what problems are faced in the informal sector?

Question

This is for a project i have to do and seem to be having no luck on the net plz answer me a.s.a.p

Answer 1

The most important problem of the informal sector is the fact that it is informal. The fact that you receive income unaccounted for (and pay no taxes on it) hurts you in several ways. Since you don't have documented income (or your documented income is much lower that your actual income), it may be difficult to qualify for a bank loan. It is nearly impossible to receive fair compensation in an eminent domain case (when government confiscates private property for public use, as in, say, demolishing buildings to expand a highway), because valuation would be based on documented income. And so on and so forth...