Streamlining Gig Economy Needs More Than Just A Gig

India’s gig economy has boomed in recent years thanks to rapid growth in digital businesses such as ecommerce and as the nature of jobs itself changed due to events like the Covid-19 pandemic. In fact, the gig economy as emerged as a major source of employment especially at a time when the lack of formal jobs remains the biggest challenge for India.

But, as it often happens, policymaking has remained far behind actual changes happening on the ground. This year’s budget seeks to bridge that gap, if only a little.

In the budget for 2025-26, Finance Minister Nirmala Sitharaman has proposed measures to formalize the gig economy by offering gig workers access to health insurance and issuing them identify cards and official registration.

These steps not only highlight the government’s focus on financial inclusion and digital expansion but also hold significant implications for India’s economic landscape considering the growing importance of the gig economy.

It’s not that authorities haven’t previously tried to formalize the gig economy. It has indeed happened, but only in a handful of states such as Rajasthan and Karnataka. But even in those states either laws to provide certain facilities to gig workers, such as insurance or social security, are still being finalized or those regulations don’t go far enough. In such a scenario, the budget proposals are indeed welcome.

Formalising the gig economy
The budget’s focus on the gig economy marks a significant step toward recognizing and protecting this growing workforce. In 2020-2021, India’s gig economy employed about 7.7 million workers, according to Niti Aayog estimates. Niti Aayog also projects that this number could reach 23.5 million by 2029-30. According to the Forum for Progressive Gig Workers, the gig economy likely helped generate revenue of $455 billion last year. This makes it a critical component of the country's economic fabric.

Gig workers, including delivery personnel, ride-hailing drivers, and freelance professionals, often operate without job security, social security benefits, or formal recognition. The government's plan includes providing gig workers with health insurance under the PM Jan Arogya Yojana, along with official ID cards and registration on the e-Shram portal.

These measures aim to offer social security and formal recognition to gig workers, who often lack traditional employment benefits.

The benefits of formalizing the gig economy are far-reaching. Social security provisions such as health insurance and pension schemes will improve the financial well-being of gig workers. Financial inclusion efforts will enable them to access loans and savings instruments, fostering economic stability. Additionally, registration on the e-Shram portal will help policymakers formulate better labour laws and targeted welfare schemes by maintaining accurate workforce data.

Challenges aplenty
However, ensuring comprehensive coverage for all gig workers remains a challenge.

Many gig workers frequently switch between platforms or engage in multiple roles, making it difficult to track their employment history. Maintaining an updated worker database is another critical issue, as the gig workforce is fluid and often informal.

Moreover, securing sustainable funding for these initiatives—whether through government budgets, employer contributions, or worker co-payments—will require careful policy design.

One possible solution could be a tripartite contribution model, where the government, platform companies, and workers share the financial burden of social security programmes. Platforms like Swiggy, Zomato, Flipkart, Amazon, Ola and Uber may also be encouraged or mandated to contribute to worker welfare funds. Additionally, financial incentives for gig platforms that provide health and insurance benefits to their workers could accelerate adoption.

The success of these initiatives will hinge on strategic planning, investment in infrastructure and technology, and collaborative efforts among stakeholders. Whether through empowering rural logistics or safeguarding gig workers, the budget lays the groundwork for a more connected and secure workforce. The true test, however, will be in executing these measures and ensuring they make a positive long-term impact.