The performance of the informal sector demands indepth analysis

livemint.com:

₹11,885 in July-September 2017 will be the equivalent of ₹15,806 by April-June 2023. Therefore, the actually observed average earnings of ₹13,347 in the later period is actually a decline of 15.5% in real terms.

Seen in a proper perspective, the earnings level observed from mid-2017 to till mid-2020, which the author described as “stagnant," is in fact a fall of 18.9% in real terms. As for the growth phase after that, when adjusted for inflation, what is presented as a buoyant annual growth of 6.5% from July-September 2020 to April-June 2023 would be a relatively prosaic 4.2%.

Also, instead of CPI, if the Wholesale Price Index (WPI) were to be used as the deflator, earnings growth in April-June 2023 over July-September 2020 would be merely 2%. Equally importantly, since formal-sector growth is used in the National Accounts to estimate informal-sector figures only for manufacturing and some service sectors, if one intended to study that informal part for whether or not it is over- or under-stated in GDP calculations, the contribution of all other segments like agriculture, etc, should have been excluded from the workforce analysis as well, instead of taking overall figures from PLFS reports.

Not doing so, in our opinion, render the inferences drawn weak. Also, the base year of the current series of GDP is 2011-12 and all the questions being raised today over the contribution of the informal or unorganized sector, assessed on the pattern of these businesses’ respective organized-sector counterparts, have been raised ever since its inception.