Abstract
The informal economy in India employs the vast majority of workers yet subjects many to precarious conditions. This article analyses labour exploitation beyond a state-centric lens, foregrounding power among labour, capital and intermediaries within neoliberal restructuring. The original contribution is a power-centred framework integrating ethnographic narratives with sector-comparative indicators to show how intermediary power and strategic state neglect co-produce precarity beyond the formal/informal binary. Using a qualitative, multi-case design in construction, domestic work and home-based garments, the article draws on 60 worker and 15 key-informant interviews, participant observation and ethnographic/narrative inquiry. The article shows how intermediaries—thekedar (labour contractors),placement agencies and subcontractors—mediate access to jobs and credit, institutionalising wage theft and peshgi (advances) akin to debt bondage in unregulated workplaces. In the sample, wage delays were widespread (45–65%), peshgi common in construction/garments (35–45%); written contracts were absent (100%) and ESI/PF coverage negligible (0%). Statutory protections are symbolic amid weak enforcement and bureaucracy, while caste, gender and migrant status shape vulnerability. Yet workers exercise agency through tactics, boycotts and civil-society-backed associations. The article reconceptualises precarity as a socio-legal condition produced by regulatory neglect aligned withcapital’s demand for “flexibility.” Policies should include universal social protection; community enforcement and grievance redress; recognition of non-standard worker organisations and bargaining; and targeted measures for women, migrants, Dalits and Adivasis. The article offers a power-centred framework for India’s shadow economy.
Introduction
The economic narrative of India is marked by pronounced disparities. In the context of accelerated economic growth and modernisation, a significant and resilient shadow economy persists, involving more than 90% of the workforce in the nation. This sector, often referred to as the informal or unorganised economy, is characterised by a lack of formal contracts, social protections, and regulatory oversight. While it functions as a crucial provider of employment and a livelihood for millions, it is also characterised by considerable vulnerability, highlighted by precarious working conditions, power imbalances, and systemic exploitation. The persistence and expansion of the informal sector in India represent not merely transient phenomena but essential features of the nation’s political economy, presenting considerable obstacles to inclusive development, social equity, and the rights of workers. Understanding the intricacies of this economy is crucial for addressing the nation’s most pressing socio-economic issues.
The conventional discourse surrounding the shadow economy has often been framed within adichotomous lens, contrasting it with the formal, regulated sector. Historically, policy interventions have focused on formalisation measures, grounded in the assumption that incorporating informal enterprises and workers into the legal and regulatory framework of the state will inherently mitigate issues of exploitation and precariousness. This perspective often simplifies the complex realities that exist in situ. The analysis inadequately addresses the significant relationships and interdependencies that exist between the formal and informal sectors, where formal enterprises often engage informal labour through subcontracting and outsourcing as a means to reduce costs and evade labour regulations. A focus primarily on state mechanisms often overlooks the profound implications of governmental inadequacies or the strategic voids that may arise. In various contexts, the inadequacy of the state to fulfil its expected responsibilities in providing welfare, redistributing the labour force, or protecting its most at-risk citizens creates a void that allows for the unchecked proliferation of exploitative power dynamics.
This research study offers a comprehensive re-evaluation of labour exploitation within the Indian shadow economy, moving beyond a purely state-centered perspective. It argues that a deep understanding requires an analysis of the intricate web of power dynamics that influence the lives of vulnerable workers. The dynamics of power transcend the traditional employer-employee relationship, encompassing intermediaries, financial lenders, and local influencers, all operating within an overarching neoliberal paradigm that emphasises market adaptability over the security of the workforce. The neoliberal framework, marked by deregulation and the emergence of non-state economic actors, has significantly altered the labour landscape, intensifying precarity and creating new vulnerabilities. Consequently, the concepts of “work,” “power,” and “precarity” necessitate a thorough re-evaluation to authentically capture the realities faced by individuals engaged in labour at the margins of the formal economy.