Forced formalisation is not healthy

The large informal sector is a consequence - not a cause - of the low level of development

For decades, one of the central aims of economic policy in India has been to create conditions for workers to move from low- to high-income employment. This has usually implied a shift from the informal sector where productivity is low, to the formal sector where productivity is high. This process of “formalisation” has been excruciatingly slow.
 
The pace is now quickening.
 
Demonetisation, which led to financialisation of savings and then to the government-ordained acceleration of digitalisation, was one driving force. So, too, the introduction of the goods and services tax (GST). Formalisation was not the original objective of