India's Workforce Remains Largely Informal Despite Post-1991 Economic Reforms

Structural analysis indicates that informal employment remains entrenched in India despite the economic reforms initiated after 1991. These reforms dismantled industrial licensing and opened the economy to foreign investment. The persistence of informal work is attributed to factors including weak manufacturing growth, skill gaps, and the dominance of micro and small enterprises.

The findings suggest that the shift from informal to formal employment seen in many emerging economies has not occurred in India. Historical data from the early 1990s showed that an estimated 80.3 per cent of non-agricultural employment was informal in 1993-94. More recently, around 73 per cent of non-agricultural workers were engaged in proprietary or partnership enterprises.