Online Quiz Test

Gig Economy

Syllabus: GS3/Economy, inclusive Growth and related issues, GS2/

In Context

The government of Rajasthan intends to establish the first welfare fund in India, which will be known as the Rajasthan Platform-Based Gig Workers Social Security and Welfare Fund.

Gig Economy


Individual employees perform tasks for clients through the mediation of a platform that assigns those tasks and handles the task-by-task transfer of payment.

 Gig workers:

  • NITI Aayog describes ‘gig laborers’ as individuals who perform work outside of the traditional employer-employee relationship.
  • The NITI Aayog report titled ‘India’s Booming Gig and Platform Economy’ defines a gig worker as “someone who engages in income-earning activities outside of a traditional employer-employee relationship, as well as in the informal sector. It also defines platform workers as those who work with Ola, Uber, Dunzo, Swiggy, Zomato, and Urban Company.


  • The gig economy is founded on temporary or independent work, which frequently involves connecting with clients or customers via an online platform.
  • The gig economy can be advantageous for workers, businesses, and consumers by making work more adaptable to immediate requirements and the demand for flexible lifestyles.
  • Employees in the freelance economy are permitted to work at their own convenience.
  • Income flexibility: This market is becoming increasingly alluring due to the flexibility that allows individuals to earn additional income.

Size of the sector

  • According to the report, 47 percent of contract work consists of medium-skilled jobs, 22 percent of high-skilled jobs, and approximately 31 percent of low-skilled jobs.
  • In 2019-2020, drivers and salespeople accounted for more than 52 percent of contract workers.
  • When workers are categorized by industry, the report indicates that 26.6 million contract workers were engaged in retail trade and sales in FY20, while approximately 13 million worked in transportation.
  • Approximately 6.2 million people were employed in manufacturing, and another 6.3 million in finance and insurance.

 Job generation potential

  • India’s contingent workforce is projected to increase from 77 lakh in 2020-21 to 2.35 crore in 2029-30.
  • Furthermore, platform labor is referred to as the “Fourth Industrial Revolution”

Challenges faced by the Gig workers:

 Urban factor

  • Accessibility makes contract work a predominantly urban phenomenon, as internet and digital technology access can be limiting.

 Job and income insecurity

Since gig laborers are typically not employees, they are not entitled to income security or social protection.

Safety issues

  • This is exacerbated for women in app-based taxi and delivery labor.

 Work pressure

  • Pressure may be exerted on employees as a result of algorithmic management practices and rating-based performance evaluation, according to a second challenge cited.
  • Regulatory framework: India lacks a framework that ensures the social security of employees while balancing the flexibility offered by platforms.
  • Currently, they operate in a regulatory limbo.
  • The Code of Social Security does not address the labor rights of gig and platform workers; it only endeavors to protect them from hazardous aspects of their employment. Social Security and Welfare Fund for Platform-Based Gig Workers in Rajasthan
  • Since the enactment of the Code on Social Security in 2020, this is the first instance of a regulatory effort to reduce the vulnerabilities of gig and platform employees.

The Rajasthan Board for the Welfare of Platform-based Gig Workers

  • The board, a tripartite institution comprised of representatives from bureaucracy, employers or clients, and employees’ unions or associations, exists as an alternative to what is normally embedded in formal employment.
  • Importance: In 2023, numerous state governments have yet to adopt regulations governing how they will implement the Social Security Code.
  • This has raised concerns regarding the rate at which gig and platform employees can qualify for benefits in a scenario in which they are viewed as “independent contractors” but are required to adhere to the rules constituting an employment relationship.
  • Rajasthan distinguishes itself as a pioneer by establishing this fund. The Social Security Code
  • The Code on Social Security was passed by the Indian Parliament in September 2020 along with three other labour codes: Code on Wages, 2019 Occupational Safety, Health and Working Conditions Code, 2020 Industrial Relations Code, 2020. The Code on Social Security was enacted during the COVID-19 pandemic, when platform workers became the backbone of metropolitan logistics, serving customers and assisting State governments in food relief schemes.
  • These are based on the recommendations of the Second National Commission on Labour (2002) and consolidate 29 laws governing minimum wages, occupational safety, and social security. It consolidates and rationalizes the provisions of eight existing central labour laws and attempts to include informal workers within the scope of social security administration.

Suggestions & way ahead:

 Extending social security measures

  • Social security measures, such as paid sick leave, year-round health access and insurance, occupational disease and work accident insurance, retirement/pension plans, and other contingency benefits, are required for contract workers and their families.

Boost to platform industry

  • NITI Aayog recommends launching an initiative to accelerate platformization, modeled after Startup India.
  • It requests that regulations be simplified and streamlined, and that licensing requirements for aggregators be reconsidered.
  • It also recommends lowering entry barriers for mobility-based platform companies.

 Hyperlocal deliveries

  • NITI Aayog requests that widespread adoption of two-wheeled hyperlocal deliveries be encouraged.

 Women in the gig economy

  • Businesses should implement gender sensitization and accessibility awareness programs for their employees and their families, especially to promote the rights of women and people with disabilities.


  • It is suggested that skill gaps be closed by periodically conducting assessments and partnering with platform businesses to recruit competent women and people with disabilities.
  • It is also suggested that aggregate data be made public in order to facilitate decision-making.

Daily Mains Question

[Q] What is the economic significance and potential of the gig economy in India? Provide suggestions on how to further incentivize the sector.