7th Meeting of the Expert Group on Informal Sector Statistics (Delhi Group) New Delhi, 2 - 4 February 2004
Session N^o3	Measurement of Informal Economy through Income and Expenditure Surveys
Links Among Employment in Informal Sector, Poverty and Gender
	By Dr. N. S. Sastry
Centre for Social Development

Links among Employment in Informal Sector,

Poverty and Gender

It may be recalled that the Indian National Sample Survey (NSS) included for the first time in 1999-2000 in its large scale employment and unemployment survey, certain probing questions to usual status workers regarding some specific features of the enterprises in which they worked. The survey also collected, through an abridged work sheet, data on the consumer expenditure of the household to which the worker belonged. The survey was so planned and executed that it was possible to identify the members of the household who were employed as usual status workers in informal sector enterprises. The gender of the head of household as well as each member of the household was also recorded. In India, data on the consumer expenditure of household are used as proxy to income of household and form the basis of estimates of poverty. In view of this context, for the first time, the NSS could generate and disseminate in 2001 household level micro data which could be used to undertake an analysis of links among "employment in informal sector", "poverty" and "gender". The principal focus of this chapter is to explore these links in the Indian context by making use of the micro data at household level available from the 1999-2000 `employment and unemployment' survey.

2 The nature and type of work from which a household derives its major income is an important indicator of the activity pattern of its members. In the NSS every sample household is, therefore, categorised into `household types’, depending on the economic activity of the members of the household during the 365 days preceding the data of survey from which major income of the household is generated. Five household types are distinguished for the rural households, viz, (i) self-employed in agriculture; (ii) self-employed in non-agriculture; (iii) agricultural labour; (iv) other (than agricultural) labour; (v) (Residual) others. For urban households, four categories of household types are distinguished, namely; (i) Self-employed households; (ii) Regular wage/salaried households, (iii) casual labour households, (iv) (Residual) others.

3 During 1999-2000, members of about 33% of the rural households took recourse to self-employment in agriculture. They constituted about 37% of the rural population. About 13% of the rural households derived their major income from self-employment in non-agriculture and 14% of rural population belonged to these households. About 32% of rural households were agricultural labour households according for 30% of rural population. Other labour households constituted 8% of rural households with about 8% of rural population in such households. The (residual) other rural households formed 14% with 11% of rural population in those households.

4 Nearly 34% of the urban households with 39% of urban population in those households had income mainly from self-employment. Among urban households, regular employment was the mainstay of 42% of households with 40% of urban population in such households. Casual labour households constituted 14% of urban households with 14% of urban population in such households. The (residual) other urban households formed 10% with 6% of urban population in those households.]

5 In the present study we need certain additional definitions for identifying the type of households. We introduce a new definition of a "household sustaining on employment in informal sector" as a household having at least one usual principal status worker in informal sector and no usual principal status worker outside informal sector. A "household sustaining on self-employment in informal sector" is defined as a household sustaining on employment in informal sector and whose household type code is (a) self-employed in non-agriculture in rural areas and (b) self-employed in urban areas. A "household sustaining on regular salaried/wage employment in informal sector in urban India" is defined as a household sustaining on employment in informal sector and whose household type code is "regular salary/wage earning" in urban areas. A "household sustaining on casual wage employment in informal sector in urban India" is defined as a household sustaining on employment in informal sector and whose household type code is "casual labour" in urban areas. A "female headed household sustaining on employment in informal sector" is defined as a household sustaining on employment in informal sector whose head is a female.

6 A `household sustaining on employment in informal manufacturing sector’ is defined as a household having at least one usual principal status worker in informal manufacturing sector and no usual principal status worker outside informal manufacturing sector. Other definitions as given in the above para 5 are also used for informal manufacturing sector. Similar definitions are also possible for construction and trade. Making use of these additional definitions and the micro data at household level available from the 1999-2000 employment & unemployment survey of NSS, a set of tables, have been specially generated by the Indian National Sample Survey Organisation (NSSO) for the present study.

7 Poverty is estimated officially in India on the basis of one measure, namely proportion of the population below an exogenously specified poverty line. For a household, monthly per capita consumer expenditure (MPCE), is its total consumer expenditure over a period of 30 days divided by the number of members in the household (size). A person's MPCE is understood as that of the household to which he or she belongs. The Indian Planning Commission, which officially estimates the incidence of poverty based on NSS household consumer expenditure survey data, has stated in its press note issued on 22 February, 2001 that in 1999-2000 the all-India poverty line corresponds to MPCE level of Rs. 327.56 in rural areas and Rs. 454.11 in urban areas. The proportion of the population below the specified poverty line (or head count ratio) is officially recognised as "poverty estimate", when the distribution of persons by MPCE is based on the NSS household consumer expenditure survey (CES) data. Persons with consumption (MPCE) less than the poverty line are defined as `poor’. Persons with consumption less than three-fourth (75%) of the poverty line are defined as `very poor’. Persons with consumption less than the poverty line but not `very poor’ are defined as `moderately poor’. Similar definitions are possible for households also. In 1999-2000, NSSO conducted a large scale CES, as usual with a detailed schedule wherein around 330 items of consumption expenditure are specified in detail over 15 pages to minimise recall lapse on the part of respondents. The distribution of persons by MPCE estimated from this CES of NSSO formed the basis for the official poverty estimates in 1999‑2000.

