GS-3: Indian Economy and issues relating to planning, mobilization, of resources
GS-2: Government policies and interventions for development in various sectors
An urban jobs safety net
In news According to World Economic Outlook by IMF, the global GDP shrunk by 3.3%. The contraction in the U.S., Brazil, Japan, Canada and Euro Area was in the range of 3.5%-7%. India’s GDP plummeted by 8%.
China, on the contrary, posted a growth of 2.3%.
The report stated that 95 million people have fallen into the ranks of the extreme poor category.
Unemployment and Pandemic
The unemployment rate in the Euro Area, the U.S. and Canada shot up to 7.1%, 8.1% and 9.6%, respectively.
Spain, Greece, Turkey, the Philippines, Argentina, Brazil, Colombia, and Peru among others are grappling with unemployment rates in double digits.
As per the Centre for Monitoring Indian Economy’s estimates, the unemployment rate in India peaked to 23.5% in April 2020 before falling to 6.9% in February 2021.
In the wake of economic deceleration, the challenge is to minimise livelihood losses. Given the contemporary realities, the need is to approach this from a rural-urban perspective for two reasons.
First, when there is an economic shock, it is essential to provide people with formal access to a livelihood safety net.
Second, the livelihood safety net must have comprehensive coverage. Such a net, provided by the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), exists only in rural areas. Urban India does not have any such cushion.
Isn’t there any scheme which caters to Urban employment?
Though the Indian government operates the National Urban Livelihoods Mission, which is focused on self-employment through skill up-gradation and credit linkages through banks, the scheme does not have guaranteed wage employment provisions akin to what MGNREGS provides.
Last year’s migration tragedy and the economic slowdown have highlighted the need for a MGNREGA type safety net in urban India.
A few States have experimented with a wage employment-based urban livelihood scheme.
Insights from Himachal Pradesh (HP)
HP launched the Mukhya Mantri Shahri Ajeevika Guarantee Yojana (MMSAGY) in 2020 with the objective of enhancing livelihood security in urban areas by providing 120 days of guaranteed wage employment to every household at minimum wages in FY 2020-21.
Any adult member of a household, less than 65 years of age, residing in the jurisdiction of the urban local body (ULB) and willing to engage in unskilled work at projects being provided by the municipality can register under the scheme.
A job card is issued to the beneficiary within seven days of registration and employment is provided within a fortnight. Otherwise, the beneficiary is eligible to be compensated at a rate of ₹75 per day.
Funding was from the grants already available to ULBs under the State and Central Finance Commissions.
Output: In a year of its operation, a quarter million man-days, benefiting about 3% of the total urban households in H.P., were generated.
Himachal Pradesh’s experience has provided some crucial insights.
Fiscally Possible: One, an urban livelihood scheme can be launched within the existing fiscal space. If not, the Union and States can provide resources together.
Curbs Migration: Two, separate minimum wages for rural and urban areas do not cause migration to urban areas since the higher cost of living in urban areas has an offsetting effect.
Urban areas require shift in focus: The focus of the Urban Employment Guarantee scheme must shift from asset creation to service delivery. Restricting it to asset creation or wage-material ratios may be sub-optimal in urban settings. The focus should be on enhancing the quality of municipal services.
Needs to be replicated at National Level: Such a scheme is like an ‘economic vaccine’ and will protect people against unemployment. It should be administered at the national level rather than at the State level.
