ILPC 2027

The large informal economy in India has received considerable attention from academics particularly in the disciplines of anthropology and economics. The trend of greater informalisation of labour since the libreralisation of the economy beginning in the 1990s has also been a subject of research. However, in this body of research, the presence of the informal sector is taken as an existing fact with very little exploration of its historical emergence.

This paper is an attempt to trace the emergence of the formal-informal divide, with specific reference to legal protection available to workers, by looking at the enactment and implementation of labour laws in the first few decades after independence. This was a period when several labour laws were debated, contested and enacted in Parliament and in State Assemblies. This paper analyses three pieces of legislation and looks at how workers, employers, labour unions, employer associations and political representatives engaged with these laws. Contrary to prevalent views about absence of unionization amongst workers in the informal sector fairly strong unions did exist in several industries (such as handlooms, cigarette manufacture, tanneries).

This paper looks at these engagements and tracks the process through which the majority of workers came to lie outside the purview of these laws, not by default, but through a process of active exclusion: exclusions through loopholes provided in laws, exemptions offered to employers, narrow interpretations of the term 'worker' and so on.