8 As already mentioned earlier, in 1999-2000, NSSO also conducted a large scale employment and unemployment survey (EUES) wherein the schedule included an abridged one page worksheet in which 32 different groups of items of consumption were specified and household consumer expenditure data on each of these 32 item groups were collected. Considering the sizes of the schedules in the CES and EUES, it was thought that it would be very difficult to obtain information for both the schedules from the same household taking into account the fatigue of the respondent. Therefore, unlike in earlier CES and EUES of NSSO, the CES and EUES schedules in 1999-2000 were canvassed in separate sets of sample households. This is the reason why EUES schedule contained in 1999-2000 an abridged worksheet of one page to record household consumption expenditure of 32 different groups of items and it was considered adequate because MPCE of the household here was merely a classification variable for tabulation of employment characteristics and not the main subject of enquiry. However, the household reporting of consumer expenditure in an abridged schedule is known to be affected by a greater degree of recall lapse than in a detailed schedule and hence would tend to understate the total consumer expenditure in comparison with that based on a detailed schedule. This downward bias may be expected to shift the distribution of persons by MPCE based on EUES to the left of that based on CES in 1999-2000. In fact, published results of the 1999-2000 EUES and CES indicate that the cumulative distribution function of MPCE based on EUES lies uniformly above that based on CES at the all-India level both in rural and urban areas. This suggests that the poverty estimate (head count ratio) based on EUES distribution of persons by MPCE would be higher than that based on CES (which is the official estimate) and hence, would at best provide only an upper bound to the comparable official poverty estimate in 1999-2000.

9 In fact, the Indian Planning Commission, based on NSS 1999-2000 CES released at all-India level poverty estimates of 27.09% in rural areas and 23.62% in urban areas. Based on NSS 1999-2000 EUES, Sundaram and Tendulkar (2001) estimated at all India level poverty ratios of 36.45% in rural areas and 28.76% in urban areas. Using the household level micro data set of EUES and published CES results, Sundaram and Tendulkar (2001) derived a significant result. They found that if the understatement arising from the abridged worksheet used for consumption expenditure recording in EUES schedule is adjusted for in the distribution of persons by MPCE and the poverty estimates are made on the basis of such an adjusted distribution, then the adjusted poverty estimates derived from EUES are very close to the official poverty estimates based on CES both in rural and urban areas of India. This result provides us the requisite confidence that the distributions of persons by MPCE in rural as well as urban India derived from 1999-2000 EUES can be used as yardsticks (standards) for obtaining valid and reliable comparisons and conclusions on the links among poverty, employment in Informal Sector and gender.

10 This chapter is organised into 12 sections. In Section 1 we present the results for the household types usually defined in NSS (see para 2 above) in rural and urban areas of the country. Section 2 gives the results for males, females and persons having current daily status of employment: self-employment, regular wage/salaried employee and casual labour in (a) agriculture and (b) non-agriculture in rural and urban areas. The current daily activity status of a person is determined on the basis of his/her activity status on each day of the reference week (preceding the date of survey) using a priority-cum-major time criterion (day to day labour time disposition). From Sections 3 to 11, the results given relate to households sustaining on employment in informal sector for broad industrial categories: manufacturing, construction, trade and all non-agricultural industries, in rural and urban areas. In all the sections results are presented for “very poor”, “moderately poor” and “poor” categories of persons or households. For want of space, a large number of tables, giving percentage distributions of households/persons by MPCE class which form the basis for the results presented in various sections, are not given in this chapter.

Section 1: Poverty by Nature of Employment

11 Poverty and nature of employment such as self-employment, casual wage employment, and regular wage/salary employment are related, whether in rural or urban areas. In paras 3 and 4 above we noted the distribution of households during 1999-2000 according to the household type: self-employed in agriculture, self-employed in non-agriculture, agricultural labour, other (than agriculture) labour, (Residual) others in rural India and the household type: self-employed, regular wage/salaried, casual labour and (Residual) others in urban India. In Tables 1 and 2 we present the percentage of households with MPCE below the poverty line (Poor), percentages of moderately poor and very poor households according to household type in rural and urban India respectively during 1999‑2000. From Table 1, it may be noted that percentage of poor households (35.7%) among agricultural labour households was the highest followed by the corresponding percentage (21.5%) for other (than agricultural) labour households in rural areas. Self-employed households in non-agricultural activities had slightly higher (18.7%) percentage of poor households as compared to the situation (16.7%) among self-employed households in agriculture and related activities. The (residual) others category of households recorded the lowest

