Topic: National Income
Q5. How does the inclusion of informal sector activities pose challenges in the accurate measurement of national income in India? Suggest measures to improve the reliability of such estimates. (15 M)
Difficulty Level: Medium
Reference: InsightsIAS
Why the question
To evaluate the challenges in measuring informal sector contributions to national income and explore solutions to enhance accuracy.Key demand of the question
Explain the challenges posed by the informal sector in national income estimation and suggest measures to improve reliability.Structure of the Answer
Introduction
Briefly introduce the significance of the informal sector in India’s economy and its role in GDP.Body
- Challenges: Discuss the unorganized nature, lack of documentation, and subsistence activities.
- Measures: Suggest solutions like improving surveys, using technology, and promoting formalization.
- Examples/Committee Recommendations: Integrate recent examples and credible committee suggestions to support the solutions.
Conclusion
Conclude with a forward-looking statement emphasizing the importance of accurate informal sector measurement for inclusive policymaking.
