Walk through any Indian city or village, and the country’s informal workforce is impossible to miss. Street vendors selling fresh vegetables, construction workers building roads and homes, domestic helpers, drivers, delivery personnel, farmers, artisans, waste collectors, small shopkeepers, and countless daily wage labourers keep the wheels of the economy turning. They provide essential goods and services that millions depend on every day. Yet despite their immense contribution, many continue to work without adequate job security, social protection, or legal safeguards. This raises a crucial question: who protects the backbone of India’s economy?
India’s informal sector is one of the largest in the world. A significant share of the country’s workforce is employed outside formal contracts, often without written agreements, fixed salaries, health insurance, pension benefits, or paid leave. These workers contribute substantially to economic activity, yet many remain invisible in official systems and vulnerable to financial uncertainty.
One of the defining characteristics of informal employment is insecurity. A daily wage labourer earns only if work is available. A street vendor’s income depends on weather, customer demand, and local regulations. Domestic workers and small artisans often lack stable employment and can lose their livelihoods without notice. For many families, even a few days without income can create serious financial hardship.
The COVID-19 pandemic exposed these vulnerabilities more clearly than ever. When economic activity came to a sudden halt, millions of migrant workers and daily wage earners found themselves without jobs, income, or adequate social security. The crisis highlighted not only the essential role of informal workers but also the urgent need for stronger safety nets during emergencies.
Despite these challenges, the informal economy remains a powerful engine of growth. It generates employment for millions who may not have access to formal jobs. Small enterprises, family-run businesses, local markets, and self-employed workers contribute significantly to production, trade, and services. Their flexibility and entrepreneurship have helped sustain economic activity even during difficult periods.
However, the sector faces several persistent challenges. Access to affordable credit remains limited, making it difficult for small businesses and self-employed workers to expand. Many workers lack formal training, reducing opportunities to improve productivity and earnings. Occupational safety standards are often inadequate, particularly in construction, manufacturing, and other physically demanding industries.
Women make up a substantial portion of India’s informal workforce, especially in domestic work, agriculture, home-based production, and small-scale enterprises. Yet they frequently face additional barriers, including wage disparities, limited legal protection, and fewer opportunities for career advancement. Improving conditions for women in the informal sector is essential not only for gender equality but also for inclusive economic growth.
Migration further complicates the picture. Millions of workers move from rural areas to cities in search of employment. While migration creates opportunities, migrant workers often lack access to affordable housing, healthcare, education, and public services in their new locations. Their temporary status can make it difficult to access government welfare schemes or labour protections.
Technology is transforming the nature of informal work. Digital payment systems, e-commerce platforms, and app-based services have opened new opportunities for small businesses and independent workers. Delivery partners, ride-hailing drivers, and freelance professionals represent a new form of informal employment shaped by the digital economy. While these platforms provide flexibility, they also raise questions about worker rights, earnings, insurance, and long-term security.
The solution is not to eliminate the informal sector but to strengthen it. Formalising every job overnight is neither practical nor desirable. Instead, policies should focus on improving working conditions while preserving the flexibility that many workers value. Simplified business registration, access to affordable finance, skill development programmes, portable social security benefits, and universal health coverage can help create a more secure future.
Governments have already taken steps through labour reforms, digital identity systems, and welfare initiatives aimed at extending benefits to unorganised workers. However, implementation remains critical. Many workers are still unaware of available schemes or face challenges in accessing them. Strengthening awareness, reducing bureaucratic barriers, and improving coordination between states can make these programmes more effective.
Private companies also have an important role. Businesses that depend on informal labour should promote fair wages, safe working conditions, timely payments, and opportunities for skill development. Consumers, too, can contribute by recognising the value of the people whose work supports everyday life and by treating them with dignity and respect.
Ultimately, India’s ambition to become one of the world’s largest economies cannot rest solely on its formal corporate sector. The country’s economic strength also depends on the millions of workers who build its homes, grow its food, transport its goods, clean its streets, and provide countless everyday services. They may not appear in boardrooms or stock markets, but they remain indispensable to the nation’s progress.
Economic growth is meaningful only when it improves the lives of those who create it. Protecting the informal workforce is therefore not merely a matter of social justice—it is an investment in India’s long-term resilience, productivity, and inclusive development.
Because the true backbone of an economy is not measured only by its largest corporations or fastest-growing industries. It is measured by how well it values and protects the millions of ordinary workers whose labour keeps the nation moving every single day.
— Dhruba Deka