How globalization has led to the reduction of employment in the formal sector of the Indian economy? Is increased informalization detrimental to the development of the country?

→ no job security / social security → no payroll - informal hiring. → small & micro enterprises like vendors, hawkers, shops. → Less than 10 working employees.

Significance in India's Economic Development

1. Most imp. significance is that informal sector absorbs India's unskilled and semi-skilled workforce in economy.

2. Provides buoyancy to India's further slipping of jobless growth & low per capita income.

3. Self employment & small businesses.

4. Exports by MSMEs (both formal & informal) are at its peak. ↳ e.g. Textile & Leather products

5. Services and low skilled work - like plumbing, electrician, house help gives flexibility to middle class.

Key challenges in formalisation

1. Lack of credit access - now improved by Priority sector lending, & PM SVANIDHI schemes.
2. Abundance of skilled & semi-skilled & unskilled labour - unfit for changing nature of work in formal sector.
3. Low formal manufacturing base in labour intensive sectors like textiles & tannery.
4. Poverty cycle - migration to urban centres.
5. Less STEM seats & opportunities.
6. Mismatch b/w qualification & job description. Many overqualified people are forced to do under-qualified/informal jobs.