India’s Gig Economy Set to Grow at 17% CAGR, Expected to Reach $455 Billion by 2024
The gig economy in India is poised for explosive growth, with a compounded annual growth rate (CAGR) of 17%, according to a white paper by the Forum for Progressive Gig Workers. By 2024, it is projected to reach a staggering $455 billion, significantly contributing to economic growth and employment opportunities.
Understanding the Gig Economy
The gig economy refers to a labor market dominated by short-term, flexible jobs, often facilitated through digital platforms. Instead of traditional full-time contracts, gig workers—also known as freelancers or independent contractors—are paid on a task-by-task basis. Popular activities in this sector include food delivery, freelance digital services, and ride-hailing.
Key Features
The gig economy offers workers the flexibility to choose their schedules and work locations, while businesses benefit from cost-efficient labor and scalable workforces. It also provides opportunities for skill enhancement, allowing workers to take on diverse tasks that broaden expertise and increase earning potential.
The Status of the Gig Economy in India
The gig economy is growing rapidly, with an estimated 7.7 million gig workers in 2020-21, projected to reach 23.5 million by 2029-30. Key sectors driving this growth include e-commerce, transportation, and delivery services, which thrive on the rising demand for flexible work arrangements.
Driving Factors
- Digital Penetration: India boasts over 936 million internet subscribers, with rural areas seeing rapid growth. Affordable smartphones (650 million users) have further expanded internet usage, creating a solid foundation for gig platforms.
- Startup and E-Commerce Growth: The rise of startups and online platforms has spurred demand for gig workers in roles like content creation, logistics, and marketing.
- Consumer Demand for Convenience: Urban demand for services such as food delivery and online shopping has created new opportunities in customer service and delivery roles.
- Low-Cost Labor: A vast pool of semi-skilled and unskilled workers, coupled with limited formal employment opportunities, drives the availability of low-wage labor for gig platforms.
- Shifting work preferences: Younger generations prioritize work-life balance and flexibility, making gig work an attractive option with its remote and project-based nature.
Employment Potential in the Gig Economy
By 2030, the gig economy is expected to contribute 1.25% to India’s GDP, generating around 90 million jobs. Gig workers are projected to constitute 4.1% of India’s workforce, making them a crucial segment of the labor market.
Tier-II and Tier-III cities are witnessing accelerated gig growth, providing alternate revenue streams for workers. Women, in particular, are benefiting from increased earnings opportunities, promoting financial independence and workforce integration.
Initially dominated by high-income earners, gig work is now popular among entry-level workers seeking flexible schedules and skill development. With the integration of artificial intelligence (AI) and predictive analytics, the gig economy is set to drive job creation and economic growth further.
Challenges for Gig Workers
Despite its potential, the gig economy presents several challenges for workers:
- Job Insecurity: A lack of work stability and irregular income are significant issues, with over 20% of workers citing these as top concerns.
- Income volatility: Earnings fluctuate based on demand, competition, and seasonal trends, making financial planning difficult.
- Regulatory Gaps: The absence of comprehensive legal protections leaves gig workers vulnerable to exploitation and excludes them from benefits like healthcare and pensions.
- Delayed Payments: More than 25% of workers face delays in payment, causing financial strain.
- Lack of Skill Development: Many workers report insufficient opportunities to build skills or advance their careers.
India’s Initiatives for Gig Workers
India has taken several steps to support gig workers, including:
- Code on Social Security, 2020: Recognizes gig workers as a distinct category and proposes extending social security benefits. However, it lacks enforceability and universal coverage.
- e-Shram Portal: Facilitates the registration of unorganized workers to improve access to social welfare schemes.
- State-Level Laws: Rajasthan’s Platform-Based Gig Workers (Registration and Welfare) Act, 2023, and Karnataka’s proposed bill mandate registration and transparency but have limitations, such as excluding workers from key labor protections.
Way Forward
India could draw inspiration from international practices, such as reclassifying gig workers as employees, to ensure they receive benefits like minimum wages and healthcare.
A portable benefits system could allow workers to access health insurance, retirement plans, and unemployment benefits, regardless of their employer. Companies like Amazon, Zomato, and Swiggy are already improving working conditions, which should become standard across the industry.
Technology-driven solutions can empower gig workers to report exploitation or discrimination, creating a fairer work environment. Additionally, skill development initiatives in collaboration with vocational institutes could equip workers with expertise for higher-paying roles and entrepreneurial ventures.
The gig economy is undeniably a cornerstone of India’s labor market transformation. Addressing its challenges and ensuring worker welfare will be critical to sustaining its growth and contribution to the country’s economy.
