Economist Jean Drèze’s proposal for a state-sponsored employment programme for urban India is truly remarkable. In its ease and agility, the plan looks like something a new tech startup would have come up with. Importantly, it addresses people’s criticism of NREGS, the national rural employment guarantee scheme that was also a brainchild of Drèze.
The big complaint against NREGS was that it was paying people to dig holes. This has been proven to not be true, because NREGA has helped build rural infrastructure. Nevertheless, NREGA is a “guarantee” — work has to be given, to the extent budgetary allocation allows. Drèze’s urban employment programme, however, is demand-driven. Quite simply, the state and/or central government will issue job stamps and give them to public institutions like government-run schools and municipal bodies. They will then use these job stamps as and when they need for maintenance or construction work.
Instead of imagining this scheme as a ‘guarantee’, Drèze has designed it to be a state intervention in the labour market, creating more ‘man days’ so that fewer people end the day without any income. It can also help raise labour rates, just like NREGA initially did. This is crucial at a time of rising unemployment when labour will be exploited by paying below minimum wages.
Drèze’s scheme is called DUET, or Decentralised Urban Employment and Training. The keyword here is ‘decentralised’. Under NREGA, the Ministry of Rural Development tends to make ‘one size fits all’ plans for a vast country. With DUET, however, the role of the central and state governments ends with issuing and allocating job stamps.
The other big criticism of NREGS used to be corruption. As with most things, middlemen come in the way of making intended benefits reach people. This is possible with job stamps as well. A government officer could use job stamps without any work done or labour employed. The money could just be shared between the government officer and labour contractors. Standard Indian corruption.
To address this, Drèze has proposed an independent placement agency. A school that needs a re-painting could ask the placement agency to send workers, and pay the placement agency with job stamps. One fears that the placement agency could itself become the hub of corruption, working with labour contractors.
The idea could be refined with the use of technology. As with Ayushman Bharat, machine-learning could be used to find suspicious patterns, such as a government office using the same labourers again and again. The government’s JAM infrastructure (Jan Dhan, Aadhaar and mobile) can be used to authenticate payments and cut out the labour contractors. We saw in the great migrant labour crisis of 2020 the nefarious role of labour contractors who just disappeared on the stranded labourers.
In Drèze’s urban employment scheme, the labour contractor would be replaced by a state-run placement agency, and the system could function pretty much the way apps like Urban Company do. In fact, an app central to making the scheme work should be developed. I would go to the extent of saying that running placement agency should be outsourced to a private organisation with similar experience of running a platform that uses technology to employ gig economy workers.
Urban governance in India is in a mess because our urban bodies don’t have enough money, don’t do a good job of raising money, and are dens of corruption. Most importantly, they don’t have much autonomy. Our cities are practically run by state governments, which tend to have a rural bias since that’s where the votes are.
The DUET idea seeks to support urban governance by giving it financial aid in the form of labour. This would reduce their budgetary constraints and help them do more. As a key intervention in urban governance, DUET could help with much-needed urban renewal in India. Job stamps could even be issued to non-government organisations such as resident welfare associations. They can also be issued as economic relief to small businesses that have suffered due to Covid and lockdowns.
The agility of the scheme allows the government to increase or decrease the number of job stamps it allocates. So, when unemployment is high, more job stamps could be issued. When employment rates stabilise, the number of job stamps could be reduced. The idea is not to replace formal employment, nor it is to make the state the primary employer. DUET can help the government regulate labour markets by creating a demand for labour when the demand is low.
How to Skill India
Factory owners will tell you that for all the employment opportunities in India, there is a shortage of skilled labour. As a result, skilled labourer can always find work, and for a decent wage. It is unskilled labourer who doesn’t have work. Modi’s grand ‘Skill India’ programme has been a flop show. DUET has a unique proposal to solve this problem. Every time a skilled labourer gets work under DUET, an unskilled labourer is tagged along as an apprentice. This helps unskilled labourer learn skills.
As India faces a historic economic crisis, there is no doubt the Narendra Modi government has to find ways of putting money in the hands of people to revive demand. The question is, what are the most quick and efficient ways of doing so? DUET is a beautiful answer to that question because it takes care of all the aspects of the problem and produces, in the end, economic value with high productivity.
Prime Minister Modi has had to eat humble pie on NREGA, increasing budgetary allocations in a scheme he once derided as a symbol of Congress’ failure. As Modi’s own monumental economic failure takes India down, he should take up Drèze’s idea without looking at the economist’s liberal ideology. Don’t let ideology come in the way of India’s progress.
The author is contributing editor, ThePrint. Views are personal.