Archive · 19 Jun 2025
India's Informal Economy is Now Better Tracked
Some people think India's GDP might be wrong because it doesn't fully measure the 'informal sector' - like small businesses without formal records.
But, India has been including this in its GDP calculations since 2011.
Some think the informal sector's impact may be overestimated because of big changes like demonetization and GST.
However, data shows the informal sector is growing and becoming better tracked.
The government uses different ways to measure different parts of this sector.
New surveys also give more up-to-date information to make sure the numbers are correct.
Critics have alleged that India's GDP is underestimated due to the unmeasured informal sector.
India's System of National Accounts has included the informal economy in GDP measurement since 2011-12.
Some argue the informal sector in GDP data is overestimated due to impacts of demonetization, GST, and the COVID-19 pandemic.
The contribution to gross value added (GVA) from agriculture and construction is computed through a 'commodity flow' method.
Recent surveys suggest the informal sector is growing robustly and data timeliness has improved.
- Who
- Economists and the Ministry of Statistics and Programme Implementation
- What
- Discussion about the measurement of India's informal sector in GDP calculations.
- When
- Since 2011-12, with improved data in recent years.
- Where
- India
- Why
- To address concerns about the accuracy of India's GDP figures, especially regarding the inclusion of the informal sector.
Criticism
Assessment
Accuracy of Measurement
Criticism
The informal sector is underestimated
Assessment
The informal sector is overestimated
- Definition of Informal Sector (SNA)
- Value added within the household sector
- GDP measurement inclusion
- Since 2011-12
- GVA calculation method
- Commodity flow
- Data Source for Informal sector
- NSS surveys
- GST threshold for registration
- ₹20 lakh for services; ₹40 lakh for goods