What is the gain in formalizing jugaad?

Since the Goods and Services Tax became law in India, hundreds of thousands of people have lost their jobs. "India's unemployment rate rose to 6.4 percent in August from 4.1 percent in July last year despite an additional 17 million people joining the workforce." "A survey by the All India Trade Union Congress (AITUC) found that a fifth of India's small businesses -- contributing 32 percent to the economy and employing 111 million people -- faced a 20 percent fall in profits since the GST rollout, and had to sack hundreds of thousands of workers." Small businesses cannot cope with the complexity of GST and many were not paying taxes, such as sales tax and excise. GST is meant to formalize the economy and 'widen the tax base'. "Historic tax reform GST has resulted in formalisation of the economy and consequently information flow would augment not only the indirect tax collections but also direct tax collections," said the Ministry of Finance. India's labor laws are extremely stringent and make it almost impossible to set up a large company. The result is that our businesses prefer to import from other countries than having to manufacture in India. Over 10 million young people are joining the workforce every year and they have to find suitable employment. "There is a school of thought that is concerned about the extremes of capitalism that have given rise to morally reprehensible practices by large enterprises," wrote E Ghani of the World Bank. "The popular perception is that small enterprises are a diversion from creation of good jobs." But, in India, "Empirical evidence suggests that there are strong positive linkages, and spillovers, between small and large enterprises. They are friends and not foes." "A 10% rise in employment of unorganized sector suppliers increases the employment of organized sector buyers by 16%." Despite being the fastest growing large economy in the world India is unable to grow its middle class because of a dearth of high quality jobs, wrote A Nag and V Beniwal. "India has created big wealth for a limited number of people at the highest income levels, but it hasn't created a massive pool of customers by creating hundreds of millions of middle income class," said J O'Neill. "So, if you think India has a jobs problem, you will throw money from helicopters (NREGS), mandate a three-day working week (lump of work fallacy), and replace the shovels of digging workers with spoons (productivity be damned). I'd like to make the case that India's official unemployment rate of around 5% is not a fudge because everybody who wants a job has a job; they just don't have the wages they need," wrote M Sabharwal. "India is a nation of enterprise dwarfs; we have 63 million enterprises of which 12 million don't have an address, 12 million work from home, only 6.4 paid indirect taxes till GST, only 1.2 million pay social security, and only 18,500 companies have a paid-up capital of more than Rs 10 crore." As people lose jobs they will resort to jugaad to survive. The tax base may widen but jobs will shrink. That is India.