Soumya Kanti Ghosh & Deep Narayan Mukherjee

A sizeable informal economy is a global issue. As per IMF 2020 estimates, the informal economy in Europe is estimated at 20% of GDP. In sub-Saharan Africa and Latin America it’s 34%. In this context, India’s estimate done as of 2018, suggests the size of the informal economy at 52%. This number was expressed by NSC (National Statistical Commission) with very limited methodological details. We argue that this is a gross overestimation and based on publicly available digital data, India’s informal economy currently is no more than 15-20% of the formal economy.

How is the informal economy measured?

Estimating the size of the informal economy is always tricky and a globally accepted statistical framework of measuring it is still awaited.

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