Poverty & Inequality

DUET: Some practical concerns

  • Blog Post Date 08 October, 2020
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Providing her perspective on Jean Drèze’s DUET proposal for an urban work programme, Ashwini Kulkarni raises pertinent questions about the implementation process. She outlines the role of ‘labour contractors’ in the present process of carrying out urban projects, and questions whether it is realistic to expect that they can be easily replaced. 

The idea of an urban employment generation programme is being discussed as though it were some version of MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) for urban India. The urban situation is, however, very different. The government infrastructure projects require more material inputs, and labour with diverse skills. Unlike in MNREGA projects, labour teams cannot be formed easily with random workers who do not know one other. Confining the recruitment of workers to local residents makes the task more difficult. Also, it adds to the problem of residence verification. 

I have some familiarity with the way building and maintenance projects in urban areas are carried out. I would like to understand how such projects will be carried out under DUET, and why we should expect the outcomes to be better. By better outcomes, I mean greater job creation and/or more appropriate, greater urban improvement.  

I assume that DUET will entail additional government expenditure. First, is it obvious that urban infrastructure should be the top priority for any extra expenditure from government revenues? Second, even if this is so, why will it lead to better outcomes under DUET than if the state government budgets for urban projects were increased by the same amount under the present system? Will DUET create more jobs or more appropriate works than if the state budgets for urban infrastructure were just expanded by the same amount? If yes, why? Unless there are more jobs or better infrastructure created under DUET than under the present system with the same extra expenditure, DUET will not have served its purpose.

At present, state government allocates funds for urban public projects such as the maintenance of government buildings, and selects a few applications from amongst the applicants given their budget. Under DUET, the allocative and selection decision would still be in the hands of the state government (point 5 in Drèze’s proposal). It is the state bureaucracy that will select the recipients of job stamps. If so, DUET is clearly not designed to improve the selection of projects. Why then will DUET lead to more appropriate projects?

Public projects in urban centres typically involve the following: water supply, sanitation, water treatment plants, upkeep of green spaces, construction and maintenance of government buildings (for example, offices, schools, clinics, hospitals, etc.), roads, pavements, roadside plantations, street lights, solid waste management, waste water management, and so on. The process is the following: A state university wants to get its buildings painted. The university applies to the state government. If it is selected to receive the required funds, it calls for tenders. Different firms bid for the tenders and the lowest bid that meets requirements is awarded the contract. The chosen firm then gives a sub-contract to a labour contractor for supplying a labour team with requisite skills. The team is supervised by personnel from the firm as it proceeds to get the buildings painted, using their own equipment and knowhow. 

Why do firms need labour contractors? This is because firms carrying out such construction and maintenance projects work typically with casual workers hired for a specific project. The labour force requirement of such firms goes up and down depending on the number of contracts awarded to the firm. If they need 100 workers today and 50 tomorrow, it is so much more convenient to deal with one or two labour contractors rather than 150 individual workers. Moreover, the firm can hold the labour contractor accountable for all issued related to the workers. Most projects are carried out in teams that comprise an appropriate mix of workers as per their skills. It is the job of a labour contractor to select workers with the required skills and a team that would work cohesively. For MNREGA, this is easier to manage as the skill requirement is not so diverse and the work mostly physical labour. Also, the workers are from the same area and often know one other. This is why labour contractors for urban construction projects often bring workers from the same village.

DUET proposal suggests that the ‘placement agency’ registers the workers and directs them to approach the prospective employer with job stamps (point 7 from Drèze’s proposal). Does this mean that the placement agency substitutes for labour contractors? Would the placement agency be able to compete with experienced labour contractors? Would they be able to form cohesive teams with diverse skills, from a pool of workers living in a random residential area in proximity of the worksite? The placement agency cannot be held accountable for all the workers registered with it. Which employer will hire a random collection of workers for whose performance no one can be held accountable? Can labour contractors register with the placement agency? If yes, what is the function of the placement agency? In Jean’s perception, it will prevent collusion between the employer and workers. It is not clear how. If two people can collude so can three. Government regulations are often bypassed by bribing the government inspectors.

Finally, I would like to endorse Pranab Bardhan’s suggestion that DUET should be directed toward the smaller taluka towns. They are in greater need of upkeep and repair rather than metropolitan cities. Low-income housing is the crying need if we want to make urban areas more welcoming to rural migrants.

DUET is a big initiative with laudable goals. But my hesitation stems from these few practical concerns, which I hope that Jean will consider and discuss.   

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