Thoughts on India’s Informal Economy from a U.S. High School Student

The entry below was written by Chanel Samuels, a high school student at the Beacon School in New York City. She read my HBR article on the informal economy in India, contacted me for an interview, and produced an excellent (and well-written) report below. Enjoy!

Women in the Informal Economy of India

India has had one of the most successful global economies over the past few years. From 2007 to 2008 India’s economy grew from 9.2 percent to 9.6 percent. Despite the apparent success of India’s economy, there are still individuals within the country whom will never benefit from the country economic successes. An informal sector means economic activity is neither taxed nor monitored by the government. India’s informal sector is comprised of 90 percent of India’s workforce, which consists of the poor (Chauhan). Because of India’s cultural society women within many sectors of the country are viewed as inferior beings compared to men. The gender inequalities within India have lead to the exploitation of many women. However as workers of the informal economy, Women have to support and financially contribute to their impoverished households and as a result this has lead to the slow deterioration of India’s cultural as well as financial portrayal of women.

India’s traditional family model is hindering the women from entering the employment sector, as they have to worry about finances, in addition to sustaining a well functioning domestic environment. Women within Indian families are expected to uphold the traditional family roles in the household. Traditionally, the Indian family roles consist of the husband whose goes out to work and the wife who stays home, takes care of the children, cooks, cleans, and gets water. The family hinders women from working hard outside the home in the public sector, factories and stores (Chauhan). As it becomes more difficult to survive off of just the male’s income, women begin to run business, specifically in their homes or as vendors (WIEGO). The money that women make from working benefits the GDP (Gross Domestic Product) and sustains their poor households (WIEGO). In fact, Semil Shah, principal of the India Strategy Consulting says, “One of the reasons the economy may have been so resilient during the downturn is because it has this informal economy. What I mean is, these people do not register their businesses, they do not pay taxes and it’s so much economic activity that it’s so sustained.” (Semil Shah).

Women’s role within the informal economy has lead to the sustainability of India’s family as the women are able to financially provide for their homes, and assume the male’s role when necessary. Families are able to survive because of their way of life, working in the informal economy. “When women work, and are treated as men’s equals, there is growth for all” (Lak 242). Women have the ability to prosper in the informal economy as they have been, but the equality will be improved gradually. Women have always been viewed as the vulnerable class with the least freedom, however as countries and policies grow, expectations and gender-based roles begin to fade, or interconnect. . “Women have always been labelled and defined, but increasingly the colonial literature presented Indian women as a single oppressed or vulnerable class” (Robb 238). Women have always been viewed as the vulnerable class with the least freedom, however as countries and policies grow, so do expectations and gender-based roles begin to fade, or interconnect. “When women work, and are treated as men’s equals, there is growth for all” (Lak 242). Women have the ability to prosper in the informal economy as they have been, but the equality will slowly and gradually be improved.

The informal economy has served as a catalyst for the progression of women within India’s economy. The reason that there is such a difference between the formal and informal economy is that, “[With] women in the formal Indian economy, there’s a high literacy rate, they’re for the most part well educated,” Shah began, “…there are a number of people in India that fall through the cracks and have to go through the public help; public education system and they suffer because of that.” There is an obvious juxtaposition within the formal and informal economies of India which branches from the upbringing of the women who live in this country.Through the informal economy women have been able to gain positions within India’s employment sector, and as a result of this the women are able to establish a financial position within India’s economy. As a result of this women are becoming less dependent upon the males within the society for structure. The Caste system is also representative of the two sectors, formal and informal, and who works where.

However despite the growing position of women within India’s informal economy, the country’s caste system exacerbates the situation by making it harder for women of the lower class to gain an economic position within the country. Lower-caste women do not always work in the informal economy, however the government is controlling them and the people of the upper-caste have more leeway when it comes to jobs in India. As stated within a history of India by Peter Robb:

“Lower-caste women certainly worked, in agriculture, as weavers, and as prostitutes – these were regulated by the state, and later (devadasis) by temples. For some, no doubt, work did mean independence and even wealth, but the rule of subordination seems likely to have been set by higher-caste norms.” (Robb 47)

The lower- caste citizens do have fewer opportunities than the upper-caste, therefore it is harder for them to establish a position within society and requires more work to maintain their status as working people. India’s caste system has worsened the economic mobility of the women, and by doing so has slowed down the economic progression of the women.

