The Scale of Informality: A Cross-State Analysis of Non-Agricultural Workers and Enterprises in India

India’s non-agricultural informal sector serves as a structural pillar of the national economy, underpinned primarily by the prevalence of unincorporated micro and small enterprises. According to the Periodic Labour Force Survey (PLFS) 2023–2024, approximately 73 per cent of non-agricultural workers are engaged in the informal sector (Government of India, 2024). Complementary data from the Annual Survey of Unincorporated Sector Enterprises (ASUSE) 2023–2024 highlight this sector’s robust growth in output and employment, noting a significant rise in female-owned proprietary establishments (Government of India, 2025). While the sector is a vital engine for job creation and gross domestic product (GDP) of the country, it faces persistent challenges, such as a lack of social security. Furthermore, data reveal a stark regional divide: some states accommodate massive informal clusters due to a lack of large-scale manufacturing, while others maintain high enterprise counts but struggle with high rates of persistent informality.

Paradoxically, the Indian labour market has remained predominantly informal despite sustained economic growth. This informality is dual-faceted, manifesting in both the nature of employment and the dominance of unincorporated enterprises. This article examines the magnitude and regional distribution of informality within India’s non-agricultural sector, highlighting significant sub-national disparities. Utilising the PLFS data from 2017–2018 to 2023–2024, we first analyse the proportion of workers engaged in the informal sector (proprietary and partnership enterprises) among usual status workers (Figure 1). Following this, Table 1 details the distribution of these workers by enterprise size. The study then explores geographical variations: Figure 2 illustrates the state-wise percentage of informal workers, while Figures 3 and 4 provide a rural–urban disaggregation across states. Finally, the gender dimension of informal employment is examined through sex-disaggregated data in Figures 5 and 6.

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Figure 1.

Source: Government of India (2024).

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Table 1.

Percentage Distribution of Informal Workers (Proprietary and Partnership Enterprises) in Usual Status Engaged in Non-agriculture Sector by Enterprise Size, India, 2023–2024.

Number of Workers ®	1–5 Workers	6–9 Workers	10–19 Workers	20 or More Workers	Not Known	All
Rural male	80.3	11.7	3.9	3.6	0.6	100
Rural female	85.9	7.2	3.4	3.3	0.3	100
Rural persons	81.3	10.8	3.8	3.5	0.6	100
Urban male	75.7	13.2	5.6	4.9	0.6	100
Urban female	79.7	10.1	4.6	5.4	0.3	100
Urban persons	76.5	12.6	5.4	5.0	0.5	100
Male (rural + urban)	78.5	12.3	4.6	4.1	0.6	100
Female (rural + urban)	83.2	8.5	3.9	4.2	0.4	100
Persons (rural + urban)	79.4	11.5	4.4	4.1	0.5	100

Source: Government of India (2024).

Note: Non-agriculture sector included industry divisions 05–99 of the National Industrial Classification, 2008.

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Figure 2.

Source: Government of India (2024).

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Figure 3.

Source: Government of India (2024).

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Figure 4.

Source: Government of India (2024).

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Figure 5.

Source: Government of India (2024).

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Figure 6.

Source: Government of India (2024).