The informal sector is the major source of livelihood in India as it provides employment to approximately 90% of the population. According to the latest reports by the International Labour Organisation, around 69% of workers in the non-agricultural workforce are still working in informal sector, yet the role of unorganised/informal sector in the economic development has always been controversial. This paper attempts to examine some of the major aspects of informal sector, its impact on the India’s burgeoning economy and some of the challenges faced by the sector and the people working in it.