Wanted: New thought and regulation for the informal sector in India in a post-COVID world

The pandemic has exposed the gravest challenges facing India's informal economy. These findings from a research project underline the need for policy implementation and reforms.

India employs 90% of its workforce within the informal labour sector. According to ILO estimates, four million workers are employed as domestic workers (of which three million are women). According to the Ministry of Housing and Urban Poverty Alleviation, more than 10 million people are registered as street vendors.

The NSSO survey findings from 2011-12 highlights that there are 37.4 million home-based workers in India. With limited laws and policies governing them they are often left at the mercy of their employers, who have become their proxy social security providers during the pandemic.

Over the span of the last three months, the mode of gainful employment has undergone significant changes, especially within the informal sector. Domestic work, street vending, construction work are trades where physical presence at the workplace is paramount, in the absence of which wages cannot be earned. 

The luxury of working from home and maintaining physical distancing are not the perks of informal work. Only specific forms of work allow informal workers to work from home, such garment manufacturing, stitching, embroidery, beedi rollers etc. where you would find home-based workers. But often such informal workers are housed in informal settlements with poor basic infrastructure services, and live in poor health and hygienic conditions which adds on to their existing socio-economic problems.

So, how imperative is accessibility to work to make a living in the informal sector? That was the focus of my research with women beneficiaries of SEWA (Self Employed Women Association) Bharat – a federation of women-led institutions providing economic and social support to women in the informal sector – across three lines of work: home based workers, domestic workers and street vendors spread across Delhi. 

As I started off with my research, I met a wary tone at the other end of every voice call that I made, and this tonal quality, I found, was a common attribute in each one of them. One could sense their anxieties in that voice, the fear in their deep breaths and their helplessness in the sheepish mundane tones. None seemed to be able to clearly articulate how things could be made better for them anytime soon. 

Home-based workers

Ruaab is an apparel producing company of SEWA which employs women engaged in home-based work in Delhi. During the lockdown, all of them were unemployed, until their labour was channelised into mask making, which has now become their alternative source of income. These women reported a significant reduction in income since the pandemic. Earlier, they earned about 8000-10,000 rupees a month whereas now it has gone down to an average of 2000 rupees.

Currently, these women are the only ones employed in their respective households, as their spouses too are associated with some other informal line of work. With the constant depletion in savings and no additional income or security of work, they fear that the fall in retail demand will lead to zero or very low earnings for them for some time to come. 

Even though access to a place of work is available, particularly in this form of informal work, they are still hugely governed by the demand in the economy which is beyond their control.

Street vendors

While home-based workers have switched to alternative livelihoods, limited capacities, resources and skill sets prevent everyone from doing so. As a result, this switch is difficult for domestic workers and street vendors, primarily because their scope of work lies beyond the spatiality of their homes. 

For a street vendor and domestic worker, access and physical proximity to the place of work matters. These are either streets or the homes of other people. In the lockdown, streets ceased to exist as places of work and domestic work was barred. 

The worst affected are street vendors, because the nature of vending is quite dynamic with respect to their spatiality, mobility and the type of commodities they trade in. With the economy crashing, demand for non-essential goods also ceased.

“Why would anyone buy cosmetics and accessories now… Everyone touches my items before they buy…I’m scared to touch them later, what if I fall ill?”

– A street vendor in Delhi. 

There are binaries within street vending too. To some extent, vegetable, fruit and other food vendors seem to have been able to get back to their trade. But non-food vendors are now left with a pile of dead inventory, for which the market has either ceased to exist or has declined significantly. This has stirred a sense of anxiety and the fear of dying from starvation. 

The fear of lost livelihoods outweighed the fear of contracting the virus among many of these vendors, who have gone back to the streets to make a living. Street vendors and domestic workers are now caught in the dilemma of whether they should try to minimise the risk of contracting the virus, or if they should try to revive their channels of income. 

“Who would buy books now…students are nowhere…schools and colleges are shut….who would buy? ”

– A book vendor in Daryaganj

Domestic Workers

Conversations with domestic workers revealed that these women worked for an average of three homes per day, earning about 6000-8000 rupees per month in pre-COVID times. During the lockdown, any income earned was due to the generosity displayed by employers, if at all.

Now, with the relaxation of the lockdown, domestic workers have begun to access these homes again, their workplaces, but now many of them have to incur increased expenditure on mobility or increased commute time or both. Access to homes is judged by the accessibility and feasibility of commuting. With limited public transportation available, along with the fear of availing any public mode of transportation, they often choose to cover these distances by foot.

“I used to work for three households before…among them one of the owners has paid me through these three months….god bless them…if not for that, I do not know what I would have done.”

– A domestic worker in Delhi 

What has helped informal workers to survive since the lockdown are past savings and loans from their families and other social networks. Also, pre-existing socio-economic leverages of these informal workers has played a vital role in coping.

But these narratives essentially expose the lack of access to work in the times of COVID-19; with limited laws or policies governing them these workers are dependent on acts of kindness, failing which they are pushed to debt traps.

Laws and policies on informal work in India

The state governments of Kerala, Maharashtra, Tamil Nadu have constituted Welfare Boards for domestic workers who can avail welfare benefits by registering. Still a large majority of domestic workers remain outside the purview of labour laws. 

For street vendors, there is the Street Vending Act, 2014 which is to safeguard their rights. The Act has various provisions which attempts to protect and govern them, one of which is the setting up of a local body called the Town Vending Committee, entitling them with powers to govern street vendors. The implementation of the Act across various indexes is questionable. 

With respect to home-based workers there is no legislation in the country for them. There remains a 2017 draft policy which suggests that the government should recognise home-based workers as formal workers, as the first step to protect their rights. It also talked about associating the home-based workers with trade unions, federations and associations in order to have clarity on their numbers and structured disbursement of the welfare. However, the policy still remains a draft! 

For the time coming ahead in the new normal, we ought to rethink livelihoods in various lines of informal work and adopt strategies and implement policies in order to accommodate the informal workforce, and facilitate their access to places of work as their earnings are hugely dependent on their physical presence. 

Note: The author acknowledges the inputs of Sukrit Nagpal and Sonal Sharma, who work with SEWA, Bharat in the Land Rights Programme.


  1. Sasindrababu KP says:


  2. Ramesh Kumar Chalakkal says:

    Well studied and observed the various issues of low income groups in our society and presented well. Real facts in the current scenario. High time to have a welfare society or government aid for them so that they can survive in such situation.

    Appreciate the author.

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