Gig Economy Workers Face Many Challenges In India; How Fintechs Are Trying To Solve Them

A gig economy worker in India suffers from fluctuating payments, lack of insurance, and higher cost of financing options. Read here to find out how some fintech companies are working towards solving these challenges
Gig Economy Workers Face A Many Challenges In India
Gig Economy Workers Face A Many Challenges In India

While we are fortunate enough to order food, electronics, groceries and other goods from the comfort of our homes, the people who deliver these items to us by racing against time, come summer, winter or rain, are not so fortunate after all. These gig economy workers, as they are called, have been defined in the Indian Code on Social Security, 2020 as “persons who perform work outside of a traditional employer-employee relationship.”

“Our economy is moving from permanent employer-employee relationships to on-demand employer-employee relationships. But with this change, the employees still need the same basic health coverage, since it is a basic human need. The government understood this problem, and hence for the first time in 2020, the Code on Social Security in India also extended social security benefits, like maternity leave, disability insurance, gratuity, health insurance, and old age protection to the workers in the flourishing gig economy space,” said Abhishek Poddar, co-founder and CEO, Plum an employee health insurance platform.

Zomato food delivery rider with red helmet

2020-2021: A Challenging Year For Gig Economy Workers

The years 2020 and 2021 were challenging for the gig economy workers, because of the first three waves of Covid-19 and other economic problems. As a result, most gig economy workers faced an acute financial issue due to a decline in their earning capacity. Many factors contributed to this, including the second wave of Covid, fuel price increase, lockdown, and others.

A research report titled, Fairwork India Ratings 2021 noted that “2021 was a challenging year for gig workers, because of the COVID-19 pandemic, the associated lockdowns, and the absence of reliable safety nets. While not all platforms experienced a decline in demand for their services, the workers’ take home earnings declined across all the platforms studied, partly due to increased work-related costs (such as fuel costs and platform commissions).”

The Three Major Challenges Gig Economy Workers Face:


A survey by Catalyst Fund and KarmaLife revealed that 88 per cent of the gig economy workers had run out of money even before the month ended. The majority of them attributed this to the rising household and fuel expenses. A huge 90 per cent of the workers surveyed also said that they desire to take a personal loan to run their family expenses, but cannot get access to one due to the very nature of their job. 

A massive 90% of those polled stated they want to take out a personal loan to cover their family's costs.

“Our data indicates that a significant fraction of gig workers face salary shortfalls with little to no access to unsecured credit. In particular, 88 per cent face regular earnings shortfalls. Gig workers have frequent cash shortages due to a couple of reasons. First, cash inflows and outflows are often mismatched. For example, expenses like rent, equated monthly instalments, or bills may fall at the beginning of the month, whereas payouts are delayed for weeks.”

“Second, there are sudden, unplanned expenditures which can be onerous. These typically entail medical expenses, home or vehicle repairs, or travel to hometowns,” says Rohit Rathi, co-founder and CEO, KarmaLife, a fintech company providing solutions to gig economy workers’ financial problems.    

Possible Solution: Many fintech companies like KarmaLife, Tartan, Onsurity, and others are working towards a viable solution to the gig economy workers’ financial problems.

“KarmaLife is building a complementary suite of financial solutions that will allow gig workers to leverage their existing work histories and earning flows to access liquidity when needed seamlessly. Today, it offers flexible small credit solutions, like Earned Wage Access to address daily needs, Lines-of-Credit to allow users to access future income, and instalment-linked loans to support larger, lumpy expenditures,” added Rathi.


The survey also highlighted that almost 40 per cent of the gig economy workers had no insurance, and only 24 per cent of them had employer-provided insurance cover. The remaining 36 per cent of the workers purchased insurance by paying the premium themselves. This highlights a key challenge in this industry: that most gig economy workers who are working are not insured.

The survey also revealed that over 40% of gig economy workers were uninsured, with only 24% having insurance provided by their employers.

“Gig workers, by nature of their very work, are subject to occupational hazards, especially accidents. They traverse roads with dangerous traffic under significant work pressure, as incentive models are often based on performance efficiency. Thus, even a small accident can create a significant financial burden, ranging from vehicle repairs to medical expenses, which in turn can throw their finances off,” adds Rathi.

Possible Solution: Micro-insurance products that are tailor-made for low-income group people can help gig economy workers insure themselves without much premium outgo, when compared to traditional insurance products.

“Gig workers are falling in the cracks with respect to traditional insurance solutions provided by various insurance companies. Without adequate health and/or accidental benefits for themselves and their dependents, as the same was amplified during the Covid, which resulted in various out-of-pocket expenses on medicine and hospitalisation, and this multiplied with job loss or reduction in earning,” says Sanchit Malik, Co-founder and chief executive officer, Pazcare, an insurance tech platform.

“Insurance tech companies like us are focusing on making the entire process of issuing an insurance policy and its claim, swift and easy for the end-users. We are also actively working on constructing bite-sized/small ticket products with respect to medical/accidental coverages that can be made affordable for the gig economy worker, and provide adequate coverage for gig workers and their dependents,” says Malik.

Adds Poddar: “Our insurance products for gig workers range from the basic offerings like health and accident insurance, to more comprehensive coverages that include doctor consultations, mental wellness, and dental care.”


According to a research by Flourish Ventures, prior to the pandemic, most gig economy workers earned above Rs 25,000, whereas after the pandemic, nine out of ten workers were earning less than Rs 15,000. There are many possible reasons for this high-income fluctuation. 

Rathi explains the most common cause: “The gig economy work contracts are more sensitive to the vicissitudes of the market, which was made starkly apparent during the 2020-21 COVID Pandemic. This caused severe supply chain disruptions and economic turmoil, since most businesses were shut during the lockdown,” adds Rathi. 

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