RAJIV GANDHI NATIONAL

UNIVERSITY OF LAW,
PUNJAB

SEMESTER THREE

ECONOMICS PROJECT

TOPIC- Gig Economy in India: Problems and Prospects

SUBMITTED TO: SUBMITTED BY:

NAME: Hunar
Dr. Brindpreet Kaur
ROLL NUMBER: 21172
Assistant Professor
SECTION- B
Rajiv Gandhi National University

of Law, Punjab
 BONAFIDE CERTIFICATE

This certificate is to declare that this project based on the topic ‘Gig Economy in India:
Problems and Prospects’ is an original work of Hunar who is a bonafide student of the
Rajiv Gandhi National University of Law, Punjab.

Signature

Hunar

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 ACKNOWLEDGEMENT

I express my gratitude to those who have made the delivery of this project possible . I would
like to express my sincere gratitude towards the esteemed Vice-Chancellor of the Rajiv
Gandhi National University of Law, Prof. (Dr.) G.S Bajpai for giving me the golden
opportunity to make this wonderful project on the topic ‘Gig Economy in India: Problems
and Prospects.’

I also extend my heartiest thanks to Dr. Brindpreet Kaur for providing me with the necessary
support I needed during the course of making my project. Her valuable help and guidance
were instrumental in the making of the project and in resolving all doubts encountered during
the making of the same.

I express my gratitude to my parents for providing me with the appropriate facilities and a
favorable environment required for the completion of the project.

Lastly, I would also like to thank my friends and peers who supported me and helped me in
finalizing the project in the given time frame.

The project helped me immensely by widening the horizons of my knowledge and provided
me with an insightful and enriching experience. My sincere thanks to all those who inspired
me in some way or the other to undertake the research.

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 INDEX

A. Title Page...........................................................................................................................................
B. Bonafide Certificate........................................................................................................................
C. Acknowledgment...........................................................................................................................
D. Index...............................................................................................................................................
1. Introduction...................................................................................................................................
1.1 Evolution of Gig Economy.....................................................................................................
2. India’s Prospects as a Gig Economy...........................................................................................
3. Benefits of a Gig economy............................................................................................................
4. Problems of a Gig Economy.......................................................................................................
5. Suggestions and Policy Recommendations.............................................................................
6. Conclusion.......................................................................................................................................
7. Bibliography...................................................................................................................................

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 1. Introduction

A Gig Economy can be defined as a flexible economy that employs labour and undertakes
exchange of resources for a temporary period over digital platforms. Such platforms are made
for active exchanges between buyer and seller which are temporary in nature. Such an
economy is termed flexible mainly because the workers employed are usually independent
contractors or freelancers for a temporary period and not as full-time workers. The work done
is not according to a fixed or a systematic schedule. For example, companies like Uber,
DoorDash and Airbnb are some of the major examples of companies working under the gig
economy1. Due to the temporary and flexible nature of such an economy, the employment is
generated which is much cheaper and efficient as compared to full-time workers and
consumers are also introduced to a nexus of fast and unique services. Moreover, as the
exchange takes place through digital mode, it can be facilitated from anywhere and is an
extremely comfortable and convenient choice for all people. A person who works outside the
traditional sphere of employment and participates in a work arrangement that has the
characterises of a gig economy can be termed as a Gig worker 2. Such workers are usually
freelancers or self-employed people who are offering their services of a contractual basis.
Sometimes these workers may even work for various employers at the same time due to the
temporary and flexible nature of the work involved. Mc Kinsey categorises gig workers into
four categories i.e., free agents who take up jobs by choice and derive their primary income
from the same, supplemental income workers who use the gig economy to derive a passive or
a side income, reluctant workers who depend on the jobs derived out of the gig economy in
order to make their ends meet and financially strapped who take up gig jobs out of necessity 3.
Niti Aayog also classifies gig workers into platform and non-platform workers. Platform
workers are those who have online based work such as software apps or through any digital
platforms4. Whereas, non-platform workers are those who are usually general wage labouresr
or obtain work in conventional sectors such as manufacturing and other sectors which can be
part time or full time. While the freelance workers decide which company or type of job they
wish to take up, the employers may set up fixed models of compensation during time of

1
At, [Link]
2
At, [Link]
122032400060_1.html
3
At, [Link]
gclid=CjwKCAjwh4ObBhAzEiwAHzZYUyBi-
0w7jOWga18olBXdipppdtOfK9u1X7ptNatAUQgmVDnQaVDKSRoCV4AQAvD_BwE
4
At, [Link]
%27s_Booming_Gig_and_Platform_Economy_27062022.pdf

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contract initiation or derive compensation based on the work done and quality of work
delivered etc5.

