Indian States Attempt Urban Job Guarantee Schemes Amid Covid Crisis
A rickshaw driver counts his earnings at the Ghazipur Wholesale Fruit and Vegetable Market in New Delhi, India, on Wednesday, June 24, 2020. (Photographer: Prashanth Vishwanathan/Bloomberg)

Indian States Attempt Urban Job Guarantee Schemes Amid Covid Crisis

Indian states have taken the lead in designing urban employment guarantee programmes as the Covid-19 pandemic disrupts livelihoods. A quicker spread of the virus in densely populated cities and towns has led to continued restrictions of normal business activities, leaving many facing job losses and income shortfalls.

While the national level rural jobs guarantee scheme can help provide support to the rural economy, India currently does not have a urban jobs guarantee programme. To bridge this gap, a few states are now experimenting with schemes that assure a certain number of workdays even to the urban poor.

The schemes may help in a small way at time when urban unemployment is running higher than rural unemployment. According to the latest data from CMIE, the unemployment rate in urban areas was at 12.02% in June 2020 as compared to 10.52% in rural areas.

Urban employment saw a collapse amid the pandemic. For rural areas, the Mahatma Gandhi National Rural Employment Guarantee Scheme prevented widespread hunger and poverty and a collapse in employment, said Nikhil Dey, social activist and founder of Mazdoor Kisan Shakti Sangathan. This has helped even though the supply of work under the scheme was at about 66% of the demand in June, according to the scheme’s official website.

States That Are Taking The Lead

To support urban employment, at least three states have announced schemes, albeit thinly funded ones.

In April, Odisha announced an urban wage employment initiative which would be operational till September 2020. The scheme would help the urban poor earn immediate wages by working on government sponsored labour intensive projects. A provision of Rs 100 crore was made for the scheme, according to an April 18 document from the state’s Housing and Urban Development Department.

According to estimates by the Odisha government, approximately 20 lakh people, accounting for a third of the state’s urban population, were likely to have been impacted by the Covid-19 crisis due to fewer working hours, lower wages and abrupt layoffs.

In May, Himachal Pradesh rolled out the Mukhya Mantri Shahri Ajeevika Guarantee Yojna to provide 120 days of minimum assured unskilled employment to every household of the urban local bodies, shows a May 16 notification from the Urban Development Department. The government estimated a spend of Rs 25.2 crore on the scheme. All adult members of a household can register and are eligible to work under the scheme. They should be residing within the jurisdiction of the urban local bodies and willing to do unskilled work at projects being executed or in sanitation services provided by the urban local bodies.

Jharkhand is expected to launch the Mukhya Mantri Shramik Yojana on Independence day, the Economic Times reported. According to the report, those above 18 years of age are eligible to apply for a job card under the scheme. The person should be staying in urban areas since April 1, 2015, and shouldn’t have the MNREGA card in rural areas. Also, daily wage workers, staying in government shelters, for the last three years would be eligible for the new scheme, the report said. BloombergQuint reached out to state government officials who didn’t share further details.

Apart from these states, Kerala had an existing urban employment guarantee scheme.

From States To Centre?

It is a welcome move that states are thinking about urban income guarantee schemes through urban local bodies and for building local infrastructure, said Amit Basole, associate professor of economics at Azim Premji University. The schemes can help overcome a shortage of local infrastructure, weak local government capacity and lack of social security for the urban poor amidst the current lockdowns, Basole said.

Dey said the scheme proposed by Jharkhand has picked up the organisational strength of MGNREGA and would do well with more resources. Though better drafted than other such schemes, the scheme limits the issuance of job cards only to those who hail from urban areas in the state. Instead, the job cards issued should work for both urban and rural employment guarantee, he said. This is because a large share of workers would fall in both categories. Work should also be provided to everyone who turns up, irrespective of which state they belong to, Dey said.

However, state-led urban employment guarantee schemes are significantly constrained by lack of fiscal space, Basole said. The budgets of the schemes remain very small. The programmes would have to be at least ten times larger to be effective, he said.

As such, these schemes are no substitute for a similar provision by the central government. It is possible to design the schemes to link with central infrastructure projects, said Basole.

Led by lack of resources, most states have rejigged existing employment schemes to introduce the minimum employment guarantee schemes, said Dey. As such, they are not enough and amplify the need for a central scheme, he added.

A rural employment guarantee scheme first introduced in Maharashtra was the inspiration for several states to announce a similar scheme, said Dey. Twenty five years later, a National Rural Employment Guarantee Act was rolled out. This time, the hope is that it will be done sooner, Dey added.

In June, Rajasthan Chief Minister Ashok Gehlot wrote to the union minister for urban development, Hardeep Singh Puri, asking the government to introduce a national urban jobs scheme on the lines of MNREGA according to a social media post by Gehlot’s office. Such a scheme would be required to provide relief to those impacted by the pandemic in urban areas, he said.

Devendra Pant, chief economist and head of public finance at India Ratings & Research, said it’s true that those in rural areas have something to fall back on, despite the fact that wages under MGNREGA are low. It is also true that such a scheme in urban areas would help kickstart the economy and revive demand, he added.

However, unlike MNREGA in rural areas, identification of works under such a scheme would remain a challenge in urban areas. Roads for instance, are under the purview of the national, state and municipal authorities and the public works department. These bodies are already staffed. Hence, the probability of a faulty policy design for such a scheme runs greater.

Also, in the current scenario, governments can choose between subsidies and intervention. Along with subsidies, if it wants to make good for someone’s job loss, the government could transfer money, for instance. The grounds on which the government makes a choice between one from another, will be fraught with challenges in urban areas, he said.

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