In its ambitious plans for “smart cities,” the Indian government has envisioned inclusive metropolises (pdf) with housing for all, reduced congestion, and better infrastructure. At the moment, though, all this seems like a distant dream, especially for the millions of informal workers who struggle to make their living in India’s overcrowded and hazardous big cities.

But a recent working paper (pdf) by Martha A Chen and Victoria A Beard, published by global research organisation World Resources Institute, suggests that supporting informal workers is actually an effective way to make cities in the global south, including India, more productive and sustainable.

The first step, the researchers say, is recognising and valuing the contributions of the much-stigmatised community, which includes street vendors and waste-pickers. In India, informal enterprises contribute to around 46% of GDP outside agriculture, according to the paper.

“As urban population growth continues, and often exceeds employment growth, struggling and emerging cities need to recognize and value the informal economy as an integral contributing component of the urban economy,” they write. ”The informal economy creates more jobs than the formal economy, particularly for low- and middle-income groups, and significantly contributes to economic growth.”

India is in the midst of a jobs crisis, and the informal economy has for long been the only option for millions. In several Indian cities, where the gulf between rich and poor is only growing wider, informal workers account for a staggeringly high share of total employment. This, the researchers say, is a “major but often overlooked dimension of city life…”

But barring a few exceptions, including a handful of street vendor-friendly policies in Bhubaneswar and Ahmedabad, and the efforts of the Self-Employed Women’s Association (SEWA), the paper found that cities in India and other developing economies are often hostile to informal workers. In analysing the challenges faced by home-based workers, street vendors, and waste-pickers, the researchers found that most lived under the constant threat of harassment and eviction, besides having limited access to basic public services such as electricity and sanitation.

The need of the hour is policies to support informal workers and create real inclusive cities.

“Cities cannot become more equal or more economically productive if they exclude the vast majority of their workforce, and especially the working poor,” the researchers write.

They acknowledge that the difficulty lies in managing competing interests, but the way forward involves better laws that offer regulated access to public spaces so informal workers can pursue their livelihoods, besides participatory policy-making that can give this segment of society a chance to voice their needs.

“An inclusive approach would combine regulation with protection, rather than repression and relocation. The organizations of informal workers (along with other, often excluded citizen groups) should be integrally involved in urban planning processes,” the researchers write. “The productivity of cities in the global South depends on a hybrid urban economy that embraces economic diversity.”