India’s labour market and its large informal enterprise sector present two interlinked development challenges. On the labour side, the persistence of informal employment, low female labour force participation, minimum wage non-compliance, and an expanding youth workforce have been central concerns in India’s employment discourse (World Bank, 2016;
La Porta and Shleifer, 2014). On the enterprise side, the unincorporated sector comprising
household-owned and individually operated firms outside the Companies Act continues to
account for a substantial share of employment and output, yet remains constrained by low
productivity, limited access to institutional credit, and weak integration into formal regulatory
and financial systems (NCEUS, 2009).
Recent policy interest has converged on two levers for addressing these challenges simultaneously: ICT adoption/digitalisation2
and enterprise formalization. ICT adoption has
been identified as a potential productivity-enhancing mechanism for micro and small
enterprises, while government-sponsored registration programmes such as Udyam and Udyam
Assist have been introduced with the explicit aim of extending formal credit access to
previously excluded firms. Understanding whether and to what degree these two pathways
deliver on their intended objectives requires rigorous empirical analysis using representative
data.
