontrackingcouldbeputinplacewithlocalauthoritiesintheinformationloop


• Publishingregionandcontextpersonalizedimpactstoriesonitsapporwebsitetoencourage informal sector towards formalization (peer-connect augmentsrelatabilityandcomfort)


• Establishing a cohesive community of grassroot entrepreneurs by offering agroup-insurance scheme at low or no premium to all the informal economicunits/labours who decide to formalize. It is important that this registrationenablestheinsurancecovertobeextendedtotheirdependentsaswellunlikeonepersononepolicyschemesinthepast.


• MoSDEcanpartnerwithLargeScaleNGOsforempoweringandenablingentryintoformalsectorfor:

§ Artisansandhandloommanufacturers§ Forcedsexworkers§ Womenfarmers,Womenartisansandworkers,§ Womendailywageearners§ Domesticworkers,home-basedworkers,streetvendorsandwastepickers§ Dailywageearners§ Constructionanddomesticworkers


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Key Partners: Technology Firms, District level local authorities, Ministry of Labour,Telehealthandm-healthStartups/companies,NGOs,Legalfirms

TechnologicalIntervention/InnovationsproposedforMOSDE::

• Voluntary donation of medical care worker’s hours towards tele-medicineconsultationswithregisteredinformalenterprisesandlabour(especiallyyouthandwomen)

• WomenandyouthentrepreneursoperatingintheinformalsectorcanbebetterservedbyMoSDE(particularly inTier3,Tier4cities)usingAadhaardatabase,digitalmarketingandsupportofPrivateCSRinitiatives,NGOsandSocialImpactEnterprises.

6.3.2.2.11CorrectSkilling(SupplySide)

WorkingPlan(ProposedAreasofInterventionforMOSDE):

• Standardize, record and disseminate easy to follow sector-specific productionpracticestoreducecostandincreaseprofitabilityinskilldelivery(furtheringandconnectingtothepolicyinitiativesproposedaspartofNationalEntrepreneurshipPolicy2015ofMoSDE)


• English, Employability & Entrepreneurship Module (EEE) modules through aLearningManagementSystem(LMS)


• Dovetailing education promotion policies at K12 level (such as Sarv ShikshaAbhiyaan and National Education Policy 2020) to impart skills alongwith theconventional knowledge to interested and enterprising students – particularlywomenandminoritystudentsinsemi-urbanandruralareas.Thiswouldhelpinnurturinganenterprisingmindsetwithsoundbusinessvaluesfromearlystages.


Key Partners: Ministry of Education, Schools, Skill and Task focussed EducationTechnologycompanies(Edtechs)

TechnologicalIntervention/InnovationsproposedforMOSDE:

• Creatingafree-textsearchcompendiumofeasytosearchandlearnstandardizedpracticesforskillsunderNationalSkillFramework.ThiscanbepartofaMoSDEapp

• MooCswithAIenabledattention,identityandprogresstracking.ThiscanbepartofaMOSDEapp

• FocusondigitalvernacularcontentintheproposedMoSDEapp/platform

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6.3.2.2.12Trade-specificmentors(SupplyandDemandSide)


• Trade/activity specific macro-economic trends can be turned into easilyunderstandable visualizations and can be made available to informal sectorentrepreneursviaadedicatedMoSDE-apptomake leveragingthemindecisionmakingveryeasy


• MoSDE’s existing schemes (PMKVY, 2015 National Entrepreneurship Policy)aroundmentoringcanhelpinthisendeavour


KeyPartners:Technologyfirms,educationalinstitutions

6.3.2.2.13Technicalskillupgrades(SupplySide)


• Standardize, record and disseminate easy to follow sector-specific productionpracticestoreducecostandincreaseprofitabilityinskilldelivery(furtheringandconnectingtothepolicyinitiativesproposedaspartofNationalEntrepreneurshipPolicy2015ofMoSDE)



• CreationofanappbasedrepositoryofMoSDEcanactasavalidgigeconomytalentmarketplace(anextensionoflowskilltemporaryjobs–architecturecanbeonthekines of ASEEM portal). To envisage it, a portal like naukri.com or vernacularLinkedIn can be introduced wherein informal entrepreneurs and labours canapply,learn,growandshowcasetheirskills

6.3.2.2.14RPLandSkillCertification(SupplySide)


