Structural transformation, productivity, and loan-taking among informal enterprises in india: evidence from nss and asuse

The informal sector is crucial for employment generation and economic activity in India. This paper explores changes in the structure, economic performance, employment, and access to finance of non-agricultural informal enterprises, using nationally representative data from the National Sample Survey (2010-11 and 2015-16) and the Annual Survey of Unincorporated Sector Enterprises (2021-22 and 2025). Through descriptive and comparative analysis, the evolution over time of the characteristics and performance of the enterprises is examined. The evidence indicates a steady structural transformation in the informal sector, rather than a move towards formalization, with trade and services gaining importance, whereas manufacturing losing relative position. Despite an increase over time in labor productivity and gross value added per enterprise, employment changes have been considerable, falling from 2015-16 to 2021-22 and then rising significantly by 2025. The analysis reveals that external loan-taking has remained low, with nearly 90 percent of the enterprises reporting no external loans, especially women, rural, and own-account enterprises. Overall, the results suggest a coexistence of limited external loan-taking with small and uneven productive capacities. The paper makes a contribution to the literature on the informal economy in India by providing an inter-temporal perspective of the sector over more than ten years and demonstrating the need for policies that promote financial inclusion, enterprise productivity, and structural transformation to promote inclusive growth.