Informal economy has a significant role in entrepreneurship, particularly, women entrepreneurs of rural area. It has great impact on employment and income generation. Normally, the sector, which is not organized, not recorded by public authorities and which has no identity, is considered to be a part of informal sector. The informal sector is defined as those establishments that employ less than 10 persons with or without use of power. The formal sector includes manufacturing, trade and services, while the informal sector includes businesses that have small size of operation and low investment, so entry is easy compared to the formal sector. On the other hand, women-owned businesses have drawn significant attention around the world. It is observed that women start business for several reasons like financial support, earning livelihood for the family, independence, etc. The size of the business owned by women in informal sector is usually small and operated from their own residence. With successful business performance, most of the women want to remain in the business. But women do not receive enough support from their family as well as government authorities. These entrepreneurs must be involved in modern small-scale units. If they are properly trained and provided with the required capital, then rural India and informal sector will emerge as a story of success.

It is estimated that presently women entrepreneurs account for about 10% of the total entrepreneurs in India. It is also clear that this percentage is growing every year. If prevailing trends continue, it is not unlikely that in the next five years, women will comprise 20% of the entrepreneurial force in India. In terms of numbers, one would estimate at least 5 lakh women entrepreneurs.

The concept of informal sector has its origin in the beginning of the 1970s and has become so popular since then that it is nowadays being used for various purposes and with various meaning. The informal economy can however no longer be considered as a temporary phenomenon. Furthermore, the informal economy has been observed to have more of a fixed character in countries where incomes and assets are not equitably distributed. It seems that even if economic growth is not accompanied by improvements in employment levels and income distribution, the informal economy does not shrink. The situation is therefore that the informal economy is continuously increasing in most developing countries, even in rural areas. Estimates show that the non-agricultural employment share of the informal workforce is 78% in Africa, 57% in Latin America and the Caribbean, and 45-85% in Asia. In all developing countries, self-employment comprises a greater share of informal employment than wage employment. Consequently, informal wage employment in the developing world constitutes 30-40% of the informal employment outside agriculture (Becker, 2004).

The informal sector consists of all activities that fall outside the formal net of registered, taxed, licensed, statistically documented, and appropriately zoned business enterprises (Thomas, 1988). International Labor Organization (ILO) defines informal sector as “enterprises with a small scale of operation, family ownership, labor-intensive units, adaptive technology and operating in unregulated and competitive markets”. System of National Accounts (1993) classified informal sector into (a) Household Sector and (b) Unincorporated Enterprises (Ivo and Viet, 1993).

Entrepreneurship Development Journal, Microenterprises in India, Micro, Financial Services, Small and Medium Enterprise, Indian Economy, Microentrepreneurial Ventures, Social Development, Women Entrepreneurs, Sociocultural Traits, Indian Culture, Performance Measurement, Organizational Traits.