More than Rs 25000 crore meant for labour welfare remains unspent

Despite central government's constant reminders to state governments and welfare Boards, there is hardly any progress on the ground.

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In 1996, two acts were passed to promote the welfare of building and construction workers. These acts mandated constitution of construction workers’ welfare boards at the state level and collection of 1% Cess on cost of construction. More than Rs 25000 crore rupees of cess collected in the last 20 years is still unspent.

The Standing Committee on Labour submitted a report in the recent session of Parliament about the workers’ welfare cess and their utilization. As per data published in this report, more than Rs 25000 crore cess collected in the last 20 years is still unspent and labour welfare sounds more like an empty talk.

The Building Workers Cess

Government of India brought  ‘The Building And Other Construction Workers Welfare Cess Act’ in 1996 to levy and collect 1% to 2%  cess on the cost of construction incurred by builders to augment the resources of the Building and Other Construction Workers Welfare Boards. These boards are constituted in every state under the Building and Other Construction Workers Act of 1996. As noted by Factly earlier, these welfare boards are supposed to take up a variety of activities for the welfare of the workers. Though the act was passed in 1996, the actual implementation began in 2007.

Less than 50% of the Workers registered with the Welfare Boards

A total of 2.58 crore construction workers are registered across the country with these boards as of March 2017. According to the available state wise data, Uttar Pradesh with 32.14 lakh has the most number of registered workers followed by West Bengal with 28.81 lakh workers. Madhya Pradesh is third in the list with 26.53 lakh registered workers. Apart from these three states, Tamil Nadu, Odisha, Andhra Pradesh, Kerala, Rajasthan, Karnataka & Chhattisgarh have more than 10 lakh registered workers each. Another six states have more than 5 lakh but less than 10 lakh registered workers.  Big states like Bihar, Gujarat, and Jharkhand have fewer numbers of workers registered with the respective boards. Fewer than 10000 workers are registered in the states of Goa, Nagaland & Meghalaya.

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 It is widely believed that the entire construction workforce is not registered with these boards because of lack of awareness and  stringent conditions like age criteria, 90 days of work etc. The committee also noted that the primary work relating to registration of workers has not been given the desired priority by the Ministry and the welfare boards. The Ministry of Labour representatives told the committee that there are around 4.6 crore construction workers. The committee noted that these estimates could be wrong and there could be many more construction workers since the construction activity across the country has picked up.

To increase the number of registrations with the welfare boards, the committee has suggested multiple measures including giving registration powers to greater number of officers, visiting construction sites for registration of workers, wide publicity, online registration of workers etc. 

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The Cess collected in the last 20 years is too low

The State and the Local governments are supposed to collect the Cess and then transfer to these boards. The Ministry of Labour reported to the committee that a total of Rs 32,632.96 crore had been collected by the states during the last 20 years. The Committee felt that the amount of cess collected in the last 20 years does not match with the construction activities carried out. The committee further noted that the amount reported by the Ministry could be of the government organizations like the Railways/NHAI/PWD/CPWD alone.

The committee also noted that there is no proper system of collection of cess and its transfer to the welfare boards. In some states, the welfare boards were constituted 7-8 years after the cess collection started. The committee asked the ministry to identify such states and seek the actual numbers related to the cess collection in the last 20 years.

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As per the data submitted by the government, only Rs 7516.52 crore has been spent by the welfare boards out of the total cess collection of Rs 32,632.96 crore. This is only 23% of the total cess collected. Only 6 states have spent more than half the cess collected. Kerala spent close to 99% of the cess collected, the only state to have spent more than 90%.

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The data indicates that the states that collected the highest amount of cess spent the least on the welfare of the construction workers. Maharashtra collected a total of 5074 crore rupees, but spent just 5% of this amount on the welfare of workers. Similarly, Karnataka collected 3861 crore rupees, but spent just 6% of this amount. Uttar Pradesh (20%), Delhi (9%), Haryana (9%), Tamil Nadu (35%), Rajasthan (39%), Madhya Pradesh (35%) are next in the list.  A total of 13 states collected more than 1000 crore rupees each. These 13 states collected more than 82% of the total cess collected in the country and together spent just 21% of the amount collected.

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Labour Welfare an empty talk?

The committee noted that 5% of the total 23% expenditure was on administrative expenditure like salaries etc. The committee also noted that many state welfare boards have not submitted audited accounts to the state government.

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This indifference is seen across party lines and in various states. Gujarat that has been ruled by the BJP for close to two decades has spent only 2.2% of the cess collected. States like Maharashtra that have been ruled by the Congress till 2014 have fared no better. Of the bigger states, the only exception seems to be Kerala & West Bengal.

The Central Government says it has been constantly reminding the State governments and State Welfare Boards to take steps to accelerate registration of construction workers, collection and utilization of cess. But despite all this talk, there is hardly any progress on ground. The Supreme Court has also been hearing a writ petition (W.P. (Civil) No. 318/2006) in this matter since the year 2006 and has recently directed all the state governments to submit the following within six weeks to the CAG.

  • Amount of cess collected since the enactment of the act till 31st March 2017
  • Amount collected and transferred to welfare boards till 31st March 2017
  • Amount which has been collected but not yet transferred to the Boards

Hopefully, the CAG will be able to throw more light on this issue.

This article has been re-published with the permission of Factly. Visit the website here.


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