Role of street vendors in the local economy

“Kahan se aate hain ye log?" (Where do these people come from?). This poignant question from the film Jolly LLB encapsulates the curiosity and often overlooked struggles of street vendors, the unsung heroes forming the backbone of our urban economies.

These micro-entrepreneurs infuse our daily lives with colour and flavour, offering everything from freshly squeezed juices to vibrant trinkets, from busy city streets to quiet corners. They come from all walks of life, with stories of hard work and determination reflected in their faces. Hindi cinema has immortalised their narratives: the struggling farmer-turned-rickshaw puller in Do Bigha Zamin, the nostalgic Kabuliwala, the resilient chaiwallah of Salaam Bombay, and the resourceful papad seller in Super 30 and many more. These films showcase this informal sector's humanity and economic vitality, a testament to our urban landscape's diverse and vibrant fabric.

Street vendors are not merely a source of convenience; they are economic powerhouses, acting as micro-entrepreneurs at heart, creating jobs, stimulating local economies, attracting tourists, promoting social inclusion, and preserving cultural heritage. They are the pulse of our cities. Street vendors are micro-entrepreneurs at heart. Their small-scale businesses contribute to a vibrant local economy, fostering competition, innovation, and consumer choice. Street vending is a significant source of self-employment, especially for those with limited formal education or skills. This sector provides livelihoods for millions, often supporting entire families. Tourists are drawn to street markets for authentic local flavours and unique goods. This influx of visitors translates to increased spending, benefiting not just the vendors but also surrounding businesses. Street vending provides economic opportunities for marginalised groups, including women, minorities, and people with disabilities, who may face barriers to accessing formal employment. Many street vendors sell traditional handicrafts, food, and other cultural products, keeping local traditions alive. Their role in preserving our cultural heritage is significant and something we should all take pride in. Their considerable economic contribution is the pulse of our cities, and it's time we appreciate and respect their role.

Recent research reveals a complex reality: street vendors stimulate economic activity across various sectors by sourcing goods from established businesses, creating critical backward linkages within the local economy. Despite facing significant hurdles like limited funding, inadequate infrastructure, and bureaucratic red tape, they exhibit remarkable resilience. Quantitative and qualitative studies underscore these micro-entrepreneurs’ vital role in local and global economies. Quantitatively, they comprise a significant portion of the urban informal workforce in many developing countries, ranging from 2% to 24% of total employment. They contribute substantially to GDP, provide livelihoods for millions, and play a crucial role in poverty reduction by offering affordable goods and services. Qualitatively, research reveals that street vendors face many challenges, including legal and regulatory barriers, lack of access to formal credit and basic infrastructure, and social stigma. Women vendors, in particular, face additional vulnerabilities due to gender discrimination. Street vendors demonstrate remarkable resilience, resourcefulness, and a robust entrepreneurial spirit despite these hurdles. Their contribution to urban vibrancy, cultural preservation, and food security is undeniable.

To unlock their full potential, we must empower street vendors. Through targeted training programmes, this involves enhancing their financial literacy, business skills, and legal awareness. Formalising their trade through legal recognition and simplified licensing, improved infrastructure, and designated vending zones can create a more conducive environment for their businesses. Social protection measures like health insurance, childcare support, and participatory governance mechanisms that include vendor associations in decision-making are crucial for their upliftment.

Fortunately, policymakers have recognised this need for empowerment and have included measures in the latest budget to support street vendors. The latest budget has brought much-needed attention to the street vendor community. Recognising their economic importance, the government has introduced measures to streamline licensing processes, expand micro-credit schemes and financial support programs, invest in skills development, and create street markets in 100 cities annually for the next five years.

While street vendors undoubtedly play a vital role in the local economy, their presence also presents challenges for urban planning and regulation. The informal nature of their businesses can lead to congestion, sanitation concerns, and potential conflicts with the formal sector. However, these challenges can be addressed through innovative solutions and collaborative efforts. We can create a prosperous urban environment that benefits street vendors and the broader community by working together. The path forward lies in collaboration. Government, vendor associations, and civil society must work together to create designated vending zones, promote digital literacy, and ensure fair regulations, protecting vendors and consumers. By empowering street vendors, we empower our cities, investing in a vibrant, inclusive, and resilient economic ecosystem that benefits everyone. This collaboration is a shared responsibility, a call to action to create a better, more inclusive urban landscape.

This article is authored by Hitesh Vaidya, former director, National Institute of Urban Affairs.