Table 1: Percentage of very poor, moderately poor and poor households in each household type - 1999-2000, Rural India

Household type	Very poor	Moderately poor	Poor
Self-employed in : agriculture	4.91	11.71	16.62
In non-agriculture	5.32	13.35	18.67
Agricultural labour	13.03	22.66	35.69
Other labour	7.18	14.36	21.54
Others	5.18	8.02	13.20
All households	7.82	15.19	23.01

percentage (13.2%) of poor households. The (residual) others category of households in rural areas are (a) those households whose major source of income arises mostly from contractual employment with regular wages and salaries and (b) those who earn their living from current returns from ownership of immovable assets (land or real estate) or from past financial investments or receipts such as pension and remittances. It may also be noted that share of poor households (35.7%) among agricultural labour households was substantially higher than that (23%) among all rural households. Percentage of very poor households was also the highest (13%) among agricultural labour households, followed by that (7.2%) among other (than agricultural) labour households in rural areas. Poverty alleviation for these categories of casual wage workers in rural areas would naturally require creation of additional work for them, and this justifies to a large extent the employment generation (poverty alleviation) programmes of the Government.

12 Table 2 shows, as expected, in urban areas share of poor (9.3%) households among regular wage/salary earning households was the lowest during 1999-2000 among all types of households and it was also smaller than that of any type of households in rural areas. Casual labour households in urban areas recorded maximum percentage (42.5%) of poor households either in urban or rural areas. These are the households earning income out of casual wage employment mostly in non-agricultural activities (informal employment in informal sector enterprises as well as informal employment in formal sector enterprises) in urban areas. Casual labour households in urban areas also recorded highest percentage (18.5%) of very poor households either in urban or rural areas. Self-employed households in urban areas had 20.5% households below the poverty line and this percentage was higher than the percentages of poor households among self-employed in non-agriculture (18.7%) and self-employment in agriculture (16.6%) in rural areas. This comparison for self-employed households in urban and rural areas held good even for the category of very poor households. There were about 7% of very poor self-employed households in urban areas as compared to 5.3% of very poor households among self-employed in non-agriculture and 4.9% of very poor households among self-employed in agriculture in rural areas.

Table 2: Percentage of very poor, moderately poor and poor households in each household type - 1999-2000, Urban India

Household type	Very poor	Moderately poor	Poor
Self-employed	7.04	13.49	20.53
Regular wage/ salaried	2.73	6.59	9.32
Casual labour	18.51	23.99	42.50
Other households	6.50	10.25	16.75
All households	6.81	11.76	18.57

Section 2: Share of Poor Households in Total Person-days of Employment for each type of Employment

13 It is of interest to know the percentage share of poor, moderately poor and very poor households in total person-days of employment estimated on current daily basis for each type of employment such as self-employment in agriculture or non-agriculture, regular wage/salaried employment in agriculture or non-agriculture, casual wage employment in public works or in agriculture or non-agriculture separately for each population segment such as rural males, rural females, rural persons, urban males, urban females and urban persons during 1999-2000 at country level. Such estimates are presented in Tables 3 and 4 for rural and urban India respectively.

14 Table 3 shows that in the total person-days of casual wage employment in agriculture in rural India, members of poor households had a share of 38.3% and members of very poor households had a share of 12.3%. In the total person-days of casual wage employment in public works taken up by women in rural India, female members of poor households had a share of 49.8% and women belonging to very poor households had a share of 15.7%. In the total person-days of casual wage employment in agriculture taken up by men in rural India, male members of poor households had a share of 37.8% and men belonging to very poor households had a share of 11.9%. In the total person-days of self-employment in non-agriculture taken up by women in rural India, female members of poor households accounted for a share of 24.6%. In the total person-days of self-employment in agriculture taken up by women in rural India, female members of poor households had a share of 21.9%. In the total person-days of casual wage employment in non-agriculture taken up by women in rural India, female members of poor households had a share of 30.8%. Women in poor households accounted for 39.3% of total person-days of casual wage employment in agriculture taken up by women in rural India during 1999-2000.

Table 3: Percentage of person – days of employment taken up on current daily status basis by members (males, females, persons) of very poor, moderately poor and poor households for each type of employment – 1999-2000, Rural India.

