The part of the economy made up of small, unregistered enterprises and of workers without written contracts, social security or legal protection, which employs the large majority of India's workforce and produces a significant share of its output.
The term "informal sector" was popularised in the early 1970s by the anthropologist Keith Hart, writing about urban Ghana, and by an International Labour Organization mission to Kenya. They noticed that a huge number of people earned a living outside government-regulated firms: street traders, small workshops, domestic workers and casual labourers. Rather than disappearing as economies grew, this sector persisted and in many countries expanded.
In India, the National Commission for Enterprises in the Unorganised Sector (2004–09), chaired by Arjun Sengupta, defined the unorganised sector as enterprises owned by individuals or households with fewer than ten workers, and informal workers as those without employment security, work security or social security. Its reports found that the vast majority of Indian workers were informal and that a large share of them lived on very low daily incomes. Importantly, informality also exists inside the formal sector: many contract and temporary workers in registered factories or government offices lack written contracts and benefits.
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