Abstract
M.A. (Development Studies)
With the ever-increasing rate of urbanisation, developing countries are faced
with a new problem - that is, the decline in the urban environment and living
conditions. This scenario is likely to further deteriorate due to unprecedented
levels of population growth and rural-urban and international migration. The
employment-carrying capacity of urban areas is eroded by these trends,
resulting in an influx of labour, which cannot be absorbed by the formal sector.
As a way of circumventing poverty, the urban unemployed population resort to
informal activities for survival, regardless of the legal consequences.
The literature on the informal sector is very controversial. This is partly
because the nature of the sector itself is contradictory and defies precise
definition. More importantly, various analysts and policy-makers approach the
informal sector with different expectations. These different expectations of the
informal sector are, in turn, related to the preconceived points of view of the
analysts as to what constitutes the proper dynamics of the informal sector and
what the role of the sector is in alleviating urban poverty. Central to the views
on the role of the informal sector in urban poverty alleviation have been the
concerns of governments of developing countries on whether to support it or
control its activities.
The realisation by governments of the need for expansion of the informal
sector has resulted in their intervention in this sector by means of regulations,
programmes and frameworks to define how the business activities should be
carried out. Interventions in the informal sector have resulted in a distortion of
the production structure in favour of the formal sector. On the other hand, the
very nature of informality and its inherent characteristics stimulate profitability
for the hawkers (peddlers) or the small business entrepreneurs. The
formalisation of the informal sector eradicates the economic dynamics, which
necessitate the viability of the activities being undertaken. The consequences
have been the further impoverishment of the small-scale entrepreneurs...