Government Advises States To Release Rs 52,000 Crore For Construction Workers 

The central government has initiated a process to release nearly Rs 52,000 crore as a short-term relief to construction workers across the country.

The widening local spread of the coronavirus and lockdowns announced across a number of key states have brought construction activity to a halt, hurting daily wage earners who work in the sector. According to government estimates, close to 5.1 crore workers are employed in the construction sector across segments like infrastructure and real estate.

In a letter written by Santosh Kumar Gangwar, minister of state for labour and employment, the government advised all states and union territories to transfer adequate funds to registered construction workers via direct benefit transfers.

“As you are aware, the country is dealing with a challenging situation due to the outbreak of Covid-19, which may lead to financial constraints, specifically to unorganised workers,” the letter said. “Against the backdrop of such a challenging situation, it is imperative that we devise mechanisms to support our unorganised workers, who sustain their livelihood on daily wages.”

One such mechanism is to release funds collected as cess under the Building and Other Construction Workers Welfare Cess Act, 1996. The central government has advised state governments to frame a scheme for the transfer of adequate funds in the bank accounts of construction workers, via direct benefit transfer, the letter said.

Relief should be provided to the 3.5 crore construction workers currently registered with state welfare boards, the government said. The amount of funds to be transferred have been left to individual state governments.

The funds available in the pool are close to Rs 52,000 crore currently, according to information provided by the government. According to data till March 31, 2019 released in response to a Lok Sabha query, cess collected in the welfare funds added up to Rs 49,674 crore. Of this Rs 19,379 crore had been spent. Data since then is not available.

Under the Construction Workers Welfare Cess Act, 1996, a cess is imposed at a rate “not exceeding 2 percent but not less than 1 percent of the cost of construction incurred by an employer”. At present, the cess stands at 1 percent. The cess is collected by local bodies and states and then transferred to the Construction Workers Welfare Board.

The letter sent by the central government is an advisory to welfare boards to release the funds to provide relief to construction workers, said a government official on the condition of anonymity.

Labour is a state subject and the centre can only advise states on labour related issues, said N.R. Bhanumurthy, a professor at National Institute of Public Finance and Policy. “The states should use these funds to help labourers, facing unemployment currently, and the centre should ensure all states follow similar guidelines on social security payments,” Bhanumurthy told BloombergQuint.

The centre, Bhanumurthy said, can also propose uniform guidelines for utilisation of the proceeds of the construction workers’ welfare fund for addressing job losses in the informal sector due to the coronavirus outbreak.

Relief To Daily Wages Earners

Among the first economic challenges emerging from restrictions imposed to curb the spread of the Covid-19 virus was the need to provide daily wage earners with relief.

As of March 24, 548 districts across 30 states and union territories were under a lockdown. Restrictions on inter-state movement have prevented reverse migration but stoppage of work has left these workers with no means to earn a daily living.

About six states, which have announced lockdowns, are offering relief to such workers. Kerala is providing Rs 1,000 per month to 20 lakh labourers. Andhra Pradesh, too, is providing Rs 1,000 per family. Other states like Delhi are offering free ration and meals.

The centre’s advisory to construction worker welfare boards adds to that relief.

Devendra Kumar Pant, chief economist at India Ratings, said the move will help construction workers tide over the current crisis, considering that sub-section is among the most vulnerable.

But more may be needed.

“The government may look to leverage its existing infrastructure network through biometric linking of bank accounts to transfer cash to the poor and daily wage earners. There are reports that the central government may be considering the latter route of tapping its pension infrastructure to at least target formal sector workers,” wrote Sonal Varma, chief India economist at Nomura in a research note dated March 24.