Given the stubbornly high urban unemployment rate, the demand for a MGNREGS-like employment guarantee scheme for the urban poor has risen. However, given the lasting fiscal burden a new welfare scheme could impose on the government – the MGNREGS outlay has been rising relentlessly –, the finance ministry might have to assess the cost of the scheme over the medium term before unveiling such a scheme for the urban poor. Earlier, the government had said in Parliament that a scheme similar to MNREGS for the urban workers was not under consideration at that moment.
The Mahatma Gandhi National Rural Employment Scheme (MG-NREGS) is a demand-driven scheme for the enhancement of livelihood security of the households in rural areas by providing at least one hundred days of guaranteed wage employment to every household whose adult members volunteer to do unskilled manual work in every financial year.
“There is an imperative need for putting in place an employment guarantee programme for the urban workforce in line with MGNREGA,” said a parliamentary standing committee on labour report presented to the Lok Sabha on August 3, 2021. Industry association CII has also recently echoed the same view in its pre-Budget memorandum submitted to the finance ministry.
Rajendran Narayana, assistant professor, Azim Premji University, said, “We are witnessing the largest crisis for the informal sector in India. In such a situation, it is important for the union government to acknowledge the crisis and launch an urban employment programme.”
Binoy Kumar Sinha, general secretary, Bhartiya Mazdoor Sangh (BMS), said the RSS-affiliated trade union has also put forward the same proposal in finance ministry’s virtual pre-Budget consultation meeting last month. Sources attended the meeting said that the finance minister did not make any comment on the proposal.
CII suggests workers under the urban employment guarantee scheme can be used towards building, maintaining and improving socially useful urban infrastructure. The scope of the work can also include among others the delivery of public services as well.
Economist Santosh Mehrotra said the urban employment guarantee scheme can be implemented, initially outside the metros. Any fear that the move will stoke inflation is unfounded as it will help to substitute expenditure on MG-NREGS by pulling workers out of rural to urban areas.
“The move cannot stoke inflation. It will raise demand for goods, which is sharply down. Inflation could be still controlled by the government if it reduces petrol and diesel prices,” he said. Country’s retail inflation rose to a five-month high of 5.91% in December.
In the last one year, urban unemployment rate has been higher compared with both national and rural joblessness rate, data compiled by Centre for Monitoring Indian Economy (CMIE) showed. In December, while the country’s unemployment rate was 7.91%, it was 9.3% in urban areas but 7.28% in rural areas.
The urban unemployment rate went up primarily due to a massive 9.5 million job loss among salaried employees and another one million among entrepreneurs in December. The loss was offset by gains in employment among daily wage labourers and farmers. In December, India’s total employment was 406 million, 2.9 million less than in November.