In recent years, developing economies, including India, have undergone considerable structural change. The informal sector continues to be a significant component of manufacturing activity in these economies. Yet, despite its large presence, the sector does not seem to contribute much to India’s economy, which has grown rapidly since the 1991 reforms.

This volume examines the presence of ‘manufacturing dualism’—a large but less productive informal sector alongside a modern and more productive formal sector—and assesses how informal manufacturing firms have responded to economic liberalization in India. It views informality through a ‘production’ lens and studies the determinants of enterprise growth and performance along the entire continuum of the informal sector—micro-level household enterprises to larger enterprises employing wage labour.

The chapters analyse the various aspects of informality in India’s manufacturing sector using rich firm-level data from large, nationally representative surveys spanning two decades of reforms. They argue that concerted government action is needed to allow the informal sector to come out of the shadows and contribute more to India’s economic growth.

About the Author

Rajesh Raj S.N. teaches at the Department of Economics, Sikkim University, Gangtok, India. Kunal Sen is Professor of Development Economics at the Institute for Development Policy and Management, the University of Manchester, UK.

Table of Contents:
Tables, Figures, and Box Preface Abbreviations Taking a ‘Production Lens’ to Informality in India: An Introduction 1. Theoretical Perspectives on the Informal Economy 2. The Policy Context 3. Change and Continuity in the Indian Informal Manufacturing Sector 4. Firms in the Indian Informal Manufacturing Sector: Characteristics and Evolution over Time 5. The Performance of Informal Manufacturing Firms 6. The Determinants of Firm Transition 7. Globalization and Its Effects 8. Out of the Shadows? Lessons and Policy Implications Appendix A1 Appendix A2 Bibliography Index About the Authors