An analysis of the latest survey of unincorporated enterprises released last month showed that 3.5 lakh crore people were employed in informal manufacturing in 2025, compared to 3.6 lakh crore in 201516, while the number of enterprises rose to 2.1 lakh crore from 2 lakh lakh crore.In contrast, data from the latest Annual Survey of Industries (ASI), which tracks the formal manufacturing sector, showed that just under 2 lakh crore people were hired in 2023-24, up 37% from 201516 (see chart).Santosh Mehrotra, a visiting professor at the University of Bath, said that in the past few years, the organized sector has made gains at the expense of the unorganized sector, but added that this does not mean formalizing the economy. “Instead, it reflects the growing stratification of the economy, with a relatively small formal sector experiencing a surge in productivity and growth, and the huge informal sector that is the mainstay of a large population facing stagnation,” he added.
The disparity between the two sectors also appears in worker income.Between 2015-2016 and 2025, in real terms, wages per hired worker in informal manufacturing establishments rose at a compound annual growth rate (CAGR) of 2.1% to Rs 72,172 from Rs 59,806.
In contrast, total remuneration paid to workers in real terms in the formal manufacturing sector increased at a compound annual growth rate of 4.5% between 2015-2016 and 2023-2024. Meanwhile, net profit in the formal manufacturing sector increased at a CAGR of 4.4% during the period.