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Essay

India’s Informal Sector - The Feeder Economy Within

India’s informal sector remains a chronic conundrum for scholars and policymakers. It has been studied widely and deeply for decades but a clear understanding remains elusive. Policy prescriptions have been attempted but defy implementation. For scholars, its riddles range from its very definitions to its empirical size and behaviour. Yet, with all these loose ends, this ubiquitous sector serves as a major dynamo in the nation’s economic and social development. Despite their numerical strength and their active participation in social landscapes that are impacted by public policies, and as voters who shape electoral outcomes, the ability of firms and workers in the informal economy to gain political leverage in the interests of very small firms and their workforces remains invisible at best; ignored at worst.

In this Essay, Barbara Harriss-White, Emeritus Fellow, Wolfson College, University of Oxford, internationally renowned for her scholarship on India’s informal economy for over five decades, delineates how the tides of liberalisation, and more recently, the rightward turn in economic policies have only further fragmented this workforce. These “sinews of India’s backbone”, she points out, directly or indirectly drive the widely acclaimed onward march of India’s corporate sector but continue to remain exploited.

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India’s plural tradition, safeguarded by a constitutional commitment to a secular democracy, is going through challenging times. The founding ideals of a multi-religious, inclusive Indian nation are fast being reshaped by a majoritarian formulation of the normative relationship between the state and religion.

Rajeev Bhargava, Honorary Fellow, Centre for the Study of Developing Societies (CSDS), New Delhi, and Balliol College, Oxford, and Director, Parekh Institute of Indian Thought, CSDS, analyses what went wrong with India’s tryst with a sui generis form of secularism. In conversation with V.S. Sambandan, Chief Administrative Officer, The Hindu Centre for Politics and Public Policy, he draws out the differences between the European and Indian variants, and the lessons offered by the latter; how ‘modernity’ resulted in ‘religionisation’, which, in turn, displaced India’s plural, free-flowing pathways; and the points of inflexion in the practice of secularism in India. He also flags an important missing element: the omission of caste from the secularisation process. Equating the Indian caste hierarchy with the “meddlesome” church in western societies, he asserts: “A caste system thwarting individual autonomy and one caste dominating another caste within the Hindu order has to be fought.”

As for the trajectory that lies ahead for India’s engagement with secularism, Prof. Bhargava remains optimistic but with a caveat: Although the “downward trajectory will stop”, one cannot expect “a dramatic turnaround”. This assessment arises from his reading that India’s disengagement from the constitutional ideal commenced in the 1980s, and, therefore, “the recovery will also take a longer period. But it will take place.”

Edited excerpts from an interview held in Chennai on August 18, 2023:

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