Informal, Inc.

Traveling around the streets of Dehli, you will find small enterprises set-up on the sidewalks by locals. These entrepreneurs make their livings selling a variety of goods from hair-cuts to fake Kama Sutras.  Development specialists term this economic activity as the informal sector because this economic activity is not counted in the GDP and employment measures, but provide 'unofficial' income to the poor.  Unlike the black market, the informal sector activity would not be considered illegal in the United States or other developed countries, except for their lack of permit or meeting of safety standards.  While many lesser developed countries have a substantial informal sector presence, India's 'brand' of the informal sector tends to be more aggressive in their sales pitch and offer a more varied selection of goods.  Here, children come up to us after dinner hugging us and trying to use sympathy to peddle necklaces for the older boy standing a few feet away.  Each tourist location have men continuously hounding foreigners to buy their post-cards and flutes. For locals, small haircutting and shaving stations are set-up with chairs and mirrors or peanuts toasted on an open flame are scooped off the sidewalk and sold.

At the surface, the informal sector seems to be a completely beneficial way for the poor to fill a need within a market and earn an income.  However, this sector posses a few issues.  Why are these children out at all times of the day, talking to strangers and remaining unsupervised? How can these vendors be able to achieve sustainable growth for their business when they only have two hands to hold their inventory? Many of these entrepreneurs are marketed as nuisance or a government failure to provide decent jobs for its citizens, but in many cases, they represent an opportunity for the government or private enterprise to incorporate more of these low wage earners into the mainstream market. One way to achieve this goal includes developing a market place for these sellers.    These markets alleviate the coordination failure of small entrepreneurs of having goods from their villages and homes and not being able to sell them in a secure fashion.  Today, we went to a market that accomplished this; the Delli Haat market welcomes hundreds of rural and urban craftswomen and men to sell their goods directly to the buyers.  We saw a variety of goods being sold at this market from across all Indian states, which in turn, allowed us to see the greater diversity of goods that India can produce.  A draw back of these markets is that they do not solve the issue of the begging children or harassing men; these markets are simply too small to accommodate everyone.  Longer term solutions need to be implemented, such as day care programs and sufficient education, to handle to large scale effects of the informal sector in India.

This strong entrepreneurial spirit of getting out there and trying to make a living out of nothing can empower a nation as it has with the United States.  If the Indian government can harness and incorporate this spirit more into its economy, India can help further develop its crusade of a democratic path to development without leaving this informal sector behind.

--Michele Breaux, MPIA 2011