By Namrata P. Rajiv, Kinjal Sharma, Gautum Kumar Mishra and Manini Agarwal  The year 2025 marked a significant turning point for India’s gig economy. Prime Minister Modi’s decision to provide gig workers with a legitimate identity through the e-shram portal and health insurance coverage under the Jan Arogya Yojana scheme demonstrated the government’s commitment to formalising this sector (Investopedia & Munichiello, 2024).  As illustrated in the chart below, the gig economy has experienced exponential growth particularly driving the youth to this sector as an alternative employment, driven by the rise of online platforms such as Zomato, Instamart, Blinkit, and Zepto. This growth is expected to continue as more workers join the platform. The recent budget has acknowledged the sector’s potential by introducing measures to formalise it (Boston Consulting Group, 2021).  From an economic perspective, investing in the gig economy offers numerous benefits, including cost-saving advantages for businesses and greater customer acquisition for consumers seeking doorstep delivery. According to NITI Aayog’s report, “India’s Booming Gig and Platform Economy,” the workforce in this sector is projected to exceed 1 crore in 2024-25 and reach 2.35 crore by 2029-30 (One Crore Gig Workers to Benefit Under PM Jan Arogya Yojana Healthcare Scheme, n.d.).  However, this growth also presents challenges, particularly regarding fixed-period contracts, seasonal employment, and the ability to hire and fire workers flexibly. To address these concerns, it is essential to understand the challenges, prospects, and recommendations for taking this economy forward. Increased digitalisation and the growth of e-commerce have led to a rise in the number of gig economy participants. With projections indicating a total of 86.5 million participants by 2027, it becomes pertinent to address the challenges and analyse the workings of the gig economy (Upwork, n.d.).  CHALLENGES: The gig economy has revolutionised the nature of work all across the world providing new job opportunities and flexibility of labour to millions of gig workers. Whether it is Uber, Zomato, or Swiggy, the gig economy is said to have revolutionised India’s economy with at its forefront the demographic dividend of half a million labor force comprising the youth. However, despite the enormous benefits provided there are several challenges causing adverse effects on the workers and the economy as a whole. Most specifically these issues include the legal insecurities due to the regulatory frameworks and the job instability posed by the gig economy. Online transport services like Ola, Uber, Rapido, etc have a huge number of gig workers spanning across the country, in cities like Mumbai, Bangalore, Chennai, Delhi, etc. In a study, it was found that 60% of drivers work for more than 12 hours a day, and up to 83% work for more than 10 hours a day. Compared to the Indian Factories Act, of  1948, which sets working hours at 8 per day and 48 hours per week, gig workers often work beyond legal work limits, without any overtime. Furthermore, these companies have a ‘’30 min delivery policy’’ to maintain competition in the market, putting immense time-bound pressures on gig workers. Most of these companies work on demand-based services with no fixed working hours and low wages.  1.1 Regulatory Framework One of the most significant challenges faced by the workers is concerning workers’ classification. The majority of the companies classify the workers as independent contractors rather than employees to avoid obligations entitled to them resulting in blatant discrimination of workers. Gig workers in these scenarios are suffering from minimum wage laws, overtime pay, and workplace protections (Rogers, 2016). This classification undertaken by companies has often led to legal battles, with courts for example, in the landmark case of “Dynamex Operations West, Inc. v. Superior Court of Los Angeles” (2018), the Supreme Court of California ruled in favour of stricter worker classification standards, leading to the passage of Assembly Bill 5 (AB5) mainly due to pressure from gig giants like Uber. There are rulings which are held which have favoured workers while others have upheld the gig worker’s classification as independent contractors. In India, gig workers face several challenges especially due to the ambiguous labour laws. There are attempts made to address these concerns such as the Code on Social Security 2020 to recognise gig workers and to offer social security benefits. However, this law does not mandate companies to provide employment benefits like minimum wage, social security, and job security and the implementation of this law remains very weak. This has resulted in gig workers continuing to operate in the grey area, with uncertainties. Another significant issue faced is concerning tax contributions. Most of the time gig workers do not receive employer support. In the traditional workforce, taxes are automatically deducted by employers easing the complex procedures of filing taxes. Whereas in the gig economy gig workers themselves must set aside money, calculate, and then pay their self-employment taxes. This at times leads to financial strains for the gig workers(Collins et al., 2019). Research indicates that gig workers struggle with the complexities of tax filing as the majority of them are unaware of tax regulations. Moreover, the absence of employer contributions to social security and insurance also places an additional burden on gig workers, adversely affecting their earnings and long-term financial stability (OECD, 2021). 1.2 Job Insecurity and Lack of Benefits In the case of the traditional workforce which typically requires a workforce full time the gig workers lack job security as their employment depends on the fluctuating demand and platform algorithms. Studies indicate that gig workers often experience income volatility due to unpredictable work availability (Woodcock & Graham, 2020) and it was also found that 29% of gig workers rely on gig work as their primary source of income, making them increasingly vulnerable to sudden shifts in demand as per a study conducted by the Pew Research Center (2021). Algorithmic adjustments tend to prioritise the workers leaving them without work affecting their long-term financial stability. Rosenblat and Stark (2016) found that ride-hailing platforms use opaque algorithms to determine worker availability and compensation, which reduces earnings without notice.