Availability of Labour Force in India

Availability of Labour Force in India!

India is the second largest country in the world with a population of over 1.2 billion. The 1991 census showed that around 25 per cent of the population resided in urban areas and the rest in rural areas.

The labour force in the country numbered 317 million in 1991, of whom a mere 8.5 per cent (about 27 million) were engaged in the formal sector while 290 million were engaged in the informal sector.

Women constituted one-third of those engaged in the informal sector and one-seventh of those employed in the formal sector.

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There were 75 million agricultural labourers and 110 million small and marginal farmers who also worked as labourers . Hence, around 185 million workers were engaged in the rural informal sector. The urban informal sector comprised around 95 million workers. The 1991 Census was conducted before the policy of liberalisation was adopted.

The decennial census in India (first conducted nationwide in 1881) gives the population on 1 March of the year concerned. The Industrial Policy Statement of the government, which laid the foundations of economic liberalisation, was adopted in July 1991. The 2001 Census, giving a picture of the effects of liberalisation, showed that around 27 per cent of the population now resided in urban areas.

More recent statistics on employment show that the informal sector has increased considerably in size. The report of the 55th Round of the National Sample Survey (1999-2000) shows that 397 million persons were employed in the informal sector.


This figure increased to 458 million in the 61st Round. Employment in the formal sector remained almost static at around 35 million during the same period. The informal sector constitutes about 93 per cent of the Indian workforce.

Informal employment is not unique to India. To understand this phenomenon in the context of global trends, one must try to view it in a theoretical framework. The trend for informalisation may be similar to other economies though the intensity may differ. We shall examine the theoretical constructs so that we can apply these later to explain the current phenomenon.

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