India is plotting a game-changer for RBI, banks, corporates, investors

The Ministry of Statistics and Programme Implementation (MoSPI) is developing a high-frequency index to track India's vast informal economy, specifically cov...

What Happened

The Ministry of Statistics and Programme Implementation (MoSPI) is developing a high-frequency index to track India's vast informal economy, specifically covering unincorporated enterprises — businesses not registered under companies law or similar statutes.
The proposed index aims to provide near real-time data on the informal sector's economic activity, which currently suffers from significant measurement lag compared to the formal sector.
Better informal economy data is expected to improve national GDP estimates, guide the Reserve Bank of India's interest-rate decisions, sharpen inflation management, and provide investors and policymakers with a more accurate picture of economic conditions.
India's informal sector, as measured by the Annual Survey of Unincorporated Sector Enterprises (ASUSE) for 2023–24, employed more than 12 crore workers across over 7.34 crore unincorporated non-agricultural enterprises.
The index would complement MoSPI's existing data infrastructure including the Annual Survey of Unincorporated Sector Enterprises (ASUSE) and the upcoming rebased National Accounts Statistics.

Static Topic Bridges

India's Informal Economy: Scale and Measurement Challenge

India's informal economy — also called the shadow, unorganised, or unincorporated economy — comprises economic activity by enterprises not registered as companies under formal legal statutes. It spans small manufacturing units, retail traders, street vendors, artisans, and service providers. The informal sector is estimated to contribute between 45–50% of India's GDP and employs approximately 80–90% of the workforce. Despite its massive size, it is poorly captured in real-time economic data because most measurement tools (factory output surveys, corporate earnings, GST returns) cover only the formal, registered sector.

India has over 7.92 crore unincorporated non-agricultural enterprises as of 2025 (ASUSE data), employing ~12.8 crore workers.
GVA per worker in the informal sector: Rs 1,49,742 in 2023–24 (up 5.62% from 2022–23).
GVA of informal sector grew 16.52% in 2023–24, driven by a 26.17% jump in services.
Internet adoption in informal enterprises grew from 21.1% (2022–23) to 26.7% (2023–24).
Measurement lag: formal sector data is available monthly or quarterly; informal sector data has an 18–24 month lag.

Connection to this news: The proposed high-frequency informal economy index directly addresses this measurement gap by enabling near real-time tracking of activity in unincorporated enterprises, closing the data deficit that currently distorts GDP estimates and policy calibration.

National Accounts Statistics and GDP Measurement in India

India's official GDP is estimated by MoSPI using the System of National Accounts (SNA) framework under the National Statistical Office (NSO). GDP is measured by three methods — output (production), income, and expenditure — with the output method being primary. The NSO's base year for national accounts was last revised to 2011–12 (from 2004–05), and a new base year revision was expected in 2026. The informal sector's contribution is estimated using extrapolation from periodic surveys (such as ASUSE and the Economic Census) rather than direct real-time measurement, which introduces significant estimation errors, especially during economic disruptions (as seen during COVID-19 and the demonetisation period of 2016–17).

MoSPI: Ministry of Statistics and Programme Implementation — the apex statistics body under the Government of India.
NSO (National Statistical Office): formed in 2019 by merging the Central Statistical Office (CSO) and the National Sample Survey Office (NSSO).
Current GDP base year: 2011–12.
New base year revision (including new ASUSE data): announced for February 2026.
GDP growth and informal sector: informal sector typically leads formal sector downturns but lags formal sector recoveries in official data.

Connection to this news: A high-frequency informal economy index would feed more timely and accurate data into national accounts compilation, reducing the systematic underestimation or overestimation that arises from treating the informal sector as a residual.

Role of MoSPI in Monetary Policy and Macroeconomic Management

The Reserve Bank of India's Monetary Policy Committee (MPC) sets the policy repo rate primarily on the basis of Consumer Price Inflation (CPI), which is compiled by MoSPI. Informal sector activity has a significant bearing on food prices, labour wages, and services inflation — all key CPI components. Inaccurate or lagged data on informal sector output can lead to misjudgements in the MPC's assessment of the output gap (the difference between actual and potential GDP), which in turn can cause over-tightening or over-loosening of monetary policy.

Monetary Policy Committee (MPC): constituted under the RBI Act, 1934 (amended 2016) — six members (3 RBI officials + 3 external members appointed by Government).
CPI: compiled monthly by MoSPI; primary inflation metric for MPC.
Flexible Inflation Targeting (FIT) framework: RBI targets CPI inflation at 4% (with a 2–6% tolerance band), adopted in 2016.
Output gap estimation depends on quality of GDP data, which in turn depends on informal sector measurement.

Connection to this news: A real-time informal economy index would improve the accuracy of output gap estimation, allowing the MPC to make better-calibrated interest rate decisions — a direct connection highlighted in the policy case for the proposed index.

Annual Survey of Unincorporated Sector Enterprises (ASUSE)

The ASUSE is an annual survey conducted by MoSPI (through the NSO) covering unincorporated non-agricultural establishments in manufacturing, trade, and services (excluding construction). It replaced and extended the earlier NSSO-based enterprise surveys. ASUSE provides data on employment, gross value added (GVA), fixed assets, and operating characteristics of India's unincorporated sector. Its data underpins both the national accounts base-year revision and the proposed high-frequency index.

ASUSE coverage: non-agricultural unincorporated enterprises (manufacturing, trade, services — not construction).
ASUSE frequency: annual (conducted since 2021–22).
ASUSE 2023–24 reference period: October 2023 to September 2024.
Total enterprises covered: 7.34 crore (2023–24); 7.92 crore (2025 survey).
Employment: ~12 crore workers in 2023–24; ~12.8 crore in 2025.

Connection to this news: ASUSE provides the structural baseline that the proposed high-frequency index would complement, moving from annual measurement to more frequent tracking of informal sector dynamics.

Key Facts & Data

India's unincorporated non-agricultural enterprises: 7.34 crore (2023–24); 7.92 crore (2025 ASUSE data).
Employment in informal sector: ~12 crore (2023–24); ~12.8 crore (2025).
GVA per worker in informal sector: Rs 1,49,742 (2023–24), up 5.62% year-on-year.
Informal sector GVA growth: 16.52% in 2023–24.
Internet-using informal enterprises: 21.1% (2022–23) → 26.7% (2023–24).
MoSPI: Ministry of Statistics and Programme Implementation — apex statistics body.
NSO formed: 2019 (merger of CSO and NSSO).
India's current GDP base year: 2011–12 (revision expected 2026).
Flexible Inflation Targeting framework: adopted 2016; RBI targets CPI at 4% (±2%).
MPC constituted under RBI Act, 1934 (amended 2016): 6 members.
ASUSE launched: 2021–22 (annual survey of unincorporated enterprises).