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India has succeeded in reducing the size of its the informal economy to 23.7 per cent in 2022-23 compared to 25.9 per cent in 2015-16 which works out to a growth of Rs 26 lakh crore in absolute terms in the country's formal economy, according to an SBI Research report released on Friday. 

The SBI Research report stated that the Indian economy is getting formalised at a faster pace than the growth in the labour force.

It cites EPFO figures to show that 65 lakh jobs were formalised since FY19 .

An increase in the formal sector results in both an increase in productivity that spurs economic growth and higher wages for workers leading to an increase in their standard of living.

The government's factsheet of Annual Survey of Unincorporated Sector Enterprises released this month states that on an average, a formal hired worker earned Rs 2.45 lakh per annum as compared to Rs 1.11 lakh earned by an informal hired worker.

The SBI report said that the government's e-Shram portal, which has registered 297 million unorganised workers, could further fast-track the formalisation process.

The portal is the first-ever national database of unorganised workers including migrant workers, construction workers, gig and platform workers. It facilitates extending benefits of social sector schemes to the workers in the unorganised sector.

The top five states account for 58 per cent of total registration, with Uttar Pradesh on the top (with more than 8 crore registrations), followed by Bihar and West Bengal.

The report also states: "Distribution of labour force (568 million) shows 45 per cent of labour force is still informal, with the usual suspects of agriculture (25.5 per cent) and services (13.9 per cent) accounting for close to 40 per cent of total workforce and 88 per cent of informal workforce," the SBI report stated.