1.1 Evolution of the Gig Economy

Nowadays, it has become a trend for people to understand gig work as something that is
temporary job taken up on contractual basis. Most people view them as a “side-hustle” or
something that can be done in order to obtain passive income instead of a solid career.
Especially during the pandemic, as everything became remote and all major databases saw a
shift to online mode, employment also became remote and temporary. With the rise of newer
technology and digital platforms that cater to the gig worker and its employer, there was a
stark rise in the gig marketplace and led to the formation of something known as the “gig
economy.” According to a report generated by the India Staffing Federation in 2019, India
serves as the 5th largest gig economy in the world after the US, China, Brazil and Japan 6. The
concept of “gig” or a flexible, contractual based job has been around the world since the
1900s and was first seen in the music industry wherein services of various artists were taken
up for a temporary period. However, most economists believes that the temporary or task-
based labour saw a rise during the 2008 financial crisis that plagued employment levels
around the globe and due to which many According to a report generated by the India
Staffing Federation in 2019, India serves as the 5th largest gig economy in the world after the
US, China, Brazil and Japan7. The concept of “gig” or a flexible, contractual based job has
been around the world since the 1900s and was first seen in the music industry wherein
services of various artists were taken up for a temporary [Link] had to lay-off their
employees which lead to an increase in freelancing jobs and self-employed people coming
up8. The gig economy further evolved during the pandemic as modern technology has
enabled people to achieve the luxury of working from home and creating an environment of
freelancing or temporary services which help create unique and newer ways of employment
generation. There has been a stark shift in the use of the term “gig” due to various
technological, social and economic factors as the nature of a gig worker has expanded to
include people working in white-collar jobs such as software developers, fashion designers
and Chief operating officers of companies who decide to work on their own terms 9. A
technological expansion across the globe and the rise of globalisation has not only made
5
Id.
6
Supra at 2.
7
Supra at 2.
8
At, [Link]
9
Id.

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working on such basis an attractive option but also created an economy around the same.
Platforms that enable such gig workers to connect with their potential employers have
increased and will only see an upward rise from here. For example, platforms such as
Upwork, Flexijobs or Remotely provide opportunities to both the gig worker and their
employers to connect through remote technology over the internet making the gig economy a
convenient recourse of employment.

2. India’s Prospects as a Gig Economy

According to a recent report by Niti Aayog titled “India’s Booming Gig and Platform
Economy,” nearly 7.7 million workers were a part of India’s gig economy in the year 2020-
2110. Furthermore, the gig economy is said to be ushering a new era of employment as the gig
workforce is expected to increase to nearly 23.5 million workers by the years 2029-30 11.
Thus, we can surely summarise that India is seeing a new revolution of gig workers. The rise
of people’s participation in India’s Gig economy is majorly due to the rapid development
especially through expansive urbanisation, use of modern technology and remote access
facilities and the widespread use of smart phones. India’s gig economy is not restricted to
only one or a few sectors but is seen to be expanding to almost all sectors as nearly 47% gig
workers are a part of the medium skilled jobs while high skilled and low skilled jobs have a
participation of 22% and 31% respectively 12. Thus, with the ushering of a new wave of gig
workers in India, it becomes extremely essential not just for the government but also for
various stakeholders who are a part of this economy to build and enhance the gig economy in
order to maximise the profits derived out of it. Consequently, it has been estimated that
Indian gig economy has a potential to add up to 1.25% to the GDP of India 13. Furthermore,
the gig economy of India is majorly characterised by the younger demographic of the country
which makes it a lucrative platform for the upcoming generations and will only see an
upward trend in the employment rate. Major speculations of gig workers emerging in other
sectors also opens wider avenues for the upcoming generations to reconstruct the future of
employment and workplace. A recent report by the Confederation of India Industries has

10
At, [Link]
%27s_Booming_Gig_and_Platform_Economy_27062022.pdf
11
Id.
12
Supra at 9.
13
At, [Link]

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shown that the Indian gig economy could triple the national economy from $3 trillion to $9
trillion by 203014.

