Kerala's model of urban employment guarantee scheme worth looking at

The Covid-19 outbreak along with the pandemic-induced lockdown has crippled the economy of India. The economic activities came to a standstill and fuelled unemployment, especially in the urban informal sector. Meanwhile, Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) came as a blessing to rural India in terms of addressing unemployment to an extent. It has set an example to mitigate the unemployment crisis and this has made economists and policymakers think about developing an urban employment guarantee scheme.

Economists have felt that a demand-driven wage employment scheme in urban areas will work as a fallback employment option to people. For instance, Jean Dreze has come up with a proposal to create an urban employment guarantee scheme called Decentralised Urban Employment and Training (DUET). The present situation in the country in terms of unemployment has given a new lease of life to the idea of an urban employment guarantee scheme. It is a known fact that in urban India, the wages for casual work remain abysmally low. Due to the absence of social protection, a substantial increase in the wage rate is needed. To make this possible a national urban employment guarantee scheme is required.

While urban India does not have an equivalent of MGNREGS, the country has had urban employment schemes including an urban wage employment programme under Swarna Jayanti Shahari Rozgar Yojana (SJSRY). Then there was National Urban Livelihoods Mission (NULM). However, these schemes laid more emphasis on self-employment and entrepreneurship rather than wage employment. At a time when discussions are about introducing an urban guarantee scheme to solve the unemployment crisis, it is better to take into consideration the performance of wage unemployment programmes as in the case of Ayyankali Urban Employment Guarantee Scheme (AUEGS), which was launched 11 years ago in Kerala. Urban local governments in the state are entrusted with the charge of implementing the scheme. The AUEGS is on par with the MGNREGS. AUEGS aims at enhancing the livelihood security of the people in the urban areas by guaranteeing 100 days of wage employment in a year to an urban household whose adult members volunteer to do unskilled manual work.

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As MGNREGS is implemented only in the rural sector, Kerala has long been demanding the extension of the MGNREGS in urban areas as well. The state has one of the highest unemployment rates in the country, especially in urban parts of the state. It was in the financial Year 2010–11; Left Democratic Front (LDF) led by the Communist Party of India (Marxist) launched an urban employment guarantee scheme called AUEGS, the first of its kind in India. An amount of Rs 20 crore was earmarked for the scheme during this period. In the case of AUEGS, the budget crunch has not been an issue as the fund allocation has been increasing over the years. In the latest Kerala Budget (2020–21), the total outlay for the scheme was Rs 200 crore.

To address the educated employment in the state, an internship programme has been proposed in the latest budget to include especially skilled educated youth under AUEGS. Under this, if skilled educated youths are employed as apprentices in private enterprises, the employment guarantee wages will be given to the entrepreneurs as a subsidy. The fixed-wage should be paid to the employees by the employers through banks. The opportunity for employment as an apprentice or intern will be for a specified period.

In 2018–19, AUEGS was converged with Pradhan Mantri Awas Yojana (Urban) (PMAY (U)) and Livelihood Inclusion and Financial Empowerment (LIFE), a flagship scheme of the ruling LDF government. The concept of convergence is envisaged in such a way that all the beneficiaries will get 90 person-days (Rs 275-per day for 90 days) as wages towards participation in house construction. Till 2019, the total sanctioned houses under PMAY (U) –LIFE is 86,848. A total of 68,873 households availed job cards and out of those 46,360 households availed 90 person-days.

The convergence of AUEGS with PMAY (U)–LIFE has been a success as it has led to an increase in the budget allocation and generation of more person-days. Though AUEGS is widely viewed as a last resort to the poorest of the poor, following the convergence with PMAY (U) and LIFE that scenario has changed. It was noticed that due to the convergence, even those urban unemployed who are otherwise reluctant to engage under AUEGS felt motivated to be a part of the scheme. The poorest of the poor, who are actively engaged in the unskilled work offered under AUEGS have also reaped the benefits due to this workable convergence model.

Due to the convergence from 2018–19 onwards, the budget provision for the scheme, actual allocation to urban local governments and number of person-days have spiked. The biggest jump was observed in 2019–20 with 26 lakh person-days being generated under the scheme. Nearly 42% of the person-days were generated for the construction of houses and 34% expenditure was incurred towards the same. While discussions and debates regarding the introduction of urban employment guarantee schemes are doing the rounds, what our country needs is a workable convergence model that can address the needs of unskilled unemployed and educated unemployed in urban areas.

(The writer is a former professor Sri Ramakrishna Hegde Chair on Decentralization, ISEC, Bengaluru)