Since the late 1970s, many developing countries, including India, started paying attention to enterprises and workers in the informal sector. Which option gives the reason for this and a step later taken by the Indian government owing to the efforts of the ILO?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Employment in the formal sector was not growing; informal enterprises were to be modernised
Developing countries began to look at the informal sector because formal sector employment was not growing. Later, through the ILO’s efforts, India began to modernise informal sector enterprises and give social security to informal workers.
Option (1) Informal enterprises were using modern technology; a tax on their profits was introduced — Incorrect. Informal enterprises use outdated technology, which is why they needed modernising.
Option (2) Formal sector jobs were growing too fast; public sector units were closed down — Incorrect. Formal jobs were not growing. That was the reason for the new attention.
Option (3) Informal workers had formed strong trade unions; minimum wages were fixed for them — Incorrect. Trade unions belong to the formal sector. Informal workers have no protection from the government.
Option (4) Employment in the formal sector was not growing; informal enterprises were to be modernised — Correct. Both the reason and the step are right.
NCERT (2026-27): “6.7 Informalisation of Indian Workforce … Since the late 1970s, many developing countries, including India, started paying attention to enterprises and workers in the informal sector as employment in the formal sector is not growing. Workers and enterprises in the informal sector do not get regular income; they do not have any protection or regulation from the government. Workers are dismissed without any compensation. Technology used in the informal sector enterprises is outdated; they also do not maintain any accounts. Workers of this sector live in slums and are squatters. Of late, owing to the efforts of the International Labour Organisation (ILO), the Indian government has initiated the modernisation of informal sector enterprises and provision of social security measures to informal sector workers.” |