Type of employment	Rural Males			Rural Females			Rural Persons
	Very poor	Mode-rately poor	Poor	Very poor	Mode-rately poor	Poor	Very poor	Mode-rately poor	Poor
Self-employed
In agriculture	5.17	13.89	19.06	6.48	15.51	21.90	5.60	14.38	19.98
In non-agriculture	4.69	13.78	18.47	7.14	17.41	24. 55	5.28	14.71	19.99
Regular employee
In agriculture	7.51	19.79	27.30	6.38	24.22	30.60	7.32	21.03	28.35
In non-agriculture	1.68	6.41	8.09	3.67	7.43	11.10	2.16	6.71	8.87
Casual labour in public works	15.59	12.09	27.68	15.72	34.04	49.76	15.78	17.93	33.71
In agriculture	11.87	25.93	37.80	13.10	26.18	39.28	12.28	25.99	38.27
In non-agriculture	7.22	16.87	24.09	10.32	20.43	30.75	7.60	17.63	25.23
General population (all status: LF+Not in LF)	8.16	18.13	26.29	8.82	19.18	28.00	8.49	18.61	27.10

L.F. = Labour Force

15 From Table 4 it may be seen that in urban India poor persons had a share of (a) 60.8% in total person-days of casual wage employment in public works, (b) 59.6% in total person-days of casual wage employment in agriculture and related activities and (c) 40% in total person-days of casual wage employment in non-agricultural activities. Very poor persons in urban India accounted for (a) 25.7% of total person-days of casual wage employment in public works, (b) 26.2% of total person-days of casual wage employment in agriculture and related activities and (c) 17.2% of total persons-days of casual wage employment in non-agricultural activities, in urban India. Members of poor households in urban India had a share of (a) 30.8% in total person-days of self-employment in agriculture and related activities and (b) 21.9% in total person – days of self-employment in non-agricultural activities, during 1999-2000 in urban India. In the total person-days of regular wage/salaried employment in agriculture and related activities in urban India, poor persons had a share of 36%. In the total person-days of regular wage/salaried employment in non-agricultural activities in urban India, the poor had only a share of 10.7%.

Table 4: Percentage of person-days of employment taken up on current daily status basis by members (males, females, persons) of very poor, moderately poor and poor households for each type of employment – 1999-2000, Urban India.

Type of employment	Urban Males			Urban Females			Urban Persons
	Very poor	Mode-rately poor	Poor	Very poor	Mode-rately poor	Poor	Very poor	Mode-rately poor	Poor
Self-employed :
In agriculture	10.67	18.08	28.75	13.76	22.93	36.69	11.36	19.45	30.81
In non-agriculture	7.08	13.03	20.11	13.36	17.81	31.17	8.06	13.83	21.89
Regular employee :
In agriculture	9.42	15.51	24.93	20.35	29.89	50.24	14.38	21.71	36.09
In non-agriculture	3.00	7.43	10.43	4.02	7.68	11.70	3.22	7.46	10.68
Casual labour in : public works	16.10	27.81	43.91	40.32	39.06	79.38	25.65	35.13	60.78
In agriculture	25.56	35.30	60.86	28.57	31.42	59.99	26.20	33.42	59.62
In non-agriculture	16.85	22.17	39.02	18.82	25.96	44.78	17.17	22.90	40.07
General population (all status : LF+Not in LF)	8.83	13.82	22.65	9.94	14.65	24.59	9.39	14.23	23.62

L.F = Labour Force

16 Women in poor households in urban India accounted for 79.4% of total person-days of casual wage employment in public works taken up by urban females. In the total person-days of casual wage employment in agriculture and related activities taken up by women in urban India, poor women had a share of 60%. In the total person-days of casual wage employment in non-agricultural activities taken up by urban females, poor women had a share of 44.8%. Out of the total person-days of self-employment in agriculture and related activities taken up by urban women, poor women accounted for 36.7%. Women in poor households in urban India had a share of 31.2% in the total person-days of self-employment in non-agricultural activities taken up by urban females. In the total person-days of regular wage/salaried employment in non-agricultural activities taken up by women in urban India, poor women had only a share of 11.7%.

Section 3: Incidence of Poverty among Households sustaining on Employment in Informal Sector

17 Table 5 shows the poverty ratios (percentage of persons below the poverty line) among the persons of the households sustaining on employment in informal sector separately for broad industrial divisions: manufacturing, construction, trade and all non-agricultural activities in rural and urban areas of the country during 1999-2000. Poverty ratios have also been disaggregated into `very poor’ and `moderately poor’ categories.

Table 5: Poverty ratios among the persons of the households sustaining on employment in informal sector by broad industry division – All-India, 1999-2000.

Broad industry division	Rural			Urban
	Very poor	Mode-rately poor	Poor	Very poor	Mode-rately poor	Poor
Manufacturing	6.85	16.90	23.75	9.42	17.04	26.46
Construction	6.80	19.49	26.29	14.40	19.51	33.91
Trade	4.39	12.82	17.21	8.44	12.94	21.38
All non-agricultural activities	6.06	15.82	21.88	10.98	16.28	27.26

18 It may be noted from Table 5 that among the persons of the households sustaining on employment in informal sector (i.e. all non-agricultural activities taken together) in rural India, 21.9% were below the poverty line (poor), of which 6.1% were below three-fourths of the poverty line (very poor); and the corresponding ratios in urban India were 27.3% and 11% respectively. This result clearly brings out the inference that incidence as well as intensity of poverty among the households sustaining on employment in informal sector were higher in urban areas as compared to the situation in rural areas of the country during 1999-2000. Further, in rural India poor and very poor among those sustaining on employment in informal sector constituted lower percentages compared to the situation in the rural people (poor : 27.09%, very poor : 8.65%). In urban India, however, poverty incidence and intensity among the people in households sustaining on employment in informal sector were higher than the corresponding situation among the urban people (poor: 23.62%, very poor: 9.26%).

