ISSUES economy, Informal economy, master plans, polices, acts, rules


Ankita  B Toro

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Abstract:  This
research paper is oriented towards how informal economy can be implemented in
planning process, and what all consideration  policies, regulations have to be taken for the
implementation. Problems facing by informal economy, though  in Indian informal economy plays very
important role for day to day activities. And most of the people are dependent
on the informal venders, Hawkers for the products, and on another side which is
a loose for collecting the revenue for the country. Which it will affect the growth
of the city. So how best we can implement informal economy can be formalized in
our planning principle so that a platform can be given to informal economy to
make it formal.

Keywords: Economy, Formal
economy, Informal economy, master plans, polices, acts, rules and regulations,
town planning, vendors, hawkers, tax,


Economy means a
country or a state which produces the things or materials and from which that
country get benefited, in terms of the goods, services or in any kinds of
materials. Economy can be divided into formal and informal economy. In formal
economy all the works will be done under rules, regulations, polices and a
proper organized systems, where all the works are properly recorded or maintained
and taxes will be paid to the govt. But in informal economy which is neither
taxed nor systematically organized and which is not even under consideration of
any government documents, laws and rules. Informal economy does not include
gross national product and gross domestic product of a country.

  In “formal economy” has been introduced in
1972 by the international Labor Organization 
(ILO) When we take consideration of urban poor Informal economy acts as
a source for them to live their life, where there is no need of education
qualification, standards maintenance. It only needs skills of the person.
Informal economy takes place when there is a informal urban development
happens, because of that increase in the population which leads to rapid growth
of the city, where it will be difficult for the urban poor to survive in their
life. Hence to survive their life informal economy kind of occupation will get

Main features of informal economy are:

Easy availability of the job

Self –employment,

Own skills applications

Small  to large scale
of activity.

Multifunctional capacity

Zones of the informal economy

Restricted free vending zone

Restricted vending zone

No – vending zones.


Legal status

Civic facilities

Transparent regulations

Organization of vendors

Participative processes

Self regulations

Promotional Measures

Other facilities given by the policy includes:

Providing the access to credit

Improvement of the skill development


Health care benefits

Pension provision



Street Vendors acts : 2014

To protect the people
like vendors and Hawkers livelihood,  regulation
for the street vending was carried out in 2014 in an Indian legislation.


Aim:  To regulate the spaces in public  areas for street vendors and howkers.

Rules: The number of
street vendor is limited to a particular zone. And should be 2.5 percentage of
the population of the ward. If in case of exceed in the capacity of vending
zone then Tvc will call them and gives warning with lots of issues of
certificates can be faced by the vendors.



Chandigarh is the
first Indian post modern planned city which is the capital of Punjab. Though
the city is planned in grid pattern it doesn’t have a open platform for the
informal vendors. Thought the planning was did after the independence informal
economy(vendors, hawkers) were not considered in the planning.


There is a one  partnership in Ahmedabad city, The Municipal
corporation partnered with SEWA and community Organizations in managing solid
waste collection and in maintaining and replacing infrastructure. As a part of
this Ahmedabad  Municipal corporation
promised not to evict residents of the participating slums for ten years. Hence
they tried to change the informal economy to formalized economy.

Dharavi, Mumbai:

When we take Dharavi
from Mumbai as an example which is known for the largest informal economy
generator place Dharavi is located in the core part of Mumbai. This has all
kind of informal economy sources. Though this is a slum but it is the one of
the biggest economy generator place of the Mumbai. People who are staying in
this place they do not want to replace this slum any kind of urban development.
When we look in to the planning aspects of the place it doesn’t fallow any kind
of land use rules.  Though the place is
sitting in the heart part of Mumbai it is not growing in terms of
infrastructural aspects and place is consuming the most core part of the city.
Land value of the place is going so high still slum up gradation is not
happing. Here planning people are trying to convert informal economy to formal
economy so that the place is not responding properly for the change to take


In Delhi during 2021
planning process they have looked toward the huge informal economy aspect where
they have given platform for the multitude of small enterprises and petty
trading activities, in the informal sector. Hence city managed it self for
organized wage paid sector and an equally large informal sector. Where this sector
with highly reduced needs
of floor space and investment is important as a source of employment and
services in the economic fabric of the city.

