Developmental planning in India had an expectation about formal and informal sector workers as the economy grows. Which option gives this expectation and what has actually happened?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → More workers would become formal sector workers; most workers are still in the informal sector
Planning expected that, as the economy grew, more workers would become formal sector workers and the informal share would shrink. This did not happen: about 89 per cent of workers are still in the informal sector.
Option (1) More workers would become self-employed; the share of self-employment has fallen below half — Incorrect. Planning spoke of formal jobs, not self-employment. And self-employment is still the largest category, about 58 per cent.
Option (2) The informal sector’s share would grow; most workers have moved into formal jobs — Incorrect. Both halves are reversed. The informal share was expected to dwindle, and most workers are still informal.
Option (3) More workers would become formal sector workers; most workers are still in the informal sector — Correct. Both the hope and the result are right.
Option (4) Formal workers would lose social security; formal workers now earn less than informal ones — Incorrect. Formal workers enjoy social security and earn more than informal workers.
NCERT (2026-27): “6.7 Informalisation of Indian Workforce … Those who are working in the formal sector enjoy social security benefits. They earn more than those in the informal sector. Developmental planning envisaged that as the economy grows, more and more workers would become formal sector workers and the proportion of workers engaged in the informal sector would dwindle. … Look at the following chart which gives the distribution of workforce in formal and informal sectors. In 2019–2020 there were about 535 million workers in India. There were about 59 million workers in the formal sector (Chart 6.4). … About only 11 per cent (59/535×100)! Thus, the rest 89 per cent are in the informal sector. …” |