19 Households sustaining on employment in informal construction sector activities recorded poverty ratios of 33.9% (of which 14.4% were very poor) and 26.3% (of which 6.8% were very poor) in urban and rural areas respectively. Among the persons of the households sustaining on employment in informal trade sector, poor constituted 21.4% and very poor 8.4% in urban India, in comparison to 17.2% of poor and 4.4% of very poor in rural India. In informal manufacturing sector, for households sustaining on employment in these activities poverty ratios recorded were (a) 26.5% (Poor) and 9.4% (Very poor) in urban India and (b) 23.8% (Poor) and 6.9% (Very poor) in rural India. It is clear that incidence and intensity of poverty were higher in construction and lower in trade activities of informal sector as compared to the situation in manufacturing activities.

Section 4: Poverty Ratios among Persons of Households sustaining on Self-Employment in Informal Sector

20 Table 6 presents the results on poverty ratios among the persons of the households sustaining on self-employment in informal sector by broad industry division: manufacturing, construction, trade and all non-agricultural activities in rural and urban India during 1999-2000. It may be seen that poverty ratios recorded in construction were significantly lower than those recorded in manufacturing sector both in rural and urban areas. In rural areas households sustaining on self-employment in informal trade sector had lowest poverty ratios among all the three industrial divisions as also in comparison with all non-agricultural activities taken together. In urban areas self-employment in informal construction sector recorded lowest poverty ratio. In general, except in construction activity, urban areas recorded higher poverty ratios as compared to the situation in rural areas. As compared to the poverty situation among rural people (27.1%), poverty situation was better in respect of households sustaining on self-employment in (a) informal sector (all non-agricultural activities) and

Table 6: Poverty ratios among the persons of the households sustaining on self- employment in informal sector by broad industry division - All India, 1999-2000.

Broad industry division	Rural			Urban
	Very poor	Mode-rately poor	Poor	Very poor	Mode-rately poor	Poor
Manufacturing	6.96	17.18	24.14	8.90	16.99	25.89
Construction	3.59	17.39	20.98	6.76	13.52	20.28
Trade	4.39	12.44	16.83	8.27	12.74	21.01
All non-agricultural activities	5.92	15.30	21.22	9.53	15.18	24.71

(b) informal trade, construction and manufacturing sectors in rural areas. In comparison with the poverty situation among urban persons (23.6%), poverty situation in urban India was (a) better in respect of households sustaining on self-employment in informal trade and construction sectors and (b) worse in respect of households sustaining on self-employment in informal manufacturing sector. Thus self-employment in informal trade and construction sectors helped in reduction of poverty levels in both rural and urban areas of the country. On the other hand, self-employment in informal manufacturing sector helped in reduction of poverty level in rural areas but not so in urban India.

Section 5: Incidence of Poverty in Urban Households sustaining on different Types of Employment in Informal Sector

21 Poverty situation among persons in households sustaining on (a) self-employment, (b) regular wage/salaried employment and (c) casual wage employment in informal sector in urban India separately for manufacturing, construction, trade and all non-agricultural activities is presented in Table 7. As expected, incidence of poverty as well as intensity of poverty were highest in households sustaining on casual wage employment in informal sector and lowest in households sustaining on regular wage/salaried employment in informal sector with the situation in self-employed households falling in between the highest and lowest levels in respect of (a) manufacturing, (b) construction, (c) trade and (d) all non-agricultural activities when comparison was within each industrial division.

Table 7: Poverty ratios among the persons of the households on employment in informal sector by household type and by broad industry division in Urban India – 1999-2000

Broad industry division	Household Type
	Self-employed			Regular salary/ wage earning			Casual
	Very poor	Mode-rately poor	Poor	Very poor	Mode-rately Poor	Poor	Very poor	Mode-rately poor	Poor
Manufacturing	8.90	16.99	25.89	6.76	14.54	21.30	18.52	23.03	41.55
Construction	6.76	13.52	20.28	5.91	8.79	14.70	19.48	23.87	43.35
Trade	8.27	12.74	21.01	7.24	11.87	19.11	17.20	19.79	36.99
All non-agricultural activities	9.53	15.18	24.71	7.42	14.15	21.57	22.86	24.20	47.06

22 Among the three types of employment: self-employment, regular wage/salaried employment and casual wage employment and the three categories of industries: manufacturing, construction and trade, poverty levels were the highest in households sustaining on casual wage employment in informal construction sector (poor–43.4%, very poor-19.5%) and the lowest in households sustaining on regular wage/salaried employment in informal construction sector (Poor-14.7%, Very poor-5.9%). As compared to the poverty levels in urban population (Poor-23.6%, Very poor-9.3%), poverty situation in urban households sustaining on regular wage/salaried employment in informal manufacturing or construction or trade sector or in informal non-agricultural activities taken together was definitely better. Thus regular wage/salaried employment in urban informal sector activities enabled the households sustaining on such employment to record lower incidence and intensity of poverty as compared to the situation obtaining in the general population of urban areas.

