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Home/Practice questions/Economics
EconomicsIndian Economic Development: Employment - Growth, Informalisation and Other Issues

Formal sector establishment are those establishment that employs ?

Formal sector establishment are those establishment that employs ?

Answer & explanation+

Correct answer: option 3

The correct answer is Option (3) → 10 hired workers or more

All public sector establishments are in the formal sector. A private sector establishment is in the formal sector when it employs 10 hired workers or more. All other enterprises, and the people working in them, form the informal sector.

NCERT (2026-27): “6.7 Informalisation of Indian Workforce … To know this we classify workforce into two categories: workers in formal and informal sectors, which are also referred to as organised and unorganised sectors. All the public sector establishments and those private sector establishments which employ 10 hired workers or more are called formal sector establishments and those who work in such establishments are formal sector workers. All other enterprises and workers working in those enterprises form the informal sector. Thus, informal sector includes millions of farmers, agricultural labourers, owners of small enterprises and people working in those enterprises as also the self-employed who do not have any hired workers.…”

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