Studies conducted in the early seventies by experts of the International Labour Office on the employment in metropolises of developing countries led to a new concept that has aroused a great deal of controversy since then: the concept of the informal sector, as opposed to the formal sector, these two sectors constituting the urban economy of third-world countries. This article first reviews literature on this concept. It then raises the main issue: Can such a concept account satisfactorily for Calcutta's economy? In other words, is it valid in Calcutta's context, and how could it be improred? It incorporates a survey of informal sector units operating in a Calcutta slum.