Section 6: Poverty in Female-headed Households sustaining on Employment in Informal Sector

23 Incidence and intensity of poverty among persons belonging to female-headed households sustaining on employment in informal sector in broad industry divisions: manufacturing, construction, trade and all non-agricultural activities for rural and urban areas of the country are presented in Table 8. An interesting result was the incidence of less poverty among persons belonging to female headed households sustaining on employment in informal manufacturing (24.9%) or construction (19.8%) or trade (10.7%) or non-agricultural activities taken together (19.3%) in comparison with the poverty situation in general population (27.1%) in rural areas of the country. However, the intensity of poverty measured by Very poor (15.2%) in rural female headed households sustaining on employment in informal construction activity was higher than the percentage of Very poor (8.7%) in rural general population.

Table 8: Poverty ratios among the persons belonging to female headed households sustaining on employment in informal sector by broad industry division – All India, 1999-2000.

Broad industry division	Rural			Urban
	Very poor	Mode-rately poor	Poor	Very poor	Mode-rately poor	Poor
Manufacturing	7.45	17.40	24.85	13.23	23.90	37.13
Construction	15.15	4.61	19.76	18.86	30.09	48.95
Trade	0.69	9.96	10.65	12.08	13.14	25.22
All non-agricultural activities	5.74	13.57	19.31	14.98	17.73	32.71

24 In urban India, there was higher incidence as well as intensity of poverty among female-headed households sustaining on employment in informal manufacturing or construction or trade or non-agricultural activities taken together, as compared to the poverty situation among the general population. In particular, poor constituted 49% and very poor 18.9% among the persons belonging to female headed households sustaining on employment in informal construction activity in urban India as compared to the poor (23.4%) and very poor (9.3%) in general urban population during 1999-2000.

Section 7: Poverty in Households sustaining on Employment in Informal Sector with only one Male Worker

25 In Table 9 poverty ratios among the persons in households sustaining on employment in informal sector with only one male usual principal status worker (age 15 years and above) are presented separately for the broad industry divisions : manufacturing, construction, trade, all non-agricultural activities in rural and urban India. Incidences as well as intensity of poverty were less in these types of households in manufacturing a construction or trade or all non-agricultural activities taken together as compared to the poverty situation in the general population in rural India. In particular, lowest poverty levels were recorded in trading activity (Poor: 17%, Very Poor: 3.5%) for these types of households.

Table 9: Poverty ratios among the persons in households on employment in informal sector with only one male usual principal status worker (15 years & above) by broad industry division – All India, 1999-2000.

Broad industry division	Rural			Urban
	Very poor	Mode-rately poor	Poor	Very poor	Mode-rately poor	Poor
Manufacturing	5.59	13.53	19.12	8.06	15.49	23.55
Construction	4.91	18.42	23.33	12.72	18.49	31.21
Trade	3.53	13.44	16.97	7.91	11.60	19.51
All non-agricultural activities	5.04	15.45	20.49	9.59	14.71	24.30

26 In urban India, households sustaining on employment in informal construction activity with only one male worker (PS) had poverty ratios (Poor: 31.2%, Very Poor: 12.7%) as compared to the poverty ratios (Poor: 23.6%, Very Poor: 9.3%) in general urban population during 1999-2000. Poverty ratios in this type of households in trading activity (Poor: 19.5%, Very Poor: 7.9%) were lower in comparison with the corresponding poverty ratios in general urban population. Single male worker households engaged in informal trading activity in urban areas were able to reduce the incidence and intensity of poverty among their members. Single male worker households engaged in informal manufacturing activity in urban areas experienced almost the same incidence of poverty as in the general urban population.

Section 8: Incidence of Poverty in Households sustaining on Employment in Informal Sector with only one Female Worker

27 In Table 10 poverty ratios among the persons belonging to households which sustained on employment in informal sector with only one female usual principal status worker (age 15 years and above) are presented separately for the industry divisions : manufacturing, construction, trade and all non-agricultural activities in rural and urban India during 1999-2000. Except in the case of all non-agricultural activities, poverty ratios (poor) for this type of households in manufacturing, construction as well as trading activities were not higher than the poverty ratio in general population in rural India. In particular, substantially lower poverty incidence as well as intensity (Poor: 9.2%, Very Poor: 3.7%) were recorded in single female worker households engaged in informal trading activity in rural areas of the country.

Table 10: Poverty ratios among the persons in households on employment in informal sector with only one female usual Principal status worker (15 years & above) by broad industry division – All India, 1999-2000.

