The difference between formal and informal sectors of the economy is that all public and private sector establishments come under the formal sector, and the remaining are counted in the informal sector. The formal sector of the economy comprises those establishments which are controlled or regulated majorly by the government and are required to follow specific rules and regulations to carry out their business activities.
The informal sector consists of enterprises or establishments that are not regulated by the government and are not forced to abide by laws and regulations.
Differences between Formal and Informal Sectors of Economy
Includes, Govt. departments, PSUs and MNCs
Includes small businesses, farmers and labourers
Includes private firms having a minimum of 10 workers and above
Includes private firms having less than 10 workers