The theoretical basis of the concept of informal sector grew out of many studies in the fifties and sixties of the last century that emphasised the presence of ‘dualism’ or ‘dual economy’ as a distinguishing characteristic of the developing countries. Prominent among them were Lewis, Fei-Ranis and Harris-Todaro. While Lewis and Fei-Ranis considered segmentation of a developing economy into rural and urban sectors; Harris- Todaro viewed this dichotomisation within the urban sector itself. The theory of dualism of the past got renewed interest during the early 70’s when it was highly felt that the theory of dualism of the past can specifically be applied to the modern urban economy, especially in developing countries where population growth and rural urban migration make it impossible for the modern sector to absorb the new entrants. In the ‘employment missions’ of ILO to the developing countries such as Kenya, Columbia, Sri Lanka, Phillipines etc, it was discovered that a large majority of the economic activities are performed outside the formal regulatory system. Kenya mission was the first of its kind which recognised not only existence and persistence of the traditional sector but also its expansion to include profitable ventures as well as marginal activities (ILO 2002a). The mission chooses to use the term ‘informal sector’ rather than ‘traditional sector’ to highlight the range of small scale and unregistered activities.