In a country of over 1.4 billion people, only a minuscule 1.6% pay income tax. The recent data from India’s Income Tax Department, presented in Parliament for the fiscal year 2022-23, paints a stark picture of the nation’s tax landscape. Out of 7.4 crore individuals who filed returns, a staggering 70% reported zero tax incidence. Meanwhile, the gig economy, a burgeoning sector anticipated to encompass 25 million workers by 2030, remains woefully underprepared for the financial responsibilities that come with this growth. A revealing new survey by Borzo (formerly WeFast) underscores this troubling reality, highlighting the glaring gaps in financial literacy among gig delivery workers in India.
The Disconnected Taxpayer
The Borzo survey, titled “Understanding the Financial Literacy of Gig Delivery Partners,” delves into the financial acumen—or lack thereof—of gig workers across 40 cities, including major urban centers like Mumbai, Delhi, and Bengaluru, as well as smaller towns like Palghar and Saharanpur. The findings are alarming: nearly 78% of gig delivery workers earn less than Rs 2.5 lakh annually, placing them below the taxable income threshold. Yet, 66.5% of these workers have never filed an income tax return. Among those who do, a significant majority file zero returns, reflecting either an inability or an unwillingness to engage with the tax system.
The survey reveals that 61% of gig workers are unaware of income tax brackets, and 65% do not have life insurance—a crucial safety net in a profession rife with risks. The data also uncovers a startling lack of engagement with traditional investment tools. A whopping 77% of gig workers do not invest in mutual funds, and 74% steer clear of the stock market altogether. Long-term savings through Public Provident Fund (PPF) accounts are similarly neglected, with only 24% of workers utilizing this option.
These statistics are not just numbers; they are a reflection of a growing economic divide. The gig economy, often heralded as the future of work, is populated by individuals who are financially vulnerable and ill-equipped to navigate the complexities of modern financial systems.
The Double-Edged Sword of Zero Returns
While the filing of zero returns may seem like a step toward financial responsibility, it is a double-edged sword. On one hand, it indicates a growing awareness among gig workers of the need to comply with income tax laws, particularly when applying for loans or other financial services. On the other hand, it highlights a systemic failure to provide these workers with the financial literacy necessary to move beyond zero returns and engage more meaningfully with the economy.
Eugene Panfilov, Managing Director of Borzo India, aptly notes the urgency of addressing these literacy gaps. “As we navigate the nuances of this dynamic gig economy, it’s imperative to equip gig delivery workers with the knowledge and tools for effective financial planning,” he says. Panfilov emphasizes the importance of guiding millions of gig workers toward better financial practices, not only for their well-being but also for their financial resilience.
A Call to Action for Policy Makers and Industry Leaders
The findings in the aforementioned report should serve as a clarion call for policymakers, industry leaders, and financial institutions. The gig economy’s rapid expansion is outpacing its workforce’s financial literacy, creating a ticking time bomb that could have severe implications for both individual workers and the broader economy. As India’s gig economy continues to grow, so must the efforts to educate and empower its workers. Financial literacy is not just a personal responsibility but a societal imperative that demands immediate and sustained action.
If India is to truly benefit from the potential of its gig economy, it must ensure that the workers driving this sector forward are not left behind in the race toward financial inclusion. The time for action is now, before the financial literacy gap becomes a chasm too wide to bridge.
