93% of the Indian workforce (460 million) resides in the informal sector.
60% of the Indian population (1380 million) is rural and agrarian, with growing numbers lacking livelihood opportunities close to their homes.
Millions of informal workers have moved back to their villages because of lack of economic activity and security in urban India.
Only 0.9% of informal workers are organised into collectives and 87% of the population lives on less than USD 5.50 per day, which due to COVID , could drastically drop further.
Genesis / Problem
Throughout the world, millions of producers and farmers with unique skills to produce meaningful and wholesome products have been reduced to mere labor in the value chain. The lack of opportunities, low wages, inconsistent work, exploitation by multiple intermediaries, limited direct market access, insufficient finances cause systemic issues with deep economic repercussions and major social implications such as limited access to education, inter-generational poverty, gender inequality and poor health conditions. Producers receive meager compensation and have negligible ownership in what they do. This gap of potential earnings is a huge untapped economic opportunity not only for producers, but is foundational for the next Regenerative Economy.
Given the nature of these sectors, there is clear absence of labor protection, social security, poor skill development opportunities, and vulnerability to disruptions – both micro (e.g., personal injury) and macro (as seen with COVID-19, due to forced migrations for work to cities). The lack of adequate work available locally, in rural India makes India account for a staggering 79 million migrant families, the largest number worldwide.
Farm and Off Farm
In India, legislation has created a structural mechanism for collectives to help organize informal producers. This has led to the creation of 7,374 organizations that collectively cover 4.3 million producers (0.9% of the informal workers). The Small Farmers Agri Consortium, for instance, facilitates the formation of agricultural producer companies.
There is no such facilitation for the Off Farm or artisanal sector, which accounts for at least 200 million families dependent on partial or full incomes from small manufacturing activities, second only to agriculture as a means of rural livelihood.
The government’s fragmented attempts to move the informal into the formal sector, have not been able to solve challenges faced by the majority of Indians, leaving a chasm for women, with women’s participation in the labor force falling. The creation of producer companies in the informal sector has only seen modest gains as they have lacked a holistic approach to help collectives achieve scale, create value added products, or tap into markets directly.