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Test Paper

Q4. What do you understand by a Platform Economy? Examine the potential of it to transform the current economic structure in the country. (250 words)

  • Model Answer:


  • Introduction:


  • A work arrangement outside of a traditional employer-employee relationship in which organisations or individuals use an online platform to connect with other organisations or individuals to solve specific problems, provide specific services, or engage in any other activities that the Central Government may deem appropriate in exchange for payment.
  • Platform labour is found in a variety of industries, including mobility, delivery, logistics, home improvement, and beauty services, and it attracts a diverse group of employees with varying levels of education, skills, geographic locations, and dependencies. Ola or Uber drivers, Swiggy or Zomato delivery agents, and other platform workers are examples.


  • Body:


  • Platform Economy's Importance for India:


  • Despite the disadvantage of limited access to capital for employees, the platform economy is an appealing proposal for a select class of workers, particularly smallholder rural labour migrants with access to automotive assets.
  • The pandemic has shown a very major role that gig and platform workers play in the economy as delivery drivers and agents, which they can subsequently invest in farm employment.
  • These workers helped many platform companies stay viable throughout the pandemic and the ensuing economic collapse by ensuring that basic commodities were delivered to people's homes.
  • This sector has a significant development potential due to the rapid pace of urbanisation.
  • Platform workers make 25 percent more per hour than non-platform workers.
  • These data are from late 2019, and when economic activity picks up, one might expect similar, if not greater, figures for this group.
  • The remittances sent by platform and gig workers contribute to the growth of rural communities as well.
  • Such job will also inspire students to engage in market-based non-regular labour.
  • Platforms are at the heart of India's digital economy transformation, easing the load on employers by allowing them to avoid hiring staff through traditional employment structures.
  • According to a report by the McKinsey Global Institute, financial services, employment and skills, agriculture, education, logistics, and retail would all have a potential worth of US $ 500 billion by 2025, up from their current value of US $170 billion.
  • Because platforms address inefficiencies and low productivity in a system plagued by both, this is conceivable.
  • Platform workers have more dependents than non-platform workers; in fact, the higher earning potential is a major incentive for people to work on platforms and support their families.
  • In addition to having an economic impact, platform work supports the needs and goals of driver-partners' families, allowing them to leave low-paying jobs and pursue higher education, lucrative careers, or other vital caregiving duties.
  • Platform labour promises workers flexibility and responsibility over the delivery of work, but they are still primarily constrained by control mechanisms integrated into the algorithm.
  • Pricing per unit of work, work allocation, and hours are all affected by this.
  • Participating in on-platform jobs such as ride-sharing and food delivery necessitates the possession of a vehicle, which the average Indian worker lacks.
  • Workers rely on intense financing plans to enter the platform economy, which are frequently assisted by platform aggregator companies.
  • As a result of financial responsibilities, platform companies become increasingly reliant on them, reducing flexibility and control.


  • What are Gig Workers:


  • The Gig Economy is a free market system in which firms recruit independent workers for short-term commitments, which leads to contractualization of the workforce and encourages the Gig economy.
  • A "gig" is a slang term for an employment that lasts for a set amount of time.
  • A company that engages in more contractualization has a higher employee turnover rate, which creates a disruptive operational environment and leads to higher training expenses and a higher rate of errors.


  • Next Steps/Conclusion:


  • Adopting international best practices- Ontario and California have taken steps to offer platform workers job status, ensuring a minimum pay and welfare benefits.
  • In addition, the government must ensure that platform workers have easy access to finance.
  • Platforms in India have the ability to rethink the economy as a whole by increasing asset use.



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