The next big opportunity: Formalising livelihood of millions of unorganised workers in India

It’s very clear we have been measuring India's formalisation incorrectly.

The focus has been on simple themes: Cash out, digital in. GST, UPI, e-invoicing. A messy informal economy finally dragged into the light.

But look a little closer and a strange gap appears.

India has formalised the data trail of its businesses without formalising the people inside them.

The government's own survey (ASUSE 2025) counts 7.92 crore small unincorporated firms employing 12.81 crore workers as of December 2025.

But, the average annual pay per hired worker is just ₹1,46,550.

That is roughly ₹12k a month. And in many industrial states, that borders on or falls below the legal minimum wage.

Plus, many of these enterprises are growing. Gross value added rose almost 11% in a year. But net addition to fixed assets fell 14%.

It means these firms are not buying machines or deepening capital. They are absorbing cheap labour instead.

Growth built on people who are paid too little, not on productivity. That is a model with a ceiling.

So we have two Indias stacked on top of each other.

One is digitally advanced. Every invoice tracked, every payment traceable, every return filed on time.

The other is a workforce whose wages have barely moved, with no contract, no security, and no ladder up.

The tax layer is formal. The livelihood layer is not.

This is exactly where the China comparison stings. China formalised its small firms and then poured capital into them, so productivity per worker kept climbing. We formalised the paperwork and left the worker where they were.

And there is also a second illusion hiding in the headline count.

The government reports 5.19 crore Udyam registrations. Impressive, until you ask how many are real operating firms and how many are empty shells, opened only to tap a subsidy or a lending quota.

Because we all know how this works. There are people who own and run 100s and 1000s of such shell firms for varied, not-so-rosy reasons.

Thus, I keep coming back to one question.

We built world-class digital rails to track economic activity. Can we build anything close to lifting the incomes of the people generating it?

Formalising a ledger is an engineering problem. We solved it.

Formalising a life is a much harder one. And on that, we have barely started.

And that’s such a big opportunity to build for!