Topic: Inclusive growth and issues arising from it.
4. Lack of access to formal credit for informal sector workers and entrepreneurs act as a major hindrance to their progress. Examine the various issues faced by the informal sector workers and suggest solutions to overcome the same. (250 words)
Difficulty level: Moderate
Why the question:
The economic impact of the pandemic spared few, but there is now evidence that those in the informal sector faced especially devastating consequences. A key reason was the challenge of raising capital. India’s formal credit system is inhospitable to informal sector workers and micro-entrepreneurs — they cannot even get a small personal loan to tide over cash flow issues in their businesses because they lack the papers and the collateral usually required for admission to the formal credit market.
Key Demand of the question:
To write about the issues faced by informal sector workers especially with respect to access to credit and measures to resolve them.
Examine – When asked to ‘Examine’, we must investigate the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications.
Structure of the answer:
Begin by citing statistics regarding to the informal sector of the Indian economy.
First, mention the harsh impact of the pandemic leading to many in the informal sector getting unemployed and mention the major issues faced by them.
Next, suggest measures to overcome the above-mentioned issues.
Conclude by writing a way forward.