Impact of Government Schemes on Informal Enterprises in India

Abstract

The informal sector plays a pivotal role in the Indian economy by generating employment and contributing to GDP. However, it often lacks access to formal credit, training, and legal protections. The informal sector in India constitutes a significant portion of the country's economy, employing a large segment of the workforce. In recognition of this, the Indian government has introduced several schemes aimed at enhancing the productivity, financial inclusion, and formalization of informal enterprises. This study evaluates the impact of key government schemes such as MUDRA Yojana, Start-Up India, Stand-Up India, PM SVANidhi, and Digital India on the performance and sustainability of informal enterprises. Using secondary data and field-based qualitative insights, the paper analyzes how these initiatives have influenced access to credit, ease of doing business, digital adoption, and the transition towards formalization. While there are visible benefits such as increased financial support and improved digital connectivity, the findings also reveal persistent challenges including lack of awareness, procedural bottlenecks, and limited capacity building. The paper concludes with policy recommendations to bridge implementation gaps and strengthen support systems for informal entrepreneurs.