Question

Distinguish between formal and informal sectors of the economy

Answer 1

Formal sector in India

• In this sector all jobs with specific working hours and regular wages and the worker’s job is assured
• It is a licensed organization and is liable to pay taxes.
• Banks and other corporations comes under formal sectors
• Rag pickers, moneylenders, brokers are considered as a part of an informal economy.
• It is also described as the grey economy.

Informal sector in India

• Majority of the population is into the informal sectors.
• Informal sectors are deemed low with low production value.
• In India agriculture, dairy, horticulture and related occupation employ 52 percent of the workers.
• It lacks security both legally and economically
• About 25 percent of the informal sectors constitute urban employment in India