Our unorganised data

S. D. Naik | Updated on June 04, 2012


With more than 90 per cent of the workforce engaged in it and accounting for 50 per cent of the national product, the unorganised or informal sector constitutes a pivotal part of the Indian economy. There has been a new dynamism of the informal economy in terms of output, employment and earnings. There are indications of growing inter-linkages between formal and informal economic activities. Hence faster and inclusive growth must be the focus, by addressing the needs of the sector in terms of credit, skill, technology, marketing and infrastructure.

Credibility of data

In recent years, there has been a growing concern about the quality and credibility of the data made available by the Indian Statistical System and the National Statistical Commission (NSC) in its report released in 2001.There is evidence that matters have deteriorated further since then because of these reasons:

(i) the reduction in the sanctioned posts of the National Sample Survey Office (NSSO) field investigators and their immediate supervisors; (ii) reduction in the sample size along with deficient sample frame; (iii) unacceptably large revisions (for instance in the index of industrial production – IIP) and (iv) failure to initiate surveys that would provide the basic source data required for National Accounts Statistics (NAS).

While the deterioration in the quality of data is common for both the organised and unorganised sectors, the unorganised or informal sector of the economy has inbuilt vulnerabilities with huge data gaps relating to the enterprises in the sector as well as the workers engaged in it. In India, about 52 per cent of workers are engaged in agricultural activities which are outside the coverage of employment-unemployment surveys for measurement of workers in the informal sector. Thus, information on informal sector and informal employment cannot be generated for all those engaged in the agricultural sector.


A Committee constituted by the National Statistical Commission (NSC) under its Chairman Prof. R. Radhakrishna, on Unorganised Sector Statistics, in its report released in February this year, made valuable suggestions. The panel's recommendations must be implemented soon for developing a reliable statistical data base on the sector. It recommends that a dedicated unit be created within the National Statistical Organisation (NSO) for standardising concepts, definitions and harmonisation thereof and promoting their use in census surveys.

The panel suggests that a system for statistics on informal economy should have the mechanism to capture data on direct and indirect linkages between the formal and informal sectors, taking into account aspects like forms of organisation; existence of differences in employment status like unpaid family workers including self employment; women's participation in extended activities, and variations in the nature of unorganised sector across different locations, and so on.

The Committee recognised that there was no unique system to capture credit information in respect of unorganised sector enterprises satisfactorily. To achieve this, the Committee wants surveys to be undertaken on the lines of NSSO's All-India Debt and Investment Surveys (AIDIS) at least once in five years. Also, it wants the National Bank for Agriculture and Rural Development (Nabard) to undertake quinquennial surveys of all NGOs and SHGs involved in microfinancing to collect financial data relating to them.

Considering the important role of micro, small and medium enterprises in the national economy, the Committee recommends that systematic studies be undertaken on their role in terms of output, employment and export. The Committee noticed the virtual absence of data on the construction sector and has recommended that a special survey relating to construction activities be undertaken on a priority basis.

Other recommendations include devising a mechanism to capture direct and indirect linkages between formal and informal sectors, a need to improve the methods of arriving at estimates of gross value added (GVA) from service and construction sectors, and strengthening the Economic Census (EC) in evolving a dependable business register for introducing annual survey of non-manufacturing industries.

Published on June 04, 2012

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