A Third of India's Informal Economy Sits in Just 50 Districts

India's informal economy has always been described in the aggregate: tens of millions of small proprietorships, workshops and roadside enterprises, assumed to be spread thinly and more or less evenly across the country's roughly 770 districts. National surveys reinforced that picture by publishing state and India-level totals and little else. On 10 September 2026, the National Statistics Office broke that habit. Its first-ever district-level breakdown of the unincorporated non-agricultural sector, covering 757 of the 770 districts in the survey's sampling frame, found that the top 50 districts, ranked by number of establishments, account for nearly a third of the sector's total establishments, workforce and Gross Value Added nationally. This is the layer of the economy that shows up in every neighbourhood: the tailor, the auto-repair shop, the wholesale trader, the roadside eatery, all counted together as unincorporated, non-agricultural establishments precisely because none of them files with the Registrar of Companies.

That is a striking number for a segment of the economy long assumed to be diffuse: 50 districts out of 770, roughly 6 percent of the map, already hold close to a third of it.

A third of India's informal economy sits in just 50 districts.

Source: DD News and Business Today, both citing the NSO's district-level ASUSE 2025 estimates. Chart: The Signal.

It is worth pausing on why that matters before turning to who those districts are. Formalization drives, credit-access schemes and GST outreach built around a national or state average are, by construction, aimed at a version of the informal economy that describes almost none of the actual geography. The top 10 districts alone, spread across Gujarat, Telangana, Uttar Pradesh and West Bengal, already account for about a tenth of the sector's establishments, workers and GVA. Ten districts producing a tenth of a sector this size is the kind of concentration usually discussed in finance or heavy manufacturing, not in an economy assumed to run through every small town equally.

The busiest districts are not the most productive ones

The new data lets two different rankings be compared for the first time, and they point at different places. Only 16 districts nationally have more than 5 lakh unincorporated-sector establishments each: eight of them in West Bengal, three in Maharashtra, two in Gujarat, and one each in Karnataka, Telangana and Uttar Pradesh. West Bengal supplies half of India's highest-volume districts on that measure alone.

Productivity tells a different story. Haryana places seven districts among the national top 50 by gross value added per worker for market establishments, more than any other state; Maharashtra, Tamil Nadu and Telangana each place six, and just eight states between them hold 40 of the top 50. West Bengal, the state with the most high-volume districts, does not appear among the leaders on that list. Telangana is the only state that shows up strongly on both counts.

Scale and productivity concentrate in different states.

Source: The Tribune, per an ANI wire report; Business Standard, both citing the NSO's district-level ASUSE 2025 estimates.

Source: Business Standard, citing the NSO's district-level ASUSE 2025 estimates. Chart: The Signal.

The map is a curve, not two piles

The concentration at the top does not mean the rest of the country is empty. Around a third of India's districts have more than 1 lakh unincorporated-sector establishments each, while about 9 percent have fewer than 10,000. That is a graduated distribution with a genuine but thin bottom tail, not a country split neatly into a handful of giants and a mass of empty districts. The concentration at the top sits on top of a broad, populated middle. That shape looks like agglomeration, activity clustering around transport links, urban demand and existing supplier networks, rather than a story about a few rich pockets surrounded by nothing. The same logic concentrates formal industry into named clusters: a port town's shipping trade, a textile belt, a component-supplier corridor around an auto plant. There is no obvious reason the unincorporated sector, which trades on the same roads and serves the same customers, should behave any differently, even though it has never before been measured closely enough to show it.

The base is growing while it concentrates

None of this is happening against a shrinking sector. Nationally, GVA per worker in the unincorporated non-agricultural sector was Rs 1,56,539 in ASUSE 2025 (the survey period January to December 2025), up from Rs 1,49,742 in ASUSE 2023-24 (October 2023 to September 2024), a 4.54 percent rise: the all-India benchmark every district figure above is measured against. The estimated number of establishments nationally rose over the same span, from 7.34 crore to 7.92 crore, a 7.97 percent increase. The informal economy is getting bigger in absolute terms even as its productive core stays confined to a short list of places.

Source: PIB, summarising the NSO's ASUSE 2025 factsheet. Chart: The Signal.

The honest objection

The obvious objection is that this is simply a population and market-size effect. Bigger districts have more people, more shops and more transactions almost by construction, so ranking districts by raw establishment count will tend to crown a handful of large cities and their surrounding districts. On that reading, fifty districts holding a third of the sector is just the arithmetic of large places being large, not a discovery.

That case explains the establishment-count list, but it does not explain the productivity list. Gross value added per worker is already a per-person measure; a bigger population or a bigger raw count of shops does not automatically raise the average output each worker produces. Haryana's seven top-50 productivity districts outrank every other state despite Haryana not featuring among the states with the biggest raw establishment counts, and West Bengal, which does dominate on raw counts, does not lead on productivity at all. A pure size effect predicts the same states winning both rankings. They do not, and a second look at the establishment-count leaders confirms it: the states that supply the most high-volume districts are not simply India's most populous ones either, which is what a naive size story would also require.

The Signal

The first district-level count of India's informal economy has handed policymakers something they did not have before: an actual target list, in two different flavours. A push for scale, more registered establishments, wider formal credit reach, points toward West Bengal's high-volume districts and the ten districts already carrying a tenth of the sector. A push for productivity, better output per worker, points toward Haryana, Maharashtra, Tamil Nadu and Telangana instead, and mostly toward different districts within them. A national campaign built around one average cannot serve both goals at once, and now there is no excuse for pretending it could. Credit-access drives, digital-payments outreach and GST-simplification pushes all carry a cost per district visited; spent evenly across 770 districts, that money reaches the vast majority of places where it will move very little, because the sector's weight and its productivity gains sit somewhere else. Watch what the next round of MSME and informal-credit policy actually targets: a real district-level strategy will name these places. A blanket national push that ignores this data will keep spending against a map that, this data now shows, does not exist.

Reporting basis: the district-level ASUSE 2025 release and its national concentration figures are per DD News, India's public broadcaster. The state breakdown of the top 10 districts by establishment count is per Business Today. The productivity ranking of the top 50 districts by state is per Business Standard. The count of districts with over 5 lakh establishments, and the broader district-count distribution, are per an ANI wire report, as also carried by The Tribune. The national GVA-per-worker and establishment-count benchmarks are from the National Statistics Office's ASUSE 2025 factsheet, published by MoSPI directly and, for the establishment count, also summarised in a Press Information Bureau release. The roughly 6 percent share of India's districts that the top 50 represent is The Signal's calculation from those figures.