Inside India's Gig Economy: Ground Realities, Gap & Growth

The recent strike by delivery partners on New Year's Eve brought the inherent issues of the gig economy to the surface. The strike conducted by thousands of delivery partners working on delivery-based apps put forward their demands for a fair minimum income, compensation including fuel & maintenance, better health and insurance coverage for accident protection, along with formal recognition as “workers” rather than merely “partners.”

Illustration by The Geostrata

These demands bring forth the issue that gig workers face and, more importantly, the gap in the gig economy, which includes algorithmic opacity, lack of employee benefits by the companies, imbalance of power, inadequate grievance-redressal systems, and delays in regulation.

India is among the fastest growing Gig work-based economies in the world, home to 7.7 billion gig workers in 2020-21 and projected to rise to 23.5 million by 2029-30 according to NITI Aayog. 

Gig work has emerged as one of the most dynamic parts of the modern workforce, with a wide range of opportunities from short-term, task-based, to freelance work in multiple sectors like food delivery, digital freelancing, logistics, e-commerce, ride hailing, etc. While the gig economy has created new opportunities for flexible engagement, it has also exposed the structural and institutional challenges in worker protection, legal recognition, and social security.

Presently, India's legal framework is limited to recognition, definition, & databases. This includes legally recognising gig and platform workers for the first time by Code on Social Security, 2020, making provisions for social security schemes by the centre and states on accident insurance, life and disability, & health benefits. The Ministry of Labour and Employment also launched the e-Shram portal to build a comprehensive National Database of Unorganised Workers (NDUW), including platform workers, migrant workers, agriculture workers, etc. 

THE DEFINITION DILEMMA

The Code on Social Security 2020, section 2(35) defines a gig worker as “a person who performs work or participates in a work arrangement and earns from such activities outside of a traditional employer-employee relationship”. Although recognition is explicitly provided, the employment status remains ambiguous because the definition does not clearly establish its connection to labour rights and protections.

As a result, existing labour laws—such as the Minimum Wages Act, 1948, the Industrial Disputes Act, 1947, and the Employees' State Insurance Act, 1948—do not extend to gig workers, leaving them without access to fundamental labour rights.

According to the NITI Aayog report of 2022, the gig workers can be categorised further into platform (workers who use an algorithmic platform) and non-platform (workers who perform technology-independent work) workers. Both these sub-categories face different challenges.

Platform workers face challenges such as fluctuating wages, limited social security, a lack of transparency in algorithms, arbitrary account deactivation, and unregulated working hours. In contrast, non-platform workers, including construction workers, struggle with informal employment, unstable incomes, weak bargaining power, unsafe working conditions, and vulnerabilities linked to gender and caste. Hence, it is crucial to provide basic rights to all gig workers, platform & non-platform, to ensure that employers do not exploit them in the name of profit margins & brand recognition. 

LOOPHOLES IN THE LEGAL FRAMEWORK

While there are a few legal frameworks in place, they are incompetent in providing a sense of security in terms of job, income, & life. The problem begins with the distorted definition of gig workers itself leading to further challenges and no safeguards for the workers. The laws and codes fail to provide legal protection to gig workers, unlike in the case of traditional employees. The Code on Social Security creates provisions for social security schemes by the centre and states, but there is no actual implementation of such schemes.

Among India’s 28 states, only four—Rajasthan, Bihar, Karnataka, and Jharkhand—have enacted state-level legislation addressing gig workers. These laws have no actual ground-level implementation and only exist in the books.

Furthermore, there is no central authority that focuses on ensuring that laws are made and implemented, leading to enforcement barriers. The legal framework in the arena of the gig economy is mostly advisory in nature and has not been translated into real-time action. 

GIG ECONOMY AROUND THE WORLD

While the gig economy still requires recognition and better legal frameworks, India can learn from various countries in ensuring the basic rights of the gig workers. The European Union’s 2024 Directive on Improving Working Conditions in Platform Work shifts the burden of proof onto digital labour platforms to challenge employment status and promotes transparency, formal recognition, and human oversight in algorithmic management systems & ensures transparency, recognition, & human oversight of algorithmic management systems. 

The United Kingdom’s Employment Rights Act, 1996, establishes an intermediate classification of “worker,” separate from both employees and independent contractors, and grants platform workers the right to receive the National Minimum Wage. France’s Labour Code Amendments on Platform Workers, 2016, even recognises platform workers'right to collective action and unionisation. Other countries like Spain, the US, China, Canada, etc. also establish the basic right to minimum wages, social security, healthcare, insurance, etc. 

The Gig Economy is accelerating and is expected to rise to 23.5 million by 2029-30, according to NITI Aayog. To tap this economic dividend, India needs to fill the gaps in structural, legal, and institutional frameworks.

The enormous potential to create employment opportunities in the future is the reason that the government needs to create a robust legal framework to ensure basic rights. The future not only depends upon technological advancements, but also on labour policies that ensure dignity, social security, dynamism, and fair growth.

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BY VASUDHA

TEAM GEOSTRATA

info@thegeostrata.com