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• It is characterised by small and scattered units which are largely outside the control of the government. There are rules and regulations but these are not followed. Jobs here are low-paid and often not regular. 
• There is no provision for overtime, paid leave, holidays, leave due to sickness etc. Employment is not secure. 
• People can be asked to leave without any reason. 
• This sector includes a large number of people who are employed on their own doing small jobs such as selling on the street or doing repair work.
  • Similarly, farmers work on their own and hire labourers as and when they require

Unorganised/Informal  sector in India 

• Around 80% of India’s labour force is employed in the informal sector and the remaining 20% in the formal sector. 
  • Of the 80% informal sector workforce, half work in agriculture and the remaining in non-agricultural sectors. 

Challenges /Issues

• Lack of Social security benefits: Formal workers work in the public and private organised sectors and have adequate social security benefits. 
  • But informal sector workers lack these benefits, making them very vulnerable to economic and political shocks.
• Susceptibility to economic shocks: The casual workers among the informal workers are most susceptible to economic shocks as most of them do unskilled, low-paid occupational jobs. 
  • A significantly high proportion of these workers belong to the marginalised groups and are migrant labourers.
  • The problems in the informal sector can be costly as it can lead to job and wage losses, higher inflation and even risk the livelihood of migrant workers. 
• Structural disadvantage: The structural disadvantage in terms of literacy and skills make them more prone to exploitation. 
  • The discrimination in the urban informal labour market against these people leaves them with no choice but to accept the offered wage.
• Government failure: There is a government failure to reduce wage inequality and ensure a bare minimum wage to a large chunk of the urban informal workers during normal times. 
  • Therefore, the majority of urban informal workers remain highly vulnerable and live in precarious conditions even during normal times. 
  • The existing government programmes cannot provide gainful employment opportunities to the migrants at their native places. 
• Implications of Lockdown: Informal sector workers suffered far more from the national lockdown in 2020 than their formal sector counterparts.
  •  With an inadequate safety net, there were painful accounts of displaced informal workers trying to get back to their rural homes.

Government’s Initiatives 

• Unorganised Workers’ Social Security Act, 2008: The Act empowers the Central Government to provide Social Security benefits to unorganised sector workers by formulating suitable welfare schemes on matters relating to (i) life and disability cover, (ii) health and maternity benefits, (iii) old age protection and (iv) any other benefit as may be determined by the Central Government.  
• Pradhan Mantri Jeevan Jyoti Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY):  Life and disability cover is provided through Pradhan Mantri Jeevan Jyoti Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY). 
  • Benefits under the schemes are for Rs.2 lakh on death due to any cause & permanent disability, Rs.1.0 Lakh on partial disability and Rs.4 lakh on death due to accident to the unorganised workers at the annual premium of Rs.342/- (Rs.330/- for PMJJBY + Rs.12/- for PMSBY) depending upon their eligibility.

• Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY)
  • The health and maternity benefits are addressed through Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) which is a universal health scheme administered by the National Health Authority.

• Pradhan Mantri Shram Yogi Maan-DhanYojana (PM-SYM) and National Pension Scheme for Traders, Shopkeeper and Self-Employed Persons (NPS- Traders).
  • The schemes launched for old age protection to unorganised sector workers including traders, shopkeepers and self-employed persons, 
  • Under the schemes, beneficiaries are entitled to receive a minimum monthly assured pension of Rs.3000/- after attaining the age of 60 years.
  • The workers in the age group of 18-40 years whose monthly income is below Rs.15000/- can join the PM-SYM scheme and Traders, shopkeepers and self-employed persons whose annual turnover is not exceeding Rs.1.5 crore can join NPS – Traders scheme.  
  • Both the schemes are being implemented in all the States/UTs of India.  

• Aam Admi Bima Yojana (AABY): It is a Government of India Social Security Scheme administered through Life Insurance Corporation of India (LIC) that provides Death and Disability cover to persons between the age group of 18 yrs to 59 yrs, under 48 identified vocational/ occupational groups /rural landless households.
  •  It is a group insurance scheme implemented through a Nodal Agency such as a Central Ministry/ Department; State Government /Union Territory or other institutionalized arrangements/ registered NGO.

• MGNREGA 
  • It is a poverty alleviation programme of the Government of India, which provides the legal Right to Work in exchange for money to the citizens of the country.
  • It aims to enhance livelihood security in rural areas by providing at least 100 days of guaranteed wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work.
• Pradhan Mantri Garib Kalyan Yojana / Package 
  • In 2020, the Government of India had announced the “Pradhan Mantri Garib Kalyan Anna Yojana” (PM-GKAY) for all beneficiaries covered under the National Food Security Act, 2013 (NFSA).
  • It is a comprehensive relief package of Rs 1.70 Lakh Crore Yojana for the poor to help them fight the battle against the CoronaVirus. 
  • It aims to reach out to the poorest of the poor, with food and money in hand, so that they do not face difficulties in buying essential supplies and meeting essential needs.

Conclusion and Way Forward 

• There is a need to give protection to informal sector workers via social welfare schemes so that the disruption they are facing does not lead to a permanent fall in demand. 
• Agriculture cannot absorb more people. It is already overcrowded. Engaging returning migrants in building new agri-value chains has some potential to create productive employment and protect livelihoods.
• In the meantime, if the government can scale up its “one nation, one ration card” scheme, and make subsidised grains available at places of work in cities and industrial towns, migrants can hopefully hold on for some time before taking a call on moving back to their native places. 
• Government godowns are overflowing with excess grain stocks, and it may be useful to distribute at least a part of this to benefit migrant workers rather than incur high costs of maintaining these stocks. 
• Along with this, some financial assistance under the Garib Kalyan Yojana can also be extended to migrants to help them remain in the cities of their work.