Formal and informal enterprises: concept, definition, and measurement issues in India

M. R. Narayana

in Linking the Formal and Informal Economy

Published in print September 2006 | ISBN: 9780199204762
Published online September 2006 | e-ISBN: 9780191603860 | DOI:

Series: WIDER Studies in Development Economics

 Formal and informal enterprises: concept, definition, and measurement issues in India

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This paper introduces the multiplicity of official concepts, definitions, and measurements of economic contributions and performance of formal and informal enterprises in India’s manufacturing and services sectors. Conceptually, formal (or informal) enterprises are distinguished by registered (or unregistered), organized (or unorganized), and regulated (or unregulated) enterprises. Employment size is a major criterion to define these enterprises. In contrast, registered and unregistered small scale enterprises are uniquely defined by size of capital investments. Using the national level databases, the economic performance of formal, informal, and small scale enterprises is separately measured by their contributions to production, employment generation, and use of assets in rural and urban areas. This implies that the standardization of concepts and definitions are a precondition for establishing comparability between the databases, or for the measurement of economic contributions and performance of India’s formal and informal enterprises.

Keywords: enterprises; organized; unorganized; informal; registered; unregistered; small scale; own account; directory establishments; non-directory establishments

Chapter.  10279 words. 

Subjects: Economic Development and Growth

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