• Recognition of Prior Learning (RPL) allows informal sector workers andentrepreneurs,who do not have the requiredminimum level of education buthaveservedatleastfourtosevenyearsinindustryorintheinformalsector,toapplyforrespectivetradetestandgoaheadwithsettingupshopoftheirown


• MoSDEshallenhancerobustnessofmonitoringandimpactassessmentofskillsbymaking holistic qualitative (subjective) and quantitative (objective) feedback apre-requisiteforissueofuniquecertificatetoeachtrainee

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KeyPartners:IndustryAssociations,TrainingInstitutes


• BlockchainenabledvalidskillcertificatesthatarevalidinandoutsideIndiacouldbeaprimepriorityofMoSDEatenableglobalandlocalentrepreneurshipandactasanincentivetowardsformalization

6.3.2.2.15ServiceVouchers(DemandSide)


• Servicevouchersareameansofpayingforavailingaservice.Thepropositionisquitestraightforward.AservicerequestorcanpurchaseaservicevouchersforapriceXwhichpaysforanhourofwork.Withthesevouchers,theservicerequestorcan then pay for services rendered by MoSDE certified companies. Servicerequestorcanclaimataxrefundofupto30%ofthevouchervalue.This30%isfundedbyMOSDE–tocreateinformalsectoremployment.TheseMoSDEcertified companies hire people from informal sector. At first, the contractsofferedtounemployedpeoplecanberathersmallandflexible.Latertheycanbemorepermanentinnature.


KeyPartners:MinistryofFinance,LowskillGigeconomyplatforms

6.3.2.2.16FacilitationofAvailingofGovernmentServices(SupplySide)


• Training for learning about diverse and relevant government schemes andservicesviaSMS invernacularlanguagesandspecificallydesignedtrainingandawarenessprogrammes

• Use of Posters for creating awareness – posters pasted at Ration shopswhereinformalsector’sfootfallishigh

6.3.2.2.17Entrepreneurialmotivationandorientation(SupplySide)

WorkingPlan(ProposedAreasofInterventionforMoSDE):• Skillinginitiativestowardsaugmentedearnings,employabilityandlivelihoodfor

informalsector• Integration with the policy initiatives proposed as part of National

EntrepreneurshipPolicy2015ofMoSDE

6.3.3IllustrativeGovernanceStructureandWorkingPlan

ForefficientimplementationoftheproposedframeworksofformalizationtheillustrativegovernancestructuregiveninTablehasbeenconceptualized.Thegovernancestructure

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encompasses primary bodies (Central Government and allied critical stakeholders –along with any council/committee/board that will be hold the primary strategicresponsibilities), secondary bodies (state and district level stakeholders along withpanchayatsandNGOsandcivilsocietiesthatprovideadditionalsupporttotheproposedoperationalframework),existingpoliciesandprocedures(legislations-centreandstate,policies/guidelinesandalliedpolicyinterventions),operationalization(withafocusonstrategy,knowledge,fundingandtechnologyexchange)andreportingandreview(withafocusonassuranceandaccountability).

Table6.8IllustrativeGovernanceStructureandWorkingPlanDimensions

Governance

Parameters

FinancialDimension

InfrastructuralDimension

KnowledgeDimension

↓

Sub-ComponentsofFormalizationFramework↓AccesstoCredit,

CollectiveBargaining,

AugmentedEarnings

AccesstoMarket;Mobilisation,Advocacy

&Onboarding;Livelihoods

MentoringandHandholding,Skilling,Apprenticeshipand

Certification

PrimaryBodies MoSDE+Banks MoSDE + Ministry ofLabour MoSDE

SecondaryBodies

NBFCs, DecentralizedService Aggregators,Insurance Providers,Fintech and FinancialEducationplatforms

Ministry of Labour, CivilService Societies, SocialImpact Firms, NGOs andSelf-help Groups, UrbanLocal Bodies andPanchayats

Training Partners, Multi-lateral organizations,Impact Organizations,MinistryofEducation

PoliciesandProcedures

MoSDE: PMYUVA,FutureProgrammesonEntrepreneurship byMoSDEOther Ministries:Export Promotionpolicies. Policies foreasy onboarding onaggregator platformsandgigeconomy.Dedicatedresourcesatlow cost toentrepreneurs forformalization andenablementofinformallabour (Eg: IFP andMega food parkschemes – APFPSPolicy)

MoSDE: SANKALP, ModelITI Scheme, PMKVY,STRIVEOther Ministries: Policypushforclusters,FDI,IPDS–withafocusonwelfareofhandmade goodentrepreneursInformal workers oftencontribute to improvedurban service provisionthrough their work. Forexample cooperatives ofmarket traders are wellplacedtomanagemarkets,and where waste pickersare organised they canworkinpartnershipwithcity governments, bothcontributing to municipalwaste-collection services,and gaining improvedworkingconditions.

