Liberalisation and its Impact on Urban Informal Sector

Abstract

Development is a dynamic chain of interrelations involving economy, human ware and material processes. The path to economic prosperity vis-à-vis policies and processes has changed over the years in search of alternative strategies for sustained growth. Since July 1991, with the then government coming to power, substantive reforms have been introduced in the industrial and trade policies, with objectives of making the economy more efficient and competitive. The basic philosophy of economic reforms was to accelerate the tempo of economic development of the country and to strengthen the competitive efficiency of our industrial sector. The major objectives of these reforms, according to the government were: (i) correcting economic imbalances and structural rigidities, (ii) ensuring sustainability of growth pattern, (iii) reducing budget deficits, and (iv) encouraging competitive forces through diversification of the country’s external sector. Though many economists have accepted the fact that the new economic policies have created a notable contribution to the Indian economy but it has also invited observations of the economic reviewers. Some opined that ongoing new economic policies are likely to substantially increase affliction in the small enterprise and urban informal sectors. The unorganised sector, which is the major source of female employment, had compelled them to take up low paid jobs or undertake more strenuous jobs for an identical pay. In India, it is always the women workers who face the layoff whenever there is an attempt to curtail the size of the personnel. Not only that the poor and vulnerable sections of urban informal sector are seen to be adversely affected like loss of employment, rising prices, increasing sickness in micro-enterprises, poverty and so on, the urban economy is also going to succumb to easy entry of foreign goods, low reliance on indigenous resources and negligible capital investments. Characteristics like labour intensiveness and uncompetitive unregulated markets will have its toll on the informal sectors. This paper attempts to develop an understanding of the nature and extent of the impact of liberalisation on the urban informal sector. The paper has also explored the interface between liberalised economic policies and the informal sector. The problems and prospects of workers, particularly the women in the urban informal sector in the context of opening up of the economy have been reviewed. The limit and prospects of urban informal sector in the changing economic scenario is also examined in its present context.