India is preparing to launch a high-frequency economic index that will track the performance of its vast informal economy, a move that could significantly improve economic policymaking, business forecasting, and investment decisions. The proposed index will focus on unincorporated enterprises, which form a major part of India’s economic ecosystem but remain largely outside the scope of existing economic indicators.
Filling a Major Data Gap
Currently, policymakers and analysts rely on indicators such as inflation, industrial production, GST collections, and manufacturing data to assess the economy. However, these measures primarily capture activity within the formal sector. Millions of small shops, service providers, traders, repair businesses, and other unincorporated enterprises remain difficult to monitor in real time.
The Ministry of Statistics and Programme Implementation (MoSPI) is developing the new index to bridge this gap and provide regular updates on the health of the informal economy. Experts believe the initiative could become one of the most significant upgrades to India’s economic data infrastructure in recent years.
Why the Informal Sector Matters
India’s informal economy employs a massive workforce and contributes significantly to economic activity. Recent surveys indicate that the number of unincorporated establishments and employment opportunities in the sector has been growing steadily.
Data from government surveys shows that unincorporated enterprises increased to 79.2 million in 2025, while employment in the sector rose to 128.1 million people. The informal sector continues to play a crucial role in job creation, particularly in rural and semi-urban regions.
Benefits for RBI, Banks and Investors
The proposed index is expected to provide valuable insights for multiple stakeholders. For the Reserve Bank of India, it could offer a clearer picture of demand patterns, employment trends, and inflationary pressures emerging from the informal economy.
Banks and financial institutions may gain a better understanding of business conditions among small enterprises, helping improve lending decisions and risk assessment. Investors and corporates could also use the data to identify economic trends earlier and make more informed strategic decisions.
A New Era of Economic Intelligence
The initiative forms part of a broader effort by the government to modernise India’s statistical systems through new data products and high-frequency indicators. Alongside new measures such as the Index of Service Production, the informal economy index could offer a more complete view of India’s economic health.
If implemented successfully, the index may become an essential tool for understanding the country’s growth story beyond the formal sector and ensuring that economic decisions reflect the realities of millions of small businesses across India.
Summary
India is developing a high-frequency index to track its informal economy and millions of unincorporated enterprises. The initiative aims to provide policymakers, RBI, banks, corporates, and investors with real-time insights into a critical yet under-measured sector. The move is expected to strengthen economic forecasting, improve policy decisions, and offer a more comprehensive picture of India’s growth trajectory.
