The formal-informal dichotomy: Revisiting the debate on the agriculture-industry linkage

Incorporation of the informal sector in the general Kaleckian framework of agriculture-industry linkage is the primary target of this article. We show that the agriculture-informal sector interaction is distinctly different from the agriculture-formal sector relationship. Although agriculture supports the formal sector only from the supply-side, it helps the informal sector by providing both demand-and supply-side inducements. Next, contrary to the general perception of formal-informal complementarities, we rather propose a fundamental conflict. This conflict arises in the presence of the food supply-constraint or the generic resource-constraint. Subsequently, with these theoretical perspectives, we show that policies that are beneficial for the formal sector, in fact, constrict the informal economy.