Unorganised sector, also known as the informal or unregistered sector, is an essential part of the Indian economy. This part of the economy is defined by the National Commission for Enterprises in the Unorganised Sector (NCEUS). It encompasses all unincorporated private companies, with ownership by individuals or families, involved in producing or selling goods and services. These businesses operate on a proprietary or partnership basis and employ fewer than ten workers.
Characteristics of Unorganised Sector
The distinguishing features of the unorganised sector in India include:
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Ease of Entry: Starting a business in this sector generally requires less capital and regulatory compliance, making it easily accessible.
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Small Scale of Operation: Most businesses in this sector operate on a small scale, primarily serving local markets.
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Labour-Intensive Methods: Unorganised businesses often rely heavily on manual labour and use lower technology-based methods in their operations.
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Flexible Pricing: Pricing in this sector is not fixed and can vary depending on the seller and the buyer.
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Lack of Sophistication: These businesses usually lack professional packaging, brand names, good storage facilities, and effective distribution networks.
Challenges Faced
Despite its significant role in the economy, the unorganised sector faces various challenges:
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Legal Status: Many businesses in this sector operate without official registration, leading to an uncertain legal status.
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Access to Government Aid: Due to their unregistered status, these businesses often lack access to government loans, schemes, and aid designed to help small and medium enterprises.
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Low Job Security and Compensation: Employees in this sector usually have low job security and receive lower salaries compared to those in the organised sector. Moreover, they are often deprived of benefits such as paid leaves and have poor growth opportunities.
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Employment of Migrants: A significant chunk of the workforce consists of migrant labourers who usually work under precarious conditions and are susceptible to exploitation.
Economic Impact
As per the NCEUS report, the unorganised sector accounted for a huge portion of India's employment in 2005. Out of 458 million employed individuals, 95%, or 435 million, worked in the unorganised sector, contributing 50.6% to India's gross domestic product (GDP). This clearly indicates the sector's immense contribution to the country's economy and employment generation.
Conclusion
While the unorganised sector is a crucial part of the Indian economy, there are several challenges that need to be addressed. The government should take steps to provide better consulting for legal and financial matters, implement protective measures against exploitation, and offer improved access to schemes and aid. These changes could lead to an improved unorganised sector, benefiting both the economy and the individuals who depend on it for their livelihood.