The growing informalization of the formal workforce is the result of a number of distinct but related forces shaping the Indian economy. On the one hand, distress caused by the persistent uncertainty of agricultural incomes in the last two decades has produced a steady and protracted movement of labour out of the sector and, on the other, the capacity of the manufacturing sector to absorb this surplus labour has been greatly limited by the absence of any significant and sustained corporate investments in the sector. Indeed, large corporations and industries have moved towards cost- and labour-saving technologies owing to the increasing complexity of navigating state and central labour laws.
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