The Informal Economy and Street Vendors
Shocks: Demonetisation, GST and Covid
Big policy changes and the pandemic hit informal workers hard because they have few savings or protections.
Informal businesses are especially exposed to sudden shocks.
Demonetisation
In 2016, the withdrawal of high-value notes disrupted cash-based businesses.
GST
The goods and services tax pushed some small firms toward formalisation, but also raised compliance burdens.
Covid lockdown
The 2020 lockdown left many vendors and migrant workers without income overnight.
Recovery
Informal workers tend to recover unevenly and slowly.
A closed market
When markets shut during the lockdown, vendors had no earnings and no safety net.
Assuming shocks affect everyone equally
Informal workers have fewer buffers.
Key takeaways
- Cash shocks hurt informal businesses.
- GST changed compliance.
- Lockdowns removed income.
- Recovery is uneven.
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