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Almost 80 % of the Economy is now Formal after COVID Digitisation Drive – SBI Report

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About 80% of economy now formal following digitisation driveThe digitisation drive and pandemic situation of the gig economy have led to a faster formalisation of the economy.

  • Compared to 2017-2018 the share of the informal sector shrunk from 52.4 per cent to just 15-20 per cent in 2020 – 21.

Key points

i.The share of the informal sectors has shrunk dramatically to 15-20 percent of the Gross Value Added (GVA) or formal Gross Domestic Product (GDP) in FY21.

ii.The note ban happened in 2016, was welcomed by some population and hated by few others but the pandemic infusion in development of the society has formalized many informal sectors.

iii.The formal financial sector was expanded by 10 per cent , and that of formalised utility services size expanded by 1 per cent during the pandemic.

iv.Agriculture sector has been formalised by 20-25 per cent since 2018 where KCC credit was played major part and now the informal agriculture sector is 70-75 per cent.

v.The real GDP in FY21 was stood at Rs 135.13 lakh crore, but lost 7.3 per cent in FY22 after the worst economic contraction ever recorded due to the epidemic.

About Gig Economy

i.A gig economy is a free market system where organizations create contracts with independent workers for short-term engagements.

ii.About 56% of new employment in India is being generated by the gig economy companies across both the blue-collar and white-collar workforce.

  • White-collar workforce –working in service sector (Desk job)
  • Blue-collar workforce – working as manual labor in the manufacturing sector.

Recent Related News

In its June 2021 Global Economic Prospects, World Bank Revised India ‘s GDP growth forecast for Financial Year (FY) 2022 to 8.3 percent from its earlier estimate to 10.1 percent (the forecast has been revised by 2.9 percentage points). It has also projected India’s growth in FY2023 at 7.5 percentage due to the impact of COVID 19.

About State Bank of India (SBI)

Establishment – 1st July, 1955
Chairman – Dinesh Kumar Khara
Headquarters – Mumbai, Maharashtra
Tagline – The Banker to Every Indian