The Informal Economy and Labour Exploitation in India: Power, Precarity, and Worker Agency

The informal economy in India employs the vast majority of workers yet subjects many to precarious conditions. This article analyses labour exploitation beyond a state-centric lens, foregrounding power among labour, capital and intermediaries within neoliberal restructuring. The original contribution is a power-centred framework integrating ethnographic narratives with sector-comparative indicators to show how intermediary power and strategic state neglect co-produce precarity beyond the formal/informal binary. Using a qualitative, multi-case design in construction, domestic work and home-based garments, the article draws on 60 worker and 15 key-informant interviews, participant observation and ethnographic/narrative inquiry. The article shows how intermediaries—thekedar (labour contractors), placement agencies and subcontractors—mediate access to jobs and credit, institutionalising wage theft and peshgi (advances) akin to debt bondage in unregulated workplaces. In the sample, wage delays were widespread (45–65%), peshgi common in construction/garments (35–45%); written contracts were absent (100%) and ESI/PF coverage negligible (0%). Statutory protections are symbolic amid weak enforcement and bureaucracy, while caste, gender and migrant status shape vulnerability. Yet workers exercise agency through tactics, boycotts and civil-society-backed associations. The article reconceptualises precarity as a socio-legal condition produced by regulatory neglect aligned with capital’s demand for “flexibility.” Policies should include universal social protection; community enforcement and grievance redress; recognition of non-standard worker organisations and bargaining; and targeted measures for women, migrants, Dalits and Adivasis. The article offers a power-centred framework for India’s shadow economy. JEL classification: O17; J46; J81; K31