GST-Induced Formalisation, Rural Livelihoods, and Social Equity: Evidence from Informal Enterprise Clusters in Kanakapura, Karnataka

April 14, 2026Open Access

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Key Points

This research aims to explore whether the GST has enabled inclusive formalisation or created compliance challenges for rural enterprises.
Analyzed data from 120 rural enterprises across silk, dairy, and granite sectors in Kanakapura, Karnataka.
Examined changes in employment, compliance burdens, liquidity stress, and forced formalisation due to GST.
Developed the GST-Induced Formalisation and Equity framework to assess socio-economic impacts.
Statistically significant decline in average employment after GST implementation across all sectors.
Working-capital blockage identified as the most sensitive channel of distress for enterprises.
High compliance costs and forced formalisation pressures persist in all examined sectors.

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Observational study assesses GST's effects on rural enterprise clusters, indicating uneven formalisation outcomes.

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N.R et al. (2026) studied this question.

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