Broad industry division	Rural			Urban
	Very poor	Mode-rately poor	Poor	Very poor	Mode-rately poor	Poor
Manufacturing	11.47	15.71	27.18	12.48	21.64	34.12
Construction	7.01	17.23	24.24	20.68	27.54	48.22
Trade	3.69	5.54	9.23	15.53	8.85	24.38
All non-agricultural activities	8.68	20.51	29.19	16.51	16.45	32.96

28 In urban India, except in the case of trading activity, both the incidence and intensity of poverty were substantially higher in manufacturing, construction and all non-agricultural activities taken together for this type of households in comparison with the poverty situation in general population. In particular, in informal construction activity very high poverty ratios (Poor: 48.2%, Very Poor: 20.7%) were recorded in single female worker households. Even in trading activity Very Poor (15.5%) was quite high compared to the situation in general urban population (Very Poor: 9.3%). Single female worker households in urban India engaged in informal sector activities experienced higher incidence and intensity of poverty than the general population.

Section 9: Poverty in Households sustaining on Employment in Informal Sector with only one Male and one Female Worker

29 Table 11 presents results on poverty ratios among the persons in households sustaining on employment in informal sector with only one male and one female usual principal status workers (15 years and above) separately for the broad industry divisions : manufacturing, construction, trade and all non-agricultural activities in rural and urban India. Incidence as well as intensity of poverty in households with only one male and one female worker were higher in rural areas than the poverty situation in general rural population in respect of such households sustaining on employment in informal manufacturing, construction and non-agricultural activities (taken together). In the case of trading activities the incidence of poverty was lower than the incidence of poverty in general rural population but intensity (Very poor percentage) of poverty was more than that in general rural population. Substantially higher incidence (44.6%) of poverty and intensity (21.7%) of poverty were recorded in the case of such households engaged in rural informal construction activity.

Table 11: Poverty ratios among the persons in households on sustaining employment in informal sector with only one male and one female usual principal status workers (15 years & above) by broad industry division – All India, 1999-2000.

Broad industry division	Rural			Urban
	Very poor	Mode-rately poor	Poor	Very poor	Mode-rately poor	Poor
Manufacturing	12.10	22.29	34.39	18.10	20.51	38.61
Construction	21.71	22.88	44.59	16.54	25.31	41.85
Trade	12.41	11.50	23.91	15.28	12.59	27.87
All non-agricultural activities	11.22	18.78	30.60	15.77	18.14	33.91

30 In urban India, all the types of households considered here recorded significantly higher incidence as well as intensity of poverty as compared to the poverty situation in general urban population. Also except in the case of construction activity, urban poverty ratios were higher than the corresponding poverty ratios in rural areas in manufacturing, trade and all non-agricultural activities taken together.

31 In rural as well as urban areas, the incidence and intensity of poverty in households sustaining on employment in informal manufacturing sector were in increasing order in respect of households with (a) only one male worker, (b) only one female worker and (c) only one male and one female worker.

Section 10: Incidence of Poverty in Households sustaining on Employment in Informal Sector with no literate member of age 15 years and above.

32 Table 12 shows the poverty ratios among the persons in households sustaining on employment in informal sector with no literate member of age 15 years and above for each broad industry division : manufacturing, construction, trade and all non-agricultural activities taken together in rural and urban India. In both rural and urban areas, the incidences as well as intensity of poverty were substantially higher in all the four broad industrial divisions as compared to the poverty situation in corresponding general populations. The poverty ratios recorded were higher in urban areas as compared to those in rural areas in all the industrial divisions.

Table 12: Poverty ratios among the persons in households sustaining on employment in informal sector with no literate member of age 15 years and above by broad industry division – All India, 1999‑2000.

Broad industry division	Rural			Urban
	Very poor	Mode-rately poor	Poor	Very poor	Mode-rately poor	Poor
Manufacturing	15.50	24.11	39.61	18.76	38.42	57.18
Construction	12.83	25.46	38.29	29.44	26.43	55.87
Trade	10.41	19.00	29.41	28.42	26.03	54.45
All non-agricultural activities	13.27	24.16	37.43	28.74	27.82	56.56

Section 11: Poverty in Households sustaining on Employment in Informal Sector with no literate female member of age 15 years and above.

33 Incidence and Intensity of poverty among the persons in households sustaining on employment in informal sector with no literate female member of age 15 years and above are presented separately for the four broad industry divisions as given para 32 in rural and urban areas in Table 13. Literacy status of the household here is less restrictive than the literacy status of the household in para 32 above. It is interesting to note that both the incidences and intensity of poverty recorded in the households considered here were lower than those in the households considered in para 32 above in the respective industry divisions and locations (rural or urban). However, in rural areas, the incidence of poverty in these households, except for industry division: trade, was higher than the incidence of poverty recorded in general rural population. Both the incidence and intensity of poverty observed in the households considered here were higher than the ratios recorded in general population in urban areas of the country. Finally, in each of the industry divisions urban poverty ratios (both incidence and intensity) were substantially higher than those found in rural areas. In employment matters Female literacy is more important in urban areas as compared to rural areas.

