Yes, it is necessary to generate employment in the formal sector rather than in the informal sector because, employee benefits such as pension, provident fund, gratuity etc. are provided in formal sector rather than in the informal sector. The workers and enterprises in the formal sector get regular salary and incentives as compared to informal sector. Formal sector uses modern technology and advanced machinery in the production process. Thus, generation of employment in the formal sector reduces poverty, income inequality and other social evils to some extent.