Digitalisation and formalisation are projected by the Government as a solution to the Indian economy’s problems. However, digitalisation has further damaged the unorganised sector without formalising it. Demand has been shifting from the unorganised to the organised sector. Given that the organised sector is more capital intensive than the unorganised sector, this demand shift has resulted in decrease in employment generation, greater inequality and shortage of demand, which have led to the economy slowing down. However, since the size of the unorganised sector is not independently estimated, it is invisiblised in the data.
Arun Kumar is a retired professor of economics, Jawaharlal Nehru University.