The problem with the informal economy is that it is comprised of poor people, indeed, 97 percent of the workers are women (Chatterjee) and they have to work under bad conditions. The workers are usually the breadwinners for their families, however, they work to stay at bay and survive under the harsh circumstances: 1) they never have a set schedule; 2) they get paid very little money; 3) there is a lack of control in how much money they earn; 4) there’s no balance paid work for children; 5) no access to institutional credit; and 6) there is a lack of supplies (Chatterjee). So the workers of the informal sector never have any stability or certainty with these jobs.

Economically, the poor people of India will never feel the benefits because “the problem is that as it gets richer, it’s not going to get on a per individual basis.” (Shah) The informal sector exists because people are not able to obtain jobs that upper class citizens are able to because of the circumstances, there just are not enough wage jobs available to the people, and the people need to be qualified for the jobs in the formal economy (Jain), unlike in the informal economy where there is a lack of skill and people are allowed to work for little pay (Chatterjee). “More fundamentally, the informal economy is where the poorest and most disadvantaged groups in India secure their livelihoods” (Chen). The people that work in this economy really need the work so they work there in order to be stagnant in wealth.

People in India are in search of jobs that will better the living conditions for their families and their selves. “Across urban India, we see people flowing in, setting up their fragile homes on the city’s fringes and setting out in search of work. People are arriving with a willingness to work at anything, and learn in any way they can” (Nilekani 314). The citizens of the working class are determined to get jobs in order to sustain an income of some sort. People in the informal sector work as: domestic servants, small traders, artisans, or field laborers on family farms (Dunlop). Opportunities are not just up in the air for Indians to catch, therefore they have to become apart of the informal economy and use their own skills to make money for the family.

Women tend to be employed doing different jobs which pay different amounts of money as oppose to men who earn less within certain segments of the informal sector (Chauhan). Men usually trade and sell more than women do and sell from push-carts and bicycles while women usually sell from baskets or spread on the ground (Chauhan). Men are more likely to be the head of the family businesses that they run in the informal sector while women are more likely to be the unpaid contributing family member (Chauhan). Men are more willing to work with tools and trade while women sell a larger assortment of goods (Chauhan). Indian women do not particularly do the jobs that people in other countries do which call for a little more skill, however they use these jobs to make ends meet and help out their families. “Indian women have been fixed occupationally in agricultural and menial pursuits as ever they have been, and this means in work that paid the lowest wages” (Stein 397). By default, women have been ‘assigned’ these jobs which show the gender indifference between men and women.

Being apart of the informal sector makes workers independent and self-reliant since people have to find jobs and user the skills that they have in order to do what they can to make money (Chatterjee). Additionally, self-employment is beneficial because it increases employment for the small business owners and for more staff (Chatterjee). Women workers of the informal economy are more organized and could possibly be better off than others in terms of credit, training, financial loans that allow women to buy their own homes and have health insurance (Chatterjee). Also, women coming together in the informal sector really give a voice to the people and empower women to further their work economically and politically (Jain). Once the informal workers are given taxation with representation and security, they will be able to bargain their rights as work (Jain).

On the other hand, the informal economy is not always viewed positively. Shah stated, “I think everyone would prefer to be involved in the formal economy but the informal economy is just more an expression of everyday life.” The informal economy doesn’t protect people because the government is not involved so people are not able to have health insurance. The workers of the informal economy in the urban areas all have an average income above the standard urban poverty rate, yet the individual workers earn below the urban poverty rate that they should be (Chen). So the informal economy is helpful, however it is not a huge change.

India’s informal economy is just a demonstration of things that are occurring globally. India’s informal economy shows that every country is suffering since there are not enough available jobs left for people to work oat. Class and gender will always be one of the main focuses that people think about and they will continue to work in the informal economy in order to make money and support their families. Women are viewed as the vulnerable class, however they are hard workers that come together in order to if there is such thing. India’s formal economy illustrates how the progression within women, is still not equivalent to that of the man. In addition India’s informal economy demonstrates that although women have come a long way, that in terms of employment and the job sector that they are still being oppressed.

The informal economy not only exists in developing countries, but also in developed countries, such as the United States. Only in the United States, these jobs are called ‘off-the-book’ jobs. The men that serve breakfast in Columbus Circle along with the women that sell hats and scarves downtown are apart of the informal sector of the United States. The women of India live in poor households and find a way to help their selves and families survive by working in the informal economy.The informal economy within India has resulted in the economic progression of the women within the country. More Indian women are now entering India’s employment sector and this consequently is leading to the breaking down of cultural and traditional barriers that has constantly left women behind the beginning of time.