Plan afoot to create index for unincorporated enterprises

New Delhi: The government is planning to create an index to monitor the performance of businesses that are not registered as companies, as part of efforts to improve the measurement and understanding of India's informal economy, according to an official.

The index, proposed by the ministry of statistics and programme implementation (MoSPI), will provide insights into the health of the large yet often difficult-to-measure informal sector.

"The ministry aims to soon come out with the index for unincorporated sector enterprises," the official said. "While the official timeline is 2031, we are aiming to launch it earlier."


Unincorporated enterprises are non-agricultural establishments that are not registered under the Companies Act, 1956, or the Companies Act, 2013.

At present, India's high-frequency economic indicators largely capture activity in the formal economy through the Index of Industrial Production (IIP) and the financial performance of listed companies.

The informal sector, however, is tracked only through the Annual Survey of Unincorporated Sector Enterprises (ASUSE).

The proposed index is expected to bridge this gap by providing periodic updates on the performance of unregistered businesses, making it the country's first high-frequency indicator for the informal economy. The need for such an indicator has grown as the unincorporated sector continues to expand.

According to ASUSE, the number of unincorporated establishments increased by 8% to 79.2 million in 2025 from 73.4 million in 2023-24, while employment increased to 128.1 million from 120.6 million during the same period.

Recent quarterly data also point to robust growth in the informal sector. The number of unregistered enterprises increased by 16.7% year-on-year to 91.7 million in the March quarter of FY26. On the other hand, employment in the sector increased by 15.5% to 151.7 million.

"The introduction of the index will be good in terms of capturing and giving a sense of how the sector is doing on a monthly or quarterly basis, depending on the frequency of the indicator," Gaura Sengupta, chief economist at IDFC First Bank, said.

Sengupta said that "it is a good thing to have a high-frequency indicator to see how the informal sector is doing when the majority of the population is employed in this sector".

The ministry is also set to launch the Index of Service Production next month, a new high-frequency indicator to measure growth in the services sector, with FY25 as the base year.