Economic progress has often been explained in terms of capital formation. Capital formation an increase in the stock of real capital requires a very sound savings and investment .A nations labour force plays an important role in capital formation and building a strong economic system. Unorganised workers are those who have not been able to pursue their common interests due to constraints like casual nature of employment, invariably absence of definite employer-employee relationship, ignorance, illiteracy, etc. They contribute significantly to employment generation and national income in developing economies, such as India. The unorganized sector in India accounted for 93% of total employment and contributed 57% to the total net domestic product (NDP). In order to study the capital formation trend of this mass numbered unorganised labours, we have selected Thrissur corporation market area which is witnessed by the existence of a large number of unorganised labours as our study area. We conduct the study on 180 unorganised labours who is engaged with street vending to study their saving –investment pattern. We approach them with a pre-tested questionnaire and go through participatory research appraisal method and analyse the data with simple mathematical tools. The study proves that 46 percentages of total labour force is from the age group of 20 to 50 which we considered as the active age group that could be actively contribute towards economic activity of a nation. But we found that their earnings are very low and most of them are below subsistence level. They are highly indebted with some cut throat money lenders and NBFI’s. They are even unaware about savings, investment and we found that there is only a limited level of capital formation is occurring from this massive sector.