MoSDE:SANKALP,PMKVY,DDU-GKY, CraftsmenTrainingScheme,STRIVEOther Ministries: MinistryofEducation

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Operationalization

Logistics partnershiptohelpinformalsectorenterprises competewithlargerretailersFinancial Inclusion isyet anotherinfrastructural areathat needsaugmentation usingPPPsupport

Development ofcompetitive marketorientation ofmicro-sizedclusterunitsDigital Inclusion is yetanother infrastructuralarea that needsaugmentation using PPPsupportWithoutorganizationandrepresentation, those inthe informal economy arenot able to pursue theiremploymentinterests throughcollectivebargaining,ortolobby policy-makers onissues such as access toinfrastructure, propertyrights, taxation and socialsecurity109.

Value ended production,designandproductqualityimprovementKnowledge augmentationabout productdiversificationPPP promotion in thevocational and testingdomainFocus on increasingcompetitiveness ofinformal enterprises andlabour [Eg: Connectingwith the nearest instituteof eminence to pilot testand develop proof ofconcepts ofmodified/innovativeproducts/services]

ReportingandReview

Tracking of metricssuchasnumberofbankaccounts per 1000informal economyactors(labour/enterprises),difference in earningsof informal actor (preand postformalization),numberof informal actors(labour/enterprises)availing loan of P2Pcredit.The information aboutaccess to credit andfinance can betriangulated withsecondarydatasuchas“provider-side”information onfinancial inclusionwhich is collected aspart of the FinancialAccess Survey(fas.imf.org)

Since informal economyactors requireinfrastructure-measuringenablement of access toinfrastructureforinformalenterprises and workerssuch as toilets, water,waste collection,electricity, storage,security and access torespectable place tooperate/do-business.Where there is a lack ofadequate infrastructure,the toll on productivity isoften high. Eg: Wherepaving and drainage inmarketsislacking,orshelterfromrain,sun,dustor wind is inadequate,workers’ health iscompromised and goodsgetdamaged110.

Dedicatedpointofcontactsfor quality checks. Eg:‘Hygiene Rating Scheme’byFSSAIMeasurementofIndicatorssuch as Gross EnrolmentRatios for skillinginterventions.

6.4 Due diligence processes for partnerships and stakeholderengagement

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https://www.ilo.org/wcmsp5/groups/public/---ed_norm/---relconf/documents/meetingdocument/wcms_218128.pdf

110 https://www.wiego.org/sites/default/files/publications/files/WIEGO-productivity-urban-informal-economy.pdf

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MoSDE eco-system is going to expand and together. Taking into account that duediligence should be commensurate with risk and appropriate to a specificenterprise/partner-organization’s circumstances and context, the following broadapproach isenvisagedforduediligence forpartnershipsandstakeholderengagementthatMoSDEwill enteraspartof its effortsand initiativesof formalizing the informaleconomythroughentrepreneurshippromotion:

• Clear incorporation of MoSDE’s expectation, commitments and policies into theengagementwithsuppliersandotherstakeholderspriortoonboarding

o Developandimplementapre-qualificationprocessesforduediligencefortheconcernedstakeholder(s),wherefeasible,adaptingsuchprocessestothespecificriskandcontextinordertofocuson‘formalization’issuesthathavebeenidentifiedasrelevantforthepartnershipandtheiractivitiesorarea(s)ofoperation.

o Provide adequate resources and training to suppliers and otherprospective relationships for them to understand and apply during theonboardingprocess(Useoftechnologyforcreatingknowledgebaseforthesamecanprovetobeeffective)

