ILPC 2026

Expansion of informal sector particularly in developing countries has triggered a major debate among the researchers and policymakers. One half to three-fourths of non-farm employment in developing countries is in the informal sector: 65% in Asia, 51% in Latin America, 48% in North Africa and 72% in sub-Saharan Africa. In India, informality is the most dominant characterization of jobs in the non-farm sector, accounting for 72% of non-farm employment in the informal sector in 2004-05(NCEUS 2007). Almost all the workers in agriculture sector are informal workers. They don’t have any social or economic security, work in very deplorable condition and are left with very few livelihood options. 

As much as 63% of informal workers in the non-farm sector are self-employed in India (NCEUS 2007). Self-employed belonging to the middle and high income group accounting for 25.3% are mostly urban traders with sufficient capital and skill, independent skilled workers or professionals (NCEUS 2007). However, 75% of them are poor and vulnerable (NCEUS 2007). These are mainly petty commodity producers (PCPs) such as small peasants, artisans, small shopkeepers etc.

Theories of development of capitalism or the market economy are based on ideas of institutional convergence: which is linked to the emergence of a specific production relation under capitalism, dominated by the relation between capital and labour (through the wage- labour route). But other forms of production relations (pre/ non-capitalist) continue to be present in many developing economies. Why do such diverse production relations survive and coexist under capitalism? What are its implications for labour?

Extent literature identifies some processes which help in the persistence and reproduction of PCPs in the presence of advanced capitalism. These include value chain, exploitation involved in PCPs and social norms. In the backdrop of this, we have made an attempt to explore the processes through which PCPs survives in the contemporary Indian economy. We have studied the relations of production involved in informal enterprises in general and those involved in handloom sector in particular.

To address above questions, we have studied the weaving cluster of Sualkuchi in Assam, a North-Eastern state in India. We have also used the data collected in  67^th round National Sample Survey on unincorporated enterprises in India.

Our study indicates that existence of PCPs actually helps the capitalists to extract surplus value by making them part of their production system through value chain. Apart from wage labour route, surplus product of direct producer is extracted via unequal exchange, unpaid family labour, labour bondage, subcontracting to home workers, casual labour. Social identities such as gender, caste and religion also play an important role in this regard.