As the city Delhi is the capital of
the state which has large number of population, and it is growing rapidly there
we can find a large circuit of informal economy development. Informal economy
development can mainly found in main commercial area, outside the boundaries of
schools colleges, hospitals and transport nodes and near large housing

So hence Delhi Development authority
brought some policy for existing informal economy areas i) The location /
concentration of present stationary units shall be considered on case by case
basis and steps for relocation / improvement shall be taken. It should be
ensured that such activities shall not spill over on the right of way. The
Government /concerned local agencies should coordinate the policy.

 ii) The areas of informal sector shall have
suitable public conveniences and solid waste disposal arrangements.

iii) Formulation of guidelines for
schemes, which would include ‘Hawking’ and ‘No Hawking’ Zone. Specific areas to
be earmarked for stationary and mobile street vendors by the concerned local
authority / RWA at neighborhood / cluster level.

 iv) The local authorities to take up new
designs of stalls, push-carts and mobile van of various sizes and with cleaning
facilities. This should be done giving due consideration of urban design
requirement of specific area where informal shopping is being permitted.

v) Defining the role and
responsibility of NGO’s along with the specific obligations on part of hawkers
towards the society for maintenance of law and order within the hawking zones
and weekly markets.

 vi) An informal unit shall not be permitted
within a distance half of the width of the road, from an intersection.

informal sector places (haat) :

Delhi haat is a place where a large
number of informal economy takes place. Where we can see no organizes cluster. There
are informal eating,  causal shopping,
can be seen. And the kind of informal sector can be seen near

TV Tower Pitampura.

sub C.B.D. Trans Yamuna Area.



transport nodes including ISBT. In addition implementing agency may add locations
as per requirement.

bazaar :

 In new urban areas, informal bazaars could be
part of the planned commercial areas at two levels. These could be implemented
in the initial planning stages along with development of residential areas.


 Weekly markets, the traditional style of
retail shopping is quite popular in Delhi, especially among the lower and
middle income groups. These markets are operating in a systematic manner
choosing locations central to a large population centres either on vacant land
or on the roadsides. Parking and other open spaces within the service markets,
commercial centres could be so designed that weekly markets can operate in
these areas during non-working hours.

norms for informal trade:

 The informal sector is to be incorporated in
trade in the planned development in various trade units should be ensured at
the time of sanction of the building plans / layout plans as per the norms. use
zones. The provision of informal sector trade units should be ensured at the
time of sanction of the building plans / layout plans.

Markets: Street Vendors in Mexico City :

Nearly 60% of Mexican workers have
informal jobs. Some states have implemented practices that have reduced informality.
A national employment formalization program also has been launched. In the
framework of stable, robust economic growth, these initiatives, together with
the development of unemployment insurance and a universal pension plan, can
drive the creation of formal, productive jobs and discourage continued

Informal employment is a persistent
problem in Latin America and the Caribbean. Following a decade of economic
growth and decline in unemployment rates, there are still many working people  holding informal jobs, deprived of social
protection and labour rights.

From the last few years of experience it
confirms that the ecomonic growth is very essential for the generation of the
more better jobs not enough to reduce the informal sector, It also necessary to
implement deliberate and integrate economic, and  applications of the social  and labour policies and actions which are the
economic growth of the city.

In 2013, the ILO Regional Office for
Latin America and the Caribbean launched the Programme for the Promotion of
Formalization in Latin America and the Caribbean, FORLAC. The programme has
three components: a) generation and dissemination of knowledge on formalization
policies, b) technical assistance to specific countries, and c)
capacity-building of workers’ and employers’ organizations in formalization

To analyze public policy experiences they
tried to identify the most remarkable ones according to the academic or
political discussion. Formalization strategies require a favorable economic
context, as well as articulated policies that allow us to address a multidimensional
and highly heterogeneous phenomenon. The persistence of high levels of
informality is a major challenge requiring the implementation of measures that
produce sustainable results. The ILO expects that the dissemination of these
experiences will help promote broader discussion on the strategies that
countries may use to facilitate the transition to formality in the region.

One article is written on the street
vendors where In recent years, city governments throughout the developing
world, such as those in Mexico City and Lima, have begun to implement plans to
control the problem of street vending. However, the outcomes are mixed and have
generated a great deal of tension between the government and street vendors. And
that  article focuses on street vendor
organizations and their importance in the policy-making process. By having a
clear understanding of the role and function of street vendor organizations,
local governments could design plans that are more in accordance with the
current situation and they would then have a higher probability for success.
The key question of that article addresses is what are the functions of street
vendor organizations?

