Contribution of the Unorganized Sector to GDP Report of the Sub Committee of a NCEUS Task Force

The task of the Sub-committee was to review the existing methodologies for estimating the contribution of unorganized/informal sector to GDP and suggest measures to facilitate direct estimation. The Group reviewed the 'Labour input method' contained in an OECD publication titled 'Measuring the Non-Observed Economy - A Handbook' and the 'Method of Apportioning' proposed by Shri Ramesh Kolli and Suvendu Hazra in a paper presented in the Eighth meeting of the 'Delhi Group'. Given the existing data systems in the country, it is not found feasible to use the 'Labour Input Method' unless substantial improvements are made in the statistical system of the country. Though, it would be necessary to introduce such improvements in the statistical system, realistic estimates need to be generated in the interim-period. The Subcommittee, thus, developed an alternative method of apportioning by using estimates of labour inputs and productivity differentials of both the organized and unorganized sectors. According to the estimates worked out by the Sub-committee by using the modified apportioning method, about 50 percent of the GDP was contributed by the unorganized/informal sector in 2004-05. [NCEUS Report] [https://docs.google.com/file/d/0B9w08mnxUvF9ZGlST3RCTHdTdE9RSEVuWUI5SlN2UQ/edit]