However, while everything seems going all too well for the Indian Gig economy, there are
also fears of imminent inflation that seems to plague the Indian economy. Many factors have
led to a deacceleration of economic development which has led to a demand-supply
imbalance, further leading to an expansion of the unemployment rate of the country. Despite
the hit that most economies of the world are facing, especially in the context of the pandemic
and the Russia-Ukraine war, there is still a very high demand for a shift from the
conventional 9-5 job which is beneficial for the gig economies of the world. The future of
the Indian gig economy largely depends on the interdependent relationship between the
employer and the employee and reimaging or reconstructing the conventional workspace.
With newer and modern technologies in use, India is seeing a rise in business entrepreneurs,
innovative start-ups and upcoming businesses who aim at employing only gig workers as a
trend. Furthermore, the gig economy of India will have greater prospects by applying certain
principles of the conventional employment approach such as wide social security networks,
medical leave, and early salary benefits.

3. Benefits of the Gig Economy

 Cost Effectiveness- By changing the conventional way of working and employments,
major costs such as maintaining large offices and facilities for employees are cut
down Most gig workers are under the trend of working remotely which means that
there is increased cost-effectiveness on the part of both the employee and the
employer with added benefits of a salary for the employee. This ensures that both
parties are satisfied and hiring flexible and temporary workers means there is a
significant cost cutting in terms of employee benefit programmes, social security
network and other paid leaves that need to be provided by the employer15.
 Expanded Labour Force- Due to the increase in the number of people who are now
participating in the gig economy as freelancers and temporary workers, there is an
availability of an expanded labour force that can take up various jobs at the same
time. Thus, the hassle of dealing with bad hires or middlemen in the process of
14
At, [Link]
indian-dream/
15
At, [Link]

8
 recruitment is also minimised and there is no dearth of opportunities available for the
gig workforce of the country.
 More Productivity- As the working hours and the type of employment is majorly
flexible in favour of the employee there is an increase in productivity and working
hours of the employee that majorly adds to the profits of many companies employing
gig workers. Employee motivation and productivity further enhances the GDP of the
nation and increase in the per capita income of the individuals further reducing
income gaps. Gig workers experience independence as they are not expected to work
in fixed square cubicles and the flexibility of working hours makes time management
easier and more efficient.
 Smooth Recruitment- Apart from the benefit of cutting costs through employing gi
workers, there is also a drastic systematisation of employing workers as most are
found on digital platforms. By making the employment opportunities uniform and
available at fixed platforms, the information relayed to the public becomes more
accessible. Thus, modernisation of technology has helped people get greater access to
such jobs which are highly flexible and prevent mental and physical exhaustion
caused due to conventional ways of recruitment, such as standing in long queues for
interviews etc.
 Decreasing gender parity- There has also been a recent trend of women being hired as
gig workers which encourages them to be more independent and also reduces the
gender gap prevalent in the nation. Statistics show that women constitute most of the
food delivery business in South East Asia16.
 Spill Over Effect- By decreasing the cost of employment and services rendered in the
gig economy, there is a surplus of consumer expenditure which further creates more
income and employment generation. Thus, there is an increase in the per capita
income of individuals and the consumer surpluses can be spent in various other
sectors to encourage economic development.

4. Problems of a Gig economy

 Commitment Issues- While the temporary nature of work in a gig economy allows a
worker to adopt various jobs, there are issues of commitment faced by employers as

16
At, [Link]

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 these freelancers may not be as committed to the job as a full-time employee would
be. This leads to issues of efficiency and quality of work provided and lead to loyalty
clashes. Eventually, such clashes lead to an overall decrease in the motivation to work
and provide quality results.
 Ethical Issues- Due to the temporary nature of the gig economy, most employers find
it easy to exploit the employees as there are hardly any social security measures in
their favour. The nature of employment is casual and offers no benefits and usually
provide lower wages than other competitive firms. Recently, there was a major
controversy after Zomato introduced its 10-minute delivery 17 rule. This only shows
the casual attitude shown towards the health and wellness of a gig worker as the
dearth of labour makes it easy for the employer to replace employees at a fast pace.
 Unregulated nature- The Gig economy has functioned in a grey area which does not
consist of regulations and the gig workers do not have many security benefits and a
social security nexus that is backed by legislations. There is an increased conflict
between the nature of gig workers and actual labour force of the country as many
believe that gig workers are just an extension of the Indian labour force while others
believe that the gig workers should be treated a s a separate entity with different
labour laws.
 Lack of Skill- The majority of the workforce which is a part of the gig economy is not
literate and is working out of necessity. A worker must be skilled enough in order to
acquire most out of a gig economy and its opportunities and the competition in such
an industry is beyond the normal level. However, even thought many companies
provide quality courses and training for improvement of the skill set, many gig
workers have to undertake the same on their own which is not cost-effective for them.
 Excessive labour- As the gig economy rises and expands, there are certain factors like
inflation that hinder the creation of newer opportunities for such workers. Therefore,
there is an excess of labour force available to participate in the gig economy but a
lesser number of opportunities available. The number of gig workers has only
expanded over the years while there is a stark fall in both opportunities and income.
 Digital Divide- While many women are coming out to be a part of the gig economy,
there is an existence of a significant obstacle of the digital divide that exists between