Table 13: Poverty ratios among the persons in households sustaining on employment in informal sector with no literate female member of age 15 years & above by broad industry division – All India, 1999-2000.

Broad industry division	Rural			Urban
	Very poor	Mode-rately poor	Poor	Very poor	Mode-rately poor	Poor
Manufacturing	9.60	19.85	29.45	17.37	24.04	41.41
Construction	9.48	24.84	34.32	19.96	24.29	44.25
Trade	7.44	17.34	24.78	18.70	21.04	39.74
All non-agricultural activities	9.21	20.80	30.01	19.92	23.98	43.90

Section 12: Concluding Remarks

34 Results on incidence and intensity of poverty among persons in households sustaining on employment in Informal sector non-agricultural enterprises have been obtained on similar lines as given in Sections 3 to 11 above in rural and urban areas for major States in India, namely (1) Andhra Pradesh, (2) Assam, (3) Bihar, (4) Gujarat, (5) Haryana, (6) Himachal Pradesh, (7) Jammu & Kashmir, (8) Karnataka, (9) Kerala, (10) Madhya Pradesh, (11) Maharashtra, (12) Orissa, (13) Punjab, (14) Rajasthan, (15) Tamil Nadu, (16) Uttar Pradesh, (17) West Bengal and (18) Delhi (urban). For want of space here, these results are not presented.

35 The measures of employment used in the Indian NSS are based on time disposition of the labour force, and do not reflect the level of income or consumption of those who are counted as employed by these employment indicators. An analysis of those employed by the level of consumption expenditure helps to discern the extent of poverty among those who are employed. In the Indian situation, the incidence of poverty is much larger than the incidence of unemployment, leading to the observation that the `poor are too poor to remain unemployed’. Another interesting observation is that poverty is related more to the nature of employment, such as self-employment, regular wage/salaried employment and casual wage employment, than the absolute rate of employment. That is why it is seen that the incidence of poverty is highest among agricultural labourers in rural areas and casual labourers in urban areas. Agricultural labourers in rural areas are also casual workers. It is among this category of workers that non-availability of work from time to time (or high incidence of underemployment) would be a major cause of low income and high incidence of poverty. Poverty alleviation for this category of workers would naturally require creating work for them and this justifies to a large extent the employment generation (poverty alleviation) programmes of the Government.

36 It has also been seen that self-employed workers in urban areas do somewhat better in terms of average earnings than the casual workers. It has been possible for a large proportion of workers to be self-employed in urban areas because of the existence of the informal sector. In view of this, our approach and policies towards the informal sector acquire significance. Though all the unemployed may not be poor, yet for the poor the only solution to poverty is employment with reasonable income. Such employment is not going to be generated on a large-scale in the formal sector in the country in the near future. That is why all efforts are needed to integrate the informal activities in the mainstream of economic activities, by providing space and facilities for such activities as well as making efforts to upgrade the productivity of workers in the informal sector through well designed programmes of skill upgradation. Literacy of workers plays an important role in the capability of the workers to absorb higher skills and thereby improve their earning capacities and lead to reduction in the incidence of poverty in the households sustaining on employment in informal sector.

37 The inter-linkages among `employment in informal sector’, `poverty’ and `gender’, as explored in this study are complex and need careful analytical scrutiny. Women (or female-headed households), it is very often argued, suffer more from poverty than men (or male-headed households) in numbers and/or in intensity. In our study, especially in rural areas, such simplistic generalisation does not seem to be working. The gender analysis of poverty should not be so much about whether women suffer from more poverty than men, but rather about how gender differentiates the social processes leading to poverty, and the escape routes out of destitution. An understanding of the casual processes leading to poverty has important policy implications: it raises important questions about whether it can be assumed, as is often done, that the kinds of policies and asset interventions that can strengthen the position of poor men are going to have much the same impact on poor women.

38 The research work reported here is supported by a Project on `Statistical Studies relating to Informal Economy in India’ undertaken by the author at the Council for Social Development, New Delhi with financial support provided by UNDP, India at New Delhi and data support from the Ministry of Statistics and Programme Implementation, Government of India (New Delhi) with active encouragement of Secretary (Statistics), Government of India, who is also the Chairman of Delhi (Expert) Group on Informal Sector Statistics. However, the findings reported and the views expressed here, are entirely the responsibility of the author. The support received from all agencies is gratefully acknowledged. This `Discussion Paper’ is presented at the Seventh Meeting of the Delhi Group on Informal Sector Statistics at New Delhi during 2 to 4 February, 2004 only for discussion and comments.

Reference

1. Sundaram, K. and Tendulkar, Suresh, D. (2001): Recent debates on Data Base for measurement of Poverty in India : Some fresh evidence, Paper presented at the Workshop on Poverty Monitoring and Evaluation, jointly organised by the World Bank and Planning Commission, New Delhi, India, January 11-12, 2002.