• Identify and assess Actual and adverse(if any) impacts associated with theenterprise’soperations,productsandservices

o ThisisessentiallyascopingexercisethatwouldhelpMOSDEindefiningthe request (ROE/RFP/RFQ or allied nature of partnership) foronboarding/engagingwiththepartner

o Gather information to understand high-level risks of adverse impactsrelatedtothesector(e.g.productsandtheirsupplychains,servicesandother activities), geography (e.g. governance and rule-of-law, conflict,pervasive human rights or environmental adverse impacts) ororganization-specific risk factors (e.g. known instances of corruption,misconduct,implementationofstandards

o Wheregaps in informationexist,consultwithrelevantstakeholdersandexperts.

o Reviewthe findingsof thescopingexerciseonaregularbasis(even if itmeanstorepeattheexerciseposton-boardingofanorganization)

o Assessthenatureandextentofactualandpotentialpositiveimpactslinkedtoprioritisedoperations

• Use leverage, to the extent possible, to prompt the partnership to prevent ormitigateadverseimpactsorrisks

o Leverage here can be in the form of contracts (e.g. bank guarantees),writtenagreementsandifpossibleuseofmarketpower;sharingofrisksandownershipofresponsibility

o Pre-decided plan of action for possible risk mitigation particularly infinancial,reputationalandbenefit-of-end-entrepreneurterms

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• Monitor and track implementation and effectiveness of theorganization’sowninternalcommitments,activitiesandgoalsonduediligence,e.g.bycarryingoutperiodicinternalorthirdpartyreviewsorauditsoftheoutcomesachievedandcommunicatingresultsatrelevantlevelswithintheorganizationtoMoSDE

• Communicate externally relevant information on due diligence policies,processes,activitiesconductedtoidentifyandaddressactualorpotentialadverseimpacts,includingthefindingsandoutcomesofthoseactivities(optional)

• When the organization identifies that it has caused or contributed to actualadverse impacts,addresssuch impactsbyproviding fororcooperating in theirremediation.

6.5ConcludingRemarksThischapterfocussedonthe‘how’partoftheformalizationofinformalsectorbyknittingtogether all preceding chapters as a premise for the framework and approachespresentedinthischapter.Startingwith-extantliterature,prioritysub-sectors,insightsfromprimarydata(detailsaboutthesamegiveninAnnexure5),challengesandissuesfaced by the informal sector and summary of support/policies and stakeholders forformalization of informal sector – this chapter took an integrative approach forconceptualizationoftheframeworkandapproachesofformalization.

ThesuggestedframeworkasproposedinSection6.3hastwopartstoitviz.Part1beingthe framework towards formalization of informal sector through entrepreneurshippromotion(Section6.3.1)andskillingroutesforenterpriseaswellaslabourpartoftheframework.Part2beingframeworkforefficientaddressingofchallengesfacedinformalsector (Section 6.3.2). The reason for proposing two frameworks was based on theunderstandingthatformalizationprocesson-groundisaconvolutedprocessandhasaclosedependenceonthewayandthequantumofeffortmadeforaddressingofchallengesand issues of the informal sector. Also, the route towards formalization for informalenterprisesandinformallabourfollowsasimilarbutnotasamepath.Thisdistinctionisimportantsincethiswillhelpthepolicymakersandsupportecosystemstakeholderstodirect theirefforts inamoretargetedmanner fordesigning interventions.Section6.4outlined the Due diligence processes for partnerships and stakeholder engagementfollowedbytheconclusion.Theprovisionoflegalidentityandrecognitionofinformalenterprisescanbetakenasaproxy of formalization but it is the facilitation towards access to the mainstreameconomicresources,includinginvestment,capital,finance,propertyandmarkets,alongwith capacity development that result in the transition of informal sector(labour/enterprise)toformalsectoratthegrassrootlevel.As micro and small enterprises typically constitute a greater contingent of the informal economy, there is a significant need for a better understanding of the incentives and disincentives and possible strategies that combine the goals of supporting enterprises and enable the survival and growth of micro and small enterprises in highly competitive contexts—together with the application of labour standards. Furthermore, it is also about promoting informal enterprises, friendly macroeconomic frameworks, and making the productive sectors of the informal economy a priority target: channelling appropriate levels of investments improve productivity in the rural and urban informal economy to provide the necessary impetus that would enable a transition to formal sector. Inclusivity and sustainability of initiatives is yet another important factor

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that needs to be taken care of when designing policy mechanisms and policy instruments for formalization. The key contribution of the chapter and this report, besides providing an overarching view of the informal sector, are the proposed framework and the operational strategy to address and facilitate the formalization of informal enterprises into formal economy through entrepreneurship promotion.

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