Women in India’s Informal Economy: Contributions and Challenges

Walk down any bustling Indian street, and you’ll see her. She might be the woman skillfully stringing marigolds into garlands, the vendor sorting a vibrant mountain of vegetables, or the artisan selling handcrafted leather sandals on the pavement. What you might not see is the woman inside her home, hunched over a sewing machine assembling garments, or the one rolling *papad* on her rooftop to sell. These women, both visible and invisible, are the beating heart of India’s massive informal economy. They are entrepreneurs, labourers, and the primary earners for their families, yet they operate in a world devoid of safety nets, defined by uncertainty, and largely unrecognised by the very economy they hold up.

What exactly is India’s ‘informal economy’? 🔗

When we talk about the “informal economy” or the “unorganized sector,” what do we mean? In simple terms, it refers to all economic activities, jobs, and enterprises that are not registered or regulated by the state. Think of it as work without a formal contract, without social security, and without the legal protections that workers in the “organized sector” often take for granted. This isn’t just a niche part of our economy; it’s the majority. And for women, it’s overwhelmingly the *only* option available.

The scope of this sector is vast. It includes street vendors, waste pickers, domestic workers, construction labourers, and a massive, often hidden, army of home-based workers. These women might be assembling electronic parts, stitching garments, or processing food from their own homes. According to data, over 90% of all working women in India are engaged in informal employment. They are a colossal workforce, contributing significantly to national production and exports, yet they remain on the absolute margins of economic life.

The great push: Globalization and economic crises 🔗

How did so many women end up in this precarious position? It’s often not a “choice” but a necessity, a structural push driven by broad economic shifts. The era of globalization, beginning in the 1990s, brought significant changes to India. While it opened up new industries and formal jobs, it also introduced market volatility and economic crises. These crises often led to widespread male unemployment as formal, protected jobs in sectors like manufacturing were cut back.

This is where women stepped in. To keep their families from falling into poverty, millions of women were forced to seek work. But the formal jobs weren’t available to them. Instead, globalization created a new kind of demand-a demand for a cheap, flexible, and non-unionized labour force. Companies began outsourcing production to smaller, unregulated workshops and even directly to homes. This feminization of informal labour meant women were absorbed into the economy, but at the very bottom, in roles that were often just an extension of their household chores, paying rock-bottom wages for piece-work.

A workforce without a net 🔗

The sheer scale of this concentration is staggering. Data from as far back as 1991, as noted in many academic studies, showed that 95.8% of all women workers were in the unorganized sector. Decades later, that number has barely budged. This means that for generations, the vast majority of working women in India have lived their entire professional lives without a single legislative safeguard.

For their counterparts in the organized sector, a job comes with a baseline of dignity: a minimum wage, defined working hours, paid leave for sickness, and maternity benefits. For women in the informal economy, these are abstract concepts.

The daily reality of no safeguards 🔗

What does this lack of protection look like in a person’s life?

• It means a garment worker is paid per piece-perhaps a few rupees for a complex stitched pattern-with no regard for the hours she pours in. If she is sick, she earns nothing.
• It means a street vendor who faces harassment or has her goods confiscated has no legal recourse.
• It means a home-based worker who becomes pregnant has no right to maternity leave; she simply loses her income.
• It means that after 40 years of back-breaking labour, there is no pension, no provident fund, and no security for old age.

This is the lived reality for over nine out of ten working women in India. They are, in effect, permanent temporary workers.

The invisible boss: How middlemen fuel exploitation 🔗

One of the most damaging features of the informal economy is its complex and shadowy structure, which is perfectly designed to facilitate exploitation. For millions of home-based workers, especially in sectors like garments, handicrafts, and assembly, work is not provided by a company. It arrives through a long chain of middlemen.

Imagine a woman in an urban slum. A man on a scooter drops off a large bag of pre-cut fabric and thread. Her task is to stitch the seams or add embroidery. A few days later, he returns, inspects the work, pays her a small amount per piece, and gives her the next bag. She may never know the name of the subcontractor he works for, let alone the large national or international brand at the very top of the supply chain.

This system is deliberately obscure. It ensures the real employer remains anonymous, insulated from all legal responsibility. This lack of a clear employer-employee relationship is the root of exploitation. As one report on home-based work highlights, this vulnerability allows for shockingly low pay. For example, some women were paid as little as Rs. 50 for cleaning 23 kilograms of almonds, a task that takes 12 to 16 hours of painstaking labour. This is a fraction of the legal minimum wage.

Denied justice: The legal vanishing act 🔗

This structure is a legal dead end for workers. When a woman is underpaid, cheated on her piece-rate, or faces harassment from a middleman, where does she go? How can she claim her rights under India’s labour laws? She can’t. The very system is designed to make her claims impossible.

The middleman will simply say he is not the employer; he is just a “trader.” The subcontractor will claim the same. The identity of the principal employer is so effectively obscured that justice is, in almost all cases, denied. This isn’t a flaw in the system; it is the system.

The one-woman enterprise: Manufacturing in the informal economy 🔗

Within this vast informal world, a huge proportion of women are not just labourers; they are entrepreneurs. They operate what are known as Own Account Manufacturing Enterprises (OAMEs). The name sounds technical, but the reality is simple: it’s a one-woman show.

This is the woman who makes and sells pickles, *papad*, or spices from her kitchen. She is the weaver with a single loom in her hut. She is the artisan making pottery or bamboo crafts. She manages the entire process herself: sourcing raw materials, production, quality control, packaging, and marketing, often selling her goods at a local market or to a visiting trader.

This is the dominant form of female entrepreneurship in India. Data from WIEGO (Women in Informal Employment: Globalizing and Organizing) shows that 96% of all women-owned enterprises are “own account” enterprises with no hired workers, and the vast majority are home-based. This is a testament to their resilience and business acumen, but it is also a sign of their constraints.

The paradox of ‘entrepreneurship’ for survival 🔗

We must be careful not to romanticize this “entrepreneurship.” For most, it is not a path to wealth but a strategy for survival. These micro-enterprises are born from a lack of other options. They are often severely under-capitalized, and their earnings are minimal. The same WIEGO study noted that the average annual income from a woman-owned OAME was less than half that of a man-owned OAME.

Recent Indian government data reinforces this. The Udyam Assist Platform (UAP) was created to register Informal Micro Enterprises (IMEs). As of early 2024, women-owned enterprises accounted for a remarkable 70.49% of all registered IMEs. This confirms their massive presence but also highlights their concentration in the smallest, most informal, and most vulnerable segment of the business world. They are running enterprises, but without access to formal credit, larger markets, or the ability to scale, they often remain trapped in a cycle of minimal earnings.

From being pushed into the informal economy by global forces to navigating exploitative supply chains and running entire manufacturing operations from their homes, these women demonstrate incredible resilience. They are the invisible engine of the Indian economy. The challenge for policymakers and society is to finally make them, and their rights, visible.

What do you think? When you next see a local street vendor or buy a handmade item, what part of this ‘invisible’ economy will you see? What single policy change do you believe would make the biggest difference in the lives of these women?

References

1. https://iwwage.org/women-in-the-indian-informal-economy/
2. https://www.ijnrd.org/papers/IJNRD2311372.pdf
3. https://yipinstitute.org/capstone/invisible-labor-women-india-home-work
4. https://www.wiego.org/wp-content/uploads/2019/09/Raveendran-Women-Men-Operators-Enterprises-India-Informal-Sector-WIEGO-SB18%20.pdf
5. https://www.pib.gov.in/PressReleaseIframePage.aspx?PRID=2002574