Measuring the Informal Economy
Introduction Ever since the advent of Demonetization and even more so since COVID-19, there have been many academics who have been pointing out that our GDP estimate is probably an overestimate considering it doesn’t capture the output from the unorganized/ informal sector at all. Along with it, it is mentioned that the informal sector is like a black-hole, and we have no idea what is happening there. For the GDP measurement, it is generally believed that the unorganized sector is assumed to move in tandem with the organized sector and no other data is available. Typically, every five years there are surveys conducted to determine informal sector activities. These surveys are conducted for Informal Manufacturing, Trade and Repair, and Other Services sectors (excluding Ownership of Dwelling sector which is a notional entry/ opportunity cost). The last such survey was conducted during the year 2015-16. These surveys also do not measure informal sector activities in Agriculture, Min...