A privately owned unit has four hired workers. Which of the following is correct about it?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → It is an informal sector establishment, as it has fewer than 10 hired workers
A private unit is in the formal sector only with 10 or more hired workers. With four hired workers this one is informal. It is still an establishment, because it has at least one hired worker.
Option (1) It is a formal sector establishment, as it has hired workers — Incorrect. Having hired workers is not enough. A private unit needs 10 or more.
Option (2) It is an informal sector establishment, as it has fewer than 10 hired workers — Correct. It falls below the limit of 10.
Option (3) It is a formal sector establishment, as every unit with a hired worker is formal — Incorrect. One hired worker makes a unit an establishment, not a formal one.
Option (4) It is not an establishment at all, as it has fewer than 10 hired workers — Incorrect. An establishment needs only one hired worker for most of the year.
NCERT (2026-27): “6.7 Informalisation of Indian Workforce … 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. …” Glossary: “Establishment – An enterprise which has got at least one hired worker for major part of the period of operation in a year.” |