The term ‘informal sector’ was first used by Hart in 1970s during his field work in urban areas of Ghana. During his field work among the urban workers in Ghana, he came across to a large self-employed sector, which provided means of livelihood for new entrants to the urban labour force who fail to acquire employment in the formal sector.

The growth of the informal sector in India can be viewed from a sociological perspective by examining the various factors contributing to its expansion, its impact on society, and the potential implications for the future.
Factors contributing to the growth of the informal sector
a. Population growth: India’s population has been growing rapidly, leading to an increase in the labor force. The formal sector has not been able to absorb this growing labor force, resulting in a large number of people seeking employment in the informal sector.
b. Urbanization: Rapid urbanization has led to the growth of informal settlements and slums in cities. People living in these areas often find it difficult to access formal employment opportunities and are forced to work in the informal sector.
c. Structural changes in the economy: The liberalization of the Indian economy in the 1990s led to a shift from agriculture and manufacturing to the service sector. This shift has resulted in a decline in formal employment opportunities, pushing more people into the informal sector.
d. Lack of education and skills: A significant proportion of the Indian population lacks access to quality education and skill development opportunities. This makes it difficult for them to find formal employment, leading to an increase in the informal sector.
Impact on society
a. Employment generation: The informal sector has been successful in providing employment opportunities to a large number of people, especially those who are unable to find work in the formal sector.
b. Poverty alleviation: Informal sector jobs, although often low-paying and lacking in benefits, have helped many people escape extreme poverty and improve their living conditions.
c. Social exclusion: Workers in the informal sector often face social exclusion and discrimination, as they are not considered part of the formal economy. This can lead to feelings of marginalization and alienation.
d. Gender disparities: Women are disproportionately represented in the informal sector, often working in low-paying and precarious jobs. This perpetuates gender inequalities and limits women’s access to resources and opportunities.
Implications for the future
a. Economic growth: The informal sector contributes significantly to India’s GDP. However, its potential for sustainable growth is limited due to the lack of access to credit, technology, and infrastructure.
b. Social protection: The absence of labor regulations and social security benefits in the informal sector leaves workers vulnerable to exploitation and economic shocks. This can have long-term implications for social stability and cohesion.
c. Skill development and human capital: The informal sector often lacks opportunities for skill development and training, which can limit the potential for human capital development and economic growth.
d. Policy interventions: The growth of the informal sector highlights the need for targeted policy interventions to improve working conditions, social protection, and access to resources for informal workers.
          The growth of the informal sector in India can thus be viewed as both a challenge and an opportunity. While it has provided employment and income for millions of people, it also highlights the need for inclusive and sustainable development policies that address the needs of this vulnerable population. Societal efforts should focus on improving access to education, skill development, and social protection for informal workers, as well as promoting the formalization of the informal sector to ensure better working conditions and economic growth.