Home / Economy / News / India's informal sector suffered sharpest contraction in Q1 FY27

Establishments and employment remained above year-ago levels but contracted sequentially, with rural India accounting for much of the decline in the June quarter

Himanshi Bhardwaj 3 min read Last Updated : Aug 21 2026 | 10:37 PM IST

India's unincorporated non-farm sector shrank in the first quarter of financial year 2026-27 (Q1FY27), with enterprise base as well as workforce contracting sequentially by 5.4 per cent and 9.7 per cent, respectively, even as the prints stayed above year-ago levels, according to the latest Quarterly Bulletin of Unincorporated Sector Enterprises released by the National Statistics Office (NSO) on Friday.

This is the sharpest quarter-on-quarter (Q-o-Q) contraction seen on both employment and establishment counts at the all-India level since the NSO started releasing quarterly unincorporated enterprise data in January-March 2025. The Q1FY27 prints are also in sharp contrast to the double-digit Q-o-Q expansion seen in Q4FY26, when establishments had grown by 16.5 per cent and the workforce by 23.6 per cent.

The sector had an estimated 86.7 million establishments in Q1FY27, up 9.20 per cent from 79.4 million a year earlier. Employment rose to 137 million workers, a 6.55 per cent growth year-on-year (Y-o-Y).

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