ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Will Central Largesse Help Construction Workers?

COVID-19 Relief Package

Informal workers, migrants in cities, farmers and small businesses are worst hit by the COVID-19 crisis. Although the central government has announced a relief package, the effective implementation of the welfare measures pose a big challenge. In this context, the role of construction welfare boards is assessed, and questions are raised over the proper distribution of direct benefit transfers to construction workers through CWBs.

India has been praised worldwide for quickly imposing a lockdown across the country to contain the spread of the deadly coronavirus. Yet, the lockdown has come at the cost of the country’s economic health and its cascading impact on all sections of society. However, it is the daily wage workers, construction workers (especially those who are unregistered), and those working in the unorganised sectors who are going to bear the brunt of the economic crisis the most. On 26 March 2020, the Ministry of Finance announced a `1.7 trillion package under the Pradhan Mantri Garib Kalyan Yojana (PMGKY) for the below poverty line (BPL) families and other targeted groups, with an aim to provide cash incentives and free ration to them for the next three months (PIB 2020a). As part of PMGKY and also with a view to prevent disruptions in short-term employment, the Ministry of Labour (MoL) has announced an employment provident fund (EPF) for those wage earners whose monthly wage earnings are less than `15,000 per month and who are employed in an establishment with up to 100 workers. Under this scheme, the government will credit 24% of wages into the provident fund (PF) account of eligible subscribers. 

As per these schemes, millions of registered construction workers have been provided benefits under the government’s welfare measure. Under Section 60 of the the Building and Other Construction Workers (BOCW) Act, 1996,1 all state governments and union territories have been advised by the MoL to transfer funds in the accounts of construction workers through direct benefit transfer (DBT) mode from the cess fund collected by the construction welfare boards (CWBs) under the BOCW Cess Act. As per the MoL, about `520 billion is available as cess funds (PIB 2020b). This fund will be provided to 35 million workers registered with CWBs. Those who have not renewed their registration or those who are not registered with CWBs would not get this benefit.

Still, given the nature of the construction labour market and the functioning of CWBs, the effective implementation of these welfare measures remains a question. Under the PMGKY, the government has made claims of transferring `312 billion through DBT to 330 million beneficiaries. This also includes a transfer of over `35 billion cess funds to 21.7 million construction workers (PIB 2020c). Based on this information, more than 13 million workers are yet to get the benefits, and only a fraction of the total of the `520 billion cess fund has been utilised so far. Who these construction workers are and how many states have provided DBT to workers is not mentioned in the statement.

Besides, some basic issues of registration of workers, collection and distribution of cess have been unresolved for a long time. The active registration (that is, renewal of registration) of workers is
a major issue, which has often been highlighted in the past by the advocacy forum, 44th Parliamentary Standing Committee on Labour, and by the Supreme Court of India. For example, in Maharashtra, there were about 0.56 million registered construction workers in 2016, of which only 50% of the total registrations were found to be valid. Similarly, in Delhi, the process of new registrations and the renewal of old ones is very slow. 

A pilot social audit of the BOCW Act conducted on the order of MoL (2018a) by Centre for Policy Research, Delhi Nirman Mazdoor Sangathan and other organisations found anomalies in the registration process. According to this report, instances of selective registration, non-updation of identity cards, enrolment of non-construction workers as beneficiaries, and corruption are rampant in the national capital. After several directions and persuasion (Nirmana Organisation 2018), the MoL had prepared a model welfare scheme guideline for the state CWBs, according to which each state was directed to start online registration of workers and allot a unique identi­fication number to these registered workers. This process would help in the portability of welfare benefits. 

Available information of the websites of all the CWBs show that until today, only a few states have started the process of online registration and renewal of workers. For example, Andhra Pradesh has started a live registration process and provides daily updates. Similarly, Uttar Pradesh (UP) and Maharashtra are also doing online registration and renewal of workers. But, in states like Delhi and Bihar, no such facilities are available.

As per the Periodic Labour Force Survey (PLFS) of employment and unemployment, there were nearly 55 million construction workers in 2017–18. Based on the estimation, about 20 million workers would be left out of benefits sourced through the DBT mode. The registration rate is still not very high. The estimation shows that only 52.5% workers were registered in 2017, although there has been an increase of 6.2 million registered workers between 2017 and 2019. But, one could also expect an increase in the total number of workers in this period. The rate of registration in Assam and Bihar is below 20%, whereas in states like Andhra Pradesh, Gujarat, Jharkhand, Maharshtra, and Uttar Pradesh, it is below the national average. The more important issue is related to the faulty processes of registration. It is found in the estimation that in some of the states, such as in Delhi and Chhattisgarh, this rate was more than 100% (Table 1).

Besides, there is a big issue of collection of cess at the stipulated rate of 1% of the total cost of construction and its proper distribution among workers. The 38th standing committee on labour of the Lok Sabha made observations that there is no proper mechanism of collection of cess and its transfer to CWBs and, in many cases, there is an under-assessment of cess. It was also found by the committee that until 2015, only 23% of collected cess during the last 20 years had been utilised. Although the utilisation ratio has increased to 39% in 2019, it is still very low. Some of the states like Tamil Nadu (11.8%), UP (10.5%), West Bengal (9.8%), Kerala (13.9%), Bihar (9.5%), Madhya Pradesh (8.3%), and Andhra Pradesh (8.0%) together contribute more than 70% in total construction gross value added (GVA). But the collection of cess is about 37%. For example, in Kerala, cess collection was only 3.9% in 2019. Similarly, Bihar collected only 3.24%. On the other hand, Karnataka and Maharashtra contribute 6.9% and 5.8% respectively in construction GVA, but they collected 10% and 15% cess, respectively. Maharashtra is the biggest collector of cess but spends very less (5.4%). Kerala (120%), Karnataka (89%), Chhattisgarh (84%), Madhya Pradesh (54%), Rajasthan (55%), Odisha (77%), Punjab (54%) and West Bengal (45%) spend more than the national average (Table 2).

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Updated On : 23rd Dec, 2020
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