17
At, [Link]
articleshow/[Link]

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 men and women. The GSMA Mobile Gender Gap Report 2020 18 shows that only 21%
of women in India are actually mobile users with internet which only shows the
widening gender gap of the country. Furthermore, the lack of any concrete numbers
on employment generation in the gig economy keeps the stereotypical prejudices of
employing women under the covers. Women are mostly seen as being employed
under jobs that require beauty and wellness services while most of the transportation
and heavy work is done by men. Furthermore, there are also major wage gaps
between men and women and gig economy may only increase such gaps due to the
unregulated nature of work involved. Household responsibilities such as child care
and other domestic responsibilities hinder women from participating in the jobs
provided by the gig economy.

5. Suggestions and Policy Recommendations

 Skill Development- By employing various initiatives that increase and develop the
skill set of gig workers will help them secure better jobs in the economy and further
provide for higher wages. Funding incentives and other subsidised benefits to gig
workers will help them undertake skill development on their own as well.
 Connecting local workers- Local workers such as those responsible for selling
regional goods and services can be connected to a vast digital platform which can
further connect them to employers who are looking for more localised and domestic
workforce. This will help create a broad nexus of interconnected vendors and help
them sell their goods across various towns and cities.
 Financial assistance- By providing financial assistance and credit facilities at lower
interest to those who wish to undertake their own business sin the gig economy will
help widen opportunities and create more employment. Loans and grants from
commercial banks at lower interest rates and for a longer time period will help fund
new agencies that are looking to expand themselves in the gig economy.
 Including Women and PwDs- By making the gig economy more inclusive, major
policies for women and Persons with Disabilities should be introduced in order to
include them also in the workforce of the nation. This will further reduce the liability
on the government as the vulnerable sections of society can become more independent
and earn their livelihood through such opportunities.
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At, [Link]

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  Establishment of Legislation- Regulating the Gig economy is one of the most urgent
steps that needs to be undertaken urgently. By passing legislation and laws in favour
of gig workers, there will be a nexus of a social security system that provides them
benefits like minimum wage, paid leaves, sick leaves etc. Women would also be
provided with security and maternity leaves which would enhance their efficiency and
participation in the workforce.
 Insurance facilities- By providing insurance for workers who are met with accidents
during their working hours, better security is provided and the brunt of such accidents
will not have to be met by the worker who might already be poor. For example,
Indonesia offers accident and other insurances to their workers who area part of the
transportation sector or are involved in any delivery systems in place19.
 RAISE Framework for Operationalizing the Code on Social Security (CoSS), 2020 20-
Under this framework, the government aims to adopt a five pillared approach in order
to ensure maximised capacity of gig workers and social security to all platform
workers.

6. Conclusion

The new revolution of gig workers has ushered in a new era of employment and a
reconstruction of the workforce in the Indian market. India shows great potential for its gig
workforce; however, it majorly depends upon the laws that are implemented and economic
policies generated for the protection and encouragement of the gig economy. Business
models that are coming up and star ups will provide a variety of opportunity for Indian gig
workers to participate and increase their per capita income. The necessity for gig workers has
only increased over the last few years and the recent trend has shown that an industry of any
size has undertaken the process of hiring gig workers due to the cost effectiveness and the
convenience of the process. Thus, it can be concluded that India has major prospects in the
expansion of the gig economy, however, it must first deal with various problems of gender
gaps, lack of skills and infrastructure and the unregulated market etc.

19
At, [Link]
%27s_Booming_Gig_and_Platform_Economy_27062022.pdf
20
Id.

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7. Bibliography

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