Tackling urban poverty

Source: This post has been created based on the article “Tackling urban poverty” published in Business Standard on 19^th October 2023.

UPSC Syllabus Topic: GS Paper 3 Indian Economy — Indian Economy and issues relating to employment.
GS Paper 2 Social Justice — Issues relating to poverty and hunger.

News: This article discusses the recent findings of the Periodic Labour Force Survey in the context of urban informal sector. It also discusses steps taken by the govt to increase formalization of labor force and suggests reforms to alleviate urban poverty.

What is the current status of the labor market in India?

According to the Periodic Labour Force Survey (2022-2023):

Labour Force Participation Rate (LFPR) was estimated at 42.4%: It was 60.8% in rural and 50.4% in urban areas.

Worker Population Ratio or WPR (defined as the number of employed per thousand people) in India was 56%: It was 59.4% in rural and 47.7% in urban areas.

The Unemployment Rate (UR) was 3.2% for the whole country and 5.4% for urban areas.

The Self-Employed Workforce (which provides us with information on the extent of informality within the labour market) was estimated at 39.6%.

What are the features of the urban informal sector in India?

The term “informal” describes a wide range of employment situations, which include; Absence of social security benefits, working in small-scale enterprises, and job-insecurity. It also encompasses economic activities that are not officially registered.

The urban informal sector is linked to the persistence of urban poverty.

At the same time, the urban informal sector is a key player in job creation, which can help in reducing the scope and intensity of poverty.

What has the govt done to increase formalization in the labour market?

The government has made numerous efforts to drive formalisation in the labour market. These include:

1) Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) scheme: Incentivised establishments registered with the Employees’ Provident Fund Organisation (EPFO) to increase workers’ employment base.

2) E-shram portal: A national database of unorganised workers has been created to extend social security benefits to them and check their employability.
It also includes migrant workers, construction workers and gig and platform workers.

3) PM Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi): Its core objective is to provide specialised micro-credit to street vendors through lending institutions to reignite their livelihoods.

These schemes act as shields, protecting the vulnerable from the uncertainties that life and livelihoods can bring.

What should be the way forward?

We must recognize the transformative potential of the urban informal sector and harness its energy to create positive change.

Setting the groundwork for a future where cities are more fair and prosperous should be the way forward.

A comprehensive approach incorporating a range of social welfare programs should be adopted.

Inclusive policy-making should be undertaken.