Some context here.

I'm from India and over here around 80% of the public work in the informal unaccounted sector.

Yesterday, the main opposition party said that if they're elected, they'd compensate each individual who's earning less than 12K per month.

For example, if someone earns 5K, govt will add 7K or if someone earns 10K, govt will add 2K

But as almost 80% of the people belong to the unaccounted informal sector, how would govt come to know the exact figures?

Okay 1 easy way to guess would be how much money an individual spends, how much money in the bank etc but don't you think people will have an incentive to show lower incomes?

How would the govt know the exact figures then.

PS- I'm not concerned from where the govt gets the money to balance, I'm only concerned regarding the validity of the income figures.



Check this interesting report of the International Labor Office on Measurement of the Informal Economy. They raise and discuss the Key Challenges:

  • The paucity of data
  • Why is measurement important?
  • Conceptualizing the informal economy (Employment in the informal sector and informal sector enterprises)

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