A Study on Hidden Economy of Informal Contracts
Magathi Shenba K
, Dr. M. D. Chinnu
Hidden economy, Informal contracts, Shadow economy, Unregistered agreements, Legal enforcement, Labour contracts, Economic regulation, Informality
The hidden economy, often referred to as the informal or shadow economy, plays a significant yet
under-acknowledged role in developing countries like India. A substantial portion of this economy
operates through informal contracts—agreements that are not documented, registered, or
enforceable through formal legal mechanisms. Despite their lack of legal recognition, these
contracts govern everyday economic activities such as labor arrangements, small business
transactions, tenancy agreements, credit dealings, and service exchanges. This research paper
examines the nature, scope, and functioning of informal contracts within the hidden economy,
analyzing their socio-economic importance and legal implications. It explores why individuals and
enterprises prefer informal contractual arrangements, the challenges they pose to legal
enforcement, revenue collection, and social security, and the resulting vulnerabilities faced by
contracting parties. The study also evaluates the limitations of existing legal frameworks in
addressing informal contractual relationships and suggests reforms for gradual formalization
without disrupting livelihoods. Through doctrinal and analytical methods, this research aims to
highlight the need for inclusive legal recognition of informal contracts to balance economic
efficiency, justice, and regulatory control.
"A Study on Hidden Economy of Informal Contracts", JETNR - JOURNAL OF EMERGING TRENDS AND NOVEL RESEARCH (www.JETNR.org), ISSN:2984-9276, Vol.4, Issue 4, page no.b35-b45, April-2026, Available :https://rjpn.org/JETNR/papers/JETNR2604128.pdf
Volume 4
Issue 4,
April-2026
Pages : b35-b45
Paper Reg. ID: JETNR_233648
Published Paper Id: JETNR2604128
Downloads: 00034
Research Area: Other area not in list
Country: Chennai, Tamilnadu, India
ISSN: 2984-9276 | IMPACT FACTOR: 9.87 Calculated By Google Scholar | ESTD YEAR: 2023
An International Scholarly Open Access Journal, Peer-Reviewed, Refereed Journal Impact Factor 9.87 Calculate by Google Scholar and Semantic Scholar | AI-Powered Research Tool, Multidisciplinary, Monthly, Multilanguage Journal Indexing in All Major Database & Metadata, Citation Generator
Publisher: RJPN (IJPublication) Janvi Wave
