Webinar on the Complementarity between the Formal and Informal Sub-Sectors of the Indian Industry

The Institute organized a webinar on “The Complementarity between the Formal and Informal Sub-Sectors of the Indian Industry” based on research by Dr. Mehak Majeed, Assistant Professor, Islamic University of Science and Technology, Jammu and Kashmir; Mr. Saeed Owais Mushtaq, Research Scholar, Department of Economics, University of Kashmir; and Mr. Zahid Gulzar Rather, Assistant Professor, Department of Higher Education, Jammu and Kashmir on July 15, 2022. The presentation was made by Dr. Mehak Majeed and was followed by a rich discussion initiated by the eminent panelists including Dr. Subhanil Chowdhury, Associate Professor, St. Xavier’s University, Kolkata; Dr. Satyaki Roy, Associate Professor, ISID; and Dr. Avinash Kumar, Assistant Professor, Centre for Informal Sector & Labour Studies, Jawaharlal Nehru University, New Delhi. The webinar was moderated by Mr. Ashish Kumar, Visiting Professor, ISID. Around 100 persons attended the webinar and more than 400 persons viewed it on YouTube till 30th September 2022.

The research aims to simultaneously understand the economic status of the formal and the informal sector(s) of the Indian economy at a point in time in terms of the efficiency using the stochastic frontier analysis. At the same time, it is a perfect fit to open up the debate about the simultaneous existence of the formal and the informal sectors. Indian economy is categorized as one of the fastest growing advancing economies. Much of the growth has been attributed to the industrialization process post-independence, especially after the economic reforms of the 1990s. However, the formal industrial sector has been unable to absorb the growing labour force and thus a majority of the labour force has been forced to derive and find self-employment options in the informal sector. Therefore, the present study first analyses some descriptive statistics about the formal and informal sectors of the Indian economy. After the preliminary analysis is made, the study estimates the stochastic frontier production functions for the two sectors and predicts the technical efficiency of the firms. The findings of the study bring forth some features of the two sectors and validate a positive and constructive presence and contribution of the informal sector in the Indian economy alongside the formal sector. The regression analysis in the study highlights the factors contributing positively and negatively toward the technical efficiency of both the formal and informal sectors to arrive at better policy recommendations.