As the city Mexico has a large connectivity
of street vendors  city have a need for
the agent or a  organized systems  who can manage and regulate them. So to help the informal economy sector in Mexico city
they had developed 5 centers  for the
informal economy sector to work. But where the sectors were setup they were
very far from the few of the informal economy sector people. So that the people
didn’t gave a proper response to the planning concept. But in present day
street vending has grown very high due to implementation of structural
adjustments in Mexico people. Street vending became one of the major activity
in the urban area for to survive the people for economically.

Mobile markets also
main characteristics of the street where different timing were allotted for the
vendors  for a day time in different areas
so that all the people can get a place for their work. And this process will
kept under supervised by a city inspector for compliance with weights and
measurements. Another
important characteristic of this type of informal market is that it is part of
a strategy for the supply and distribution of food staples to the city. This
strategy was originally created by city government with the idea of eliminating
intermediaries and to bring food to working class areas at reasonable prices
(Martinez, 1996). These markets also offer complementary or secondary articles
such as shoes, clothing, and costume jewelry.


The creation of bazaars by street
vendors has been a response by vendors to the uncertainty with respect to the
location where they operate; vendors have usufructuary rather than de jure
rights (Jagannathan, 1987) to their locations. In recent years, the
construction of bazaars has been booming in Mexico City as a response to the
uncertainty merchants feel when they have to move and start building the
business and getting new customers all over again. Bazaars are an intermediate
status of ownership, or usus right (Jagannathan, 1987) where vendors can use
and work the location but somebody else is the de jure owner of the piece of
property who charges vendors a start-up fee as well as weekly or monthly rent.
Bazaars normally operate during weekends and open daily during certain seasons
such as Christmas. Bazaars are also characterized by product specialization;
the main product sold at the weekend bazaars is clothing. While some goods are
imported, a considerable quantity is domestic.

The majority of the vendors (51%)
believe they benefit from being members because the organization negotiates on
their behalf with the local government authorities regarding issues that
directly abet their work. Almost a third (29%) of the vendors also believe that
they benefit from the organization because it is a mechanism to address the
problems of distribution of work spaces in the market. In short, Table 2 identities
two important functions that organizations perform: (1) Organizations as
negotiators or deal-makers and (2) Organizations as managers of what
Jagganathan (1987) calls social assets.

 Initiatives to formalize the informal employment:

An effective strategy for addressing
informal employment requires taking at least two complementary intervention
areas into account.  Their they have to align
the informal sector to formal sector 
hence the creation of the growth of the job was a very necessary
requirement. Where more of the then are into tertiary informal activities. The
main aim is to address the increase the productivity of the economy-especially
of small and medium size enterprises. And also to promote the growth of formal
and productive jobs.

for the formalization of employment :

This programs was signed by the state
governments and the Federal District with the national government on 22 July
2013. The programs seeks to facilitate the transition of informal jobs to
formal ones. The proposed target is to formalize 200,000 informal workers by
the second half of 2014. The programs operates through agreements whose
objective is to ensure that all workplaces comply with the provisions of the
Federal Law on Employment and the social security law in an effort to uphold
workers’ right to receive all social security benefits. The programs also seeks
to affiliate workers to the mandatory social security system managed by the
Mexican Social Security Institute (IMSS), and to promote the voluntary
affiliation of other workers to the mandatory IMSS system, including domestic
workers, non-wage workers, cooperative members, communal landowners and
small-scale landowners. Likewise, it promotes and supports the affiliation of
state and municipal government workers to the respective social security
institutions, or, as pertinent, their voluntary affiliation to the respective
social security systems.

To this end, the Labour and Social
Protection Secretariat has committed to disseminating these activities among
employers and workers, as well as to supporting state governments in meeting
targets through linkage activities developed by the National Employment
Service. Agreements were also made to adopt the measures necessary to affiliate
all suppliers and contractors of the Federal Public Administration. Activities
will also be implemented to advance in the simplification and deregulation of
IMSS services in an effort to make them more accessible, flexible and
transparent. Programs results can help continue and improve these activities in
the future.


: When we look back
to the cities most of the cities have informal economy as a main source as a  economy generator. But due to which lts of
people who are in formal sector becoming the jobless which is leading into lose
to the income for the country. This affects the city growth. But because of
this we can’t ignore the informal economy.
Because in India we have 81% of informal economy sector which itself is a big
challenge to convert them into formal economy.

As the other cities like Mexico are implementing
providing a place for informal economy by Bazaars and a common  gathering place which will be at a comfortable
distance for the vendors and giving them a Identity card will be a better idea.
So that total number of informal economy sector people account can be recorded.

























 Author – Chandrasekhar- India’s
informal economy           economy/article11119085.ece