You're absolutely right. Let me rewrite this as your perspective—a blog post in your voice, talking about what you proposed, what you see missing, and what you think should happen next.
From BAD to MAD to the Missing Data Layer: Why MoSPI's Index Isn't Enough
I've just read the Economic Times article about MoSPI's plan to create an index for unincorporated enterprises. It's a step forward, but it misses the fundamental problem I identified a decade ago.
The Problem I Spotted
Here's what the government is doing: creating an index to monitor unincorporated businesses—non-agricultural establishments not registered under the Companies Act. The informal sector is currently tracked only through the Annual Survey of Unincorporated Sector Enterprises (ASUSE), a once-a-year exercise. According to ASUSE, unincorporated establishments grew to 79.2 million in 2025 with 128.1 million workers. But quarterly data tells the real story: 91.7 million unregistered enterprises with 151.7 million workers by Q3 FY26.
But here's the uncomfortable truth: you cannot measure what you cannot see.
Think about this:
- Housemaids working in homes—millions of them, completely untracked
- Self-employed electricians, plumbers, consultants—no tax returns, no official records
- Street vendors paying hafta instead of taxes
- Gig workers on unregistered platforms
- Migrant workers with no formal contracts
None of them file Income Tax Returns. None of them appear in any database until someone knocks on their door with a survey form. And the moment that survey ends, the government is back to guessing.
An index—no matter how frequent—cannot solve this. An index is still a periodic measurement of an invisible population. You're trying to take the pulse of a patient you can't see.
My Solution: From BAD to MAD (2016)
The idea is simple but radical: Don't commission surveys. Embed data collection into the act of work itself.
I proposed that all 100 million establishments in India—factories, offices, shops, clinics, NGOs, government departments—ensure that the MAD app is installed on every employee's smartphone. The worker taps IN when arriving at work (GPS-verified, only activates at the workplace). Taps OUT when leaving. That's it. The system then automatically:
- Records attendance
- Calculates daily wages or monthly salaries
- Deducts and deposits PF/TDS/ESIC contributions
- Feeds data to Income Tax, EPFO, ESIC, Labour Ministries
- Generates compliance reports in real time
Why this matters for unincorporated workers specifically: A housemaid, a street vendor, a gig worker—each could have the MAD app. They clock in when work starts. The system knows immediately: there's engagement, there's a wage, there's a person. No survey. No registration form. No waiting for annual data. Just real-time visibility.
My Other Idea: The Startup Act 2015
Around the same time, I also proposed a "New Economic Order"—a Startup Act that would simplify business registration for unincorporated entrepreneurs. Instead of being governed by the Companies Act 1956, startups would register online on the Income Tax Department website, obtain a unique "Startup Number," and pay zero corporate income tax for 10 years—while still filing transparent returns.
My goal was to create 5 million startups per year, each employing 2 people, totaling 10 million new jobs annually. All transactions would flow through cheques or digital payments, creating a permanent audit trail.
The connection to unincorporated enterprises is crucial: A self-employed housemaid, electrician, or consultant could register as a Startup under this framework instead of remaining invisible. They'd have:
- A unique formal identity
- Online, friction-free registration
- Tax transparency with incentives (zero tax for 10 years)
- Access to institutional credit and insurance
- Portability of benefits
The same framework would apply to roughly 65% of India's population under age 30.
Where These Ideas Converge
MAD + Startup Act creates a coherent system:
| Aspect | My MAD Proposal (2016) | My Startup Act Proposal (2015) |
|---|---|---|
| Registration | Real-time clock-in via smartphone app | Online, single portal, unique startup ID |
| Data Capture | Every work event feeds to central servers (Labour, IT, EPFO, ESIC) | Every transaction tracked via cheques/UPI with full disclosure |
| Tax/Compliance | Auto-deducted from wages; no separate ITR filing needed | File ITR annually; zero corporate tax for first 10 years |
| Worker Status | Visible immediately to state as employed/self-employed | Registered as formal entrepreneur; bankable, insurable |
| Formality Bridge | Works for casual, gig, contractual, permanent workers alike | Accepts anyone; no restrictions on business type or sector |
What MoSPI Is Missing
My critique is simple: You cannot index what remains invisible.
An index measures the formal. But 79 million unincorporated establishments and 151 million workers are largely informal. They don't volunteer information. You can't measure voluntary disclosure from people who have every incentive to hide.
My MAD solution reframes the problem: Don't commission an index. Build the infrastructure that makes the data self-generating.
Once every worker in India has a MAD app and every self-employed person has registered as a Startup (or under a similar simple framework), you don't need annual surveys anymore. The data flows continuously, automatically, verified in real time. The index becomes a live dashboard, not an annual report.
The Government Is Finally Moving (2026)
But I submitted to them: These are still enforcement-after-the-fact measures.
Compliance is verified periodically by humans through reports and inspections. The ghost beneficiary, the unpaid wage, the unregistered worker—these are discovered in arrears, not prevented in real time.
- Every attendance event is a compliance event—automatically
- Every wage payment is triggered by verified attendance—no ghost workers possible
- Every gig worker's engagement days accumulate in real time—no manual registration needed
- Every apprentice's training hours are verified—stipend DBT flows without leakage
- The "study on formalisation impact" becomes self-running, continuous, sector-wise, district-wise, gender-wise—as a by-product of the attendance layer itself
What Should Happen Next
For MoSPI's index to actually work—for the unincorporated sector to become measurable and formalisable—India needs:
Mandate MAD adoption: Every establishment (MSME, self-employed, gig platform, government agency) deploys the mobile attendance app. Make it a condition of GST registration, labour compliance, and corporate tax filing.
Implement Startup Act simplicity: Remove barriers to registration for self-employed and micro-enterprises. Let them register online, file simplified returns, and get basic tax and social security incentives.
Integrate real-time data: Feed MAD attendance data into EPFO, ESIC, Income Tax, GST, and labour boards continuously, not annually.
Replace surveys with streams: Retire periodic ASUSE. The index MoSPI wants becomes a live dashboard—real-time, granular, continuously updated—generated automatically by MAD and Startup Act registrations.
The result: No more guessing about housemaids, vendors, or self-employed workers. No more annual surveys waiting for results. They're visible. They're formalized. They're contributing to the tax and social security system automatically. And MoSPI gets economic data of unmatched depth and real-time accuracy.
That's not just an index. That's a transformation of India's informal economy into a visible, measurable, formal one.
Sources
| # | Title | Date | About |
|---|---|---|---|
| 1 | From BAD to MAD | 2016-06-02 | My proposal to replace stationary biometric attendance devices with mobile attendance devices—geo-tagged, real-time workforce tracking feeding to Labour Ministries, IT, EPFO, ESIC, NITI Aayog, and DBT servers. |
| 2 | A New Economic Order? Startup Act 2015 | 2015-09-13 | My framework for creating 5 million startups/year via online registration, zero corporate tax for 10 years, and transparent transaction tracking—enabling informal workers to formalise without bureaucracy. |
| 3 | The Government Just Proved the Idea Right | 2026-05-10 | My letter to Labour Ministry renewing the MAD proposal after Government announced wage compliance and e-Shram gig worker registration; I argue MAD would make violations impossible to hide and replace periodic studies with real-time data. |
| 4 | Plan afoot to create index for unincorporated enterprises - The Economic Times | 2026-06-29 | The government's plan to create a high-frequency index for unincorporated enterprises; currently 79.2 million establishments and 128.1 million workers tracked only via annual ASUSE survey; Q3 FY26 shows 91.7 million enterprises with 151.7 million workers. |
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