Poverty Hidden or Poor? An Inside Look at India's Informal Workforce

?The Unorganized Workforce in India

In India, about 81% of the workforce is unorganized . This means that the majority of workers do not have a fixed income, job security, or social benefits like health insurance or retirement plans. These conditions make it difficult for workers to plan and secure their futures. Despite these challenges, official reports indicate that only 11% of Indians live in poverty. This low number might be due to changes in the criteria for Below Poverty Line (BPL) cards, influenced by inflation and other economic factors.

Defining Poverty in India?

Poverty in India is defined in two main ways:

1. Monthly Income:

?? - Urban Areas: Earning less than ?1,286 per month.

?? - Rural Areas: Earning less than ?1,059.42 per month.

2. Daily Spending:

?? - Cities: Spending less than ?47 per day.

?? - Villages: Spending less than ?32 per day.

However, in 2021, only 11.9% of the population was classified as poor. This statistic seems incongruent with the average minimum income in India, which is ?5,340 per month, as reported by the government. This discrepancy raises questions about the accuracy of poverty data and whether all incomes, especially in the informal sector, are properly documented.

?Historical?Population and Poverty Over Time

?- 1947: India's population was 34 crore, with 27 Crore Around 80% living in poverty.

- 2021: India's population is 141 crore, with approximately 16 crore people around 11.9% classified as poor.

This reduction in poverty is remarkable, but it also highlights potential changes in how poverty is measured and reported. For example, in 2005, the minimum wage was ?1,720, and by 2015, it had increased to ?4,800. Despite these increases, many workers in the informal sector do not have their incomes documented, leading to inconsistencies in poverty statistics.

?Minimum Wages and Informal Workforce

?India's informal workforce includes agricultural workers, domestic workers, factory workers, and hospitality workers. These workers often lack social security and fixed wages. The E-shram portal, launched in 2021, aimed to register around 38 crore informal workers to provide a database for better policy formulation. However, these workers still lack social security and fixed pay, highlighting the challenges in formalizing the informal sector.

Registration and Documentation Challenges

Agriculture employs 42% of the informal workforce. The E-shram portal relies on self-declaration forms, which exclude those who benefit from ESI (Employees' State Insurance) and PF (Provident Fund) or those who file income tax returns. This self-exclusion makes it difficult to obtain accurate data on the informal economy. In 2023, only 8 crore income tax returns were filed, while 11.80 crore workers were registered under the ESIC Department of Labourtment of Labour . This stark difference underscores the vast size of the informal economy.

Efforts to Reduce Poverty by?Government and NGO Initiatives

Since 1947, India has made significant strides in reducing poverty, from 80% to 11.8% in 2021. However, the informal economy's size and lack of accurate income documentation suggest that poverty may still be more widespread than official statistics indicate. Various NGOs, NPOs, and government initiatives have been working to reduce poverty, but significant challenges remain.

NREGA and Wage Increases

?The NREGA (National Rural Employment Guarantee Act) mission involves 13.2 crore workers who lack social and job security. Despite a recent wage hike of 3-10%, the average MGNREGA wage increase of ?28 per day remains insufficient. The average wage for 2024-25 is projected to be ?289, up from ?261 for FY 2023-24, but this is still below the standards set by the 2019 Minimum Wages Act.

?Challenges and Future Directions

The discrepancy between reported poverty rates and the actual economic conditions of the informal workforce suggests that many workers remain vulnerable. Accurate data collection and effective policy implementation are essential to address these ongoing issues. Ensuring that all workers, especially those in the informal sector, have access to social security and fair wages is crucial for reducing poverty and improving economic stability.

While India's official poverty rate has decreased significantly over the decades, the lack of income documentation and social security for the informal workforce presents a significant challenge. Addressing these issues requires a multi-faceted approach involving accurate data collection, effective policy implementation, and ensuring social and economic protections for all workers.

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Disclaimer: The views expressed in this article are my personal opinions based on my current knowledge of the economy and systems. I possess 9 years of experience working with various stakeholders and as a beneficiary myself. This article is intended to provide social influence and insights. It is not to be used for any legal purposes, and I do not endorse its use as such. Readers are strongly encouraged to conduct their own research and exercise caution before making decisions based on the information presented. Please note that the article has been generated with the assistance of technology, and there may be discrepancies. Kindly refrain from using it as a definitive source and exercise discretion in sharing it.

?References:

In India, about 81% of the workforce is unorganized

average minimum income

The E-shram portal

8 crore income tax returns

ESIC Department of Labourtment of Labour .

NREGA (National Rural Employment Guarantee Act)

- Google Sources

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