Puru DubeyAIR 86 · CSE 2025 · 169 wordsTheir whole copy
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It was assumed that informal sector would wither away with modernisation of developing economies. However, it flourishes and expands both as a safety net and perpetuating itself as a trap.
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INFORMAL SECTOR : A SAFETY NET
It serves as an innovative space which absorbs those excluded from the neo-liberal formal sector. Bina Agarwal found that with LPG related layoffs, most migrants found job in informal sectors.
As a safety net, it provides unskilled jobs with low entry requirements. Women too find job in this sector providing opportunities. It is also a sector which produces cheap goods linked to survival of excluded & marginalised.
However, this safety net also acts a trap.
TRAP OF INFORMAL SECTOR
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Informal sector perpetuates itself as it hires cheap labour and keeps cost of production low. Even formal sector utilises informal sector to remain competitive.
Due to competition among developing economies, efforts to reform are fraught with risk of losing competitiveness. Hence informal remains perpetual.
Recent State interventions like e-Shram however aim to counter this.