Question

What is a major difference between formal and informal economic sectors?

Answer 1

Formal sectors usually refers to the official sectors. for eg: Banks that provide loans to the people. Here, the RBI looks after the working of the banks and helps the people to gain loans at low interest and in the recognition of the govt.

However, the informal sector can be described with an example of zamindars, and local money lenders who donot have specific record and provide the people loans at local levels. These are basically individuals who are rich and so provide money in villages etc.