Forbes India
India’s informal construction sector is predominantly a rural story. According to a pilot study released by the Ministry of Statistics and Programme Implementation (MOSPI), an estimated 10.3 lakh unincorporated establishments were engaged in construction activities, with rural agencies outnumbering urban ones significantly.Of the total 10.3 lakh establishments, 6.5 lakh were rural against 3.8 lakh urban. The highest number of such informal construction establishments were in Maharashtra (1.3 lakh), followed by Kerala and Karnataka.A similar, more pronounced pattern was observed for households undertaking own-account construction. Of the 98.5 lakh households that built for their own use during the period, the overwhelming majority were in rural areas.The study was conducted from July to December 2025, using a 365-day reference period.Urban regions deploy more workersDespite rural areas dominating in sheer numbers, urban construction establishments are more labour-intensive. On average, urban establishments engaged 5.5 workers per site against 4.5 in rural areas.The same pattern holds for households. Urban households engaged 4.4 workers on average compared to 4.2 in rural areas. States like Jharkhand (11.4) and Odisha (9.6) recorded the highest worker-per-establishment ratios, while Karnataka led among households undertaking own-account construction followed by Chhattisgarh, Bihar and Tamil Nadu.Hired worker establishments account for approximately 77 percent of the total across all sectors. Meanwhile, across the board, hired workers constitute 73 percent of the total construction workforce, with working owners making up 17 percent. Urban establishments recorded a higher proportion of hired workers at 75.6 percent compared to 71.8 percent in rural areas.Formal credit reaches villagesThe average value of fixed assets owned by these establishments stood at Rs 5.21 lakh, while that of hired worker establishments was Rs 66,750.The study also notes the growing reach of institutional finance in rural construction. Nearly 23 percent of rural households undertaking own-account construction availed institutional funding (such as commercial or cooperative banks, NBFC, housing boards, local bodies etc), a signal that formal credit is gradually penetrating grassroots building activity. The figure for urban areas was 13 percent.The MOSPI study, conducted alongside the Annual Survey of Unincorporated Sector Enterprises 2025, is the first extensive attempt to map India’s informal construction segment.
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