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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).

The lack of uniformity in the implementation of welfare schemes is another issue faced by the construction workers. It is clearly stated in the BOCW Act that, under the social welfare schemes, areas like health, education, housing as well as skill development would be given priority. Contrary to this, in many states, there are large numbers of schemes for construction workers and many are unrelated to priority areas. In states like Punjab, Gujarat, UP and Andhra Pradesh, more than 15 welfare schemes of various types are meant for construction workers. Many of these schemes are unrelated to priority welfare schemes.

Finally, one could also not expect much benefit from the EPF relief measures as they apply to only formal workers registered as contributing members of the Employees’ Provident Fund Organisation. According to the PLFS estimation, there are 83% casual and 11% self-employed workers in the construction industry. Only 5.7% work on a regular basis, of which only 1.6% are regular formal workers and remaining 3.9% are informal workers. Overall, 2.2% of total construction workers are availing some kind of social security benefits, and only 1.5% regular workers are eligible for PF-related benefits.

Fourteen years ago, the National Campaign Committee for Central Legislation on Construction Labour had filed a petition in the Supreme Court, seeking the apex court’s direction to the MoL for implementation of the BOCW Act. In pursuance of this, the Court gave a detailed direction to the MoL (2018) on the implementation of this act. Following this, the MoL had circulated a draft model welfare scheme to all state governments and CWBs for proper action and strengthening of the implementation machinery. But, sadly, in some states, CWBs are lying defunct. No action has been taken on the implementation of construction workers’ issues. The statistical records also show their dismal performance.

Given this background, how the central largesse will help millions of construction workers overcome challenges at a time when the coronavirus has hit the country’s economy hard is to be seen. More importantly, construction in India still has a seasonal character. Therefore, even if the period of lockdown ends, resumption of construction will take time, and by the next month, monsoon will approach, which will further delay construction activities. These issues have not been addressed with respect to the informal sector workers and as concerns regarding the infectious COVID-19 become serious, workers are faced with a daunting struggle for survival.

1 The BOCW Act, 1996 regulate the employment and conditions of service of building and other construction workers; the BOCW Cess Act, 1996 provides for the levy and collection of a cess on the cost of construction incurred by employers with a view to augment the resources of the Building and Other Construction Workers’ Welfare Board constituted under the BOCW Act.

Ministry of Labour and Employment (2018a): “Draft Framework for Social Audit on Implementation of BOCW Act,” GoI, https://labour.gov.in/sites/default/files/draft_framework_for_social_audit_on_implementation_of_BOCW_Act.pdf.

— (2018b): “Model Welfare Scheme for Building and Other Construction Workers and Action Plan for Strengthening Implementation Machinery,” GoI, July, https://labour.gov.in/sites/default/files/Model%20Welfare%20Scheme%28Final%29.pdf.

Nirmana Organisation (2018): “Pilot Social Audit of BOCW Act in Delhi,” http://www.nirmana.org/Documents/social_audit_report-delhi.pdf.

Parliamentary Standing Committee on Labour (2014): “The Building and Other Construction Workers Related Laws (Amendment) Bill, 2013,” Lok Sabha, New Delhi, http://164.100.47.193/lsscommittee/Labour/15_Labour_44.pdf.

— (2018): “Action Taken by the Government on the Observations/Recommendations of the Committee Contained in their Twenty-Eighth Report (Sixteenth Lok Sabha) on ‘Cess funds and their Utilisation for Workers’ Welfare,” Lok Sabha, New Delhi, http://164.100.47.193/lsscommittee/Labour/16_Labour_38.pdf.

PIB (2020a): “Finance Minister announces Rs 1.70 Lakh Crore relief package under Pradhan Mantri Garib Kalyan Yojana for the poor to help them fight the battle against Corona Virus,” Ministry of Finance, Press Information Bureau, Press Release, 26 March, https://pib.gov.in/PressReleseDetailm.aspx?PRID=1608345.

— (2020b): “Labour Ministry Issues Advisory to all States/UTs to use Cess fund for Welfare of Construction Workers,” Ministry of Labour and Employment, https://pib.gov.in/PressReleseDetailm.aspx?PRID=1607911.

— (2020c): “Pradhan Mantri Garib Kalyan Package: Progress So Far,” Ministry of Finance, https://pib.gov.in/PressReleaseDetailm.aspx?PRID=1617393.

 

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Updated On : 27th Apr, 2020

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