India’s ‘developed’ status by 2047 depend on empowering its blue-collar workforce

Dr. Rajesh Shukla    September 14, 2023

OPINION I The Economic Times

The goal of becoming a fully developed nation by year 2047 has been set by the government in no uncertain terms. In his recent address to the nation on Independence Day, the Prime Minister hailed the contributions of labourers and expressed satisfaction that during a five-year period, nearly 13.5 crore people have broken out of poverty and entered the new aspiring middle class.

In many ways this acknowledgement imparts a measure of dignity to the labour community that has for long occupied the lowest strata of society, not just in terms of level of income but also social inclusion. How well do we know this segment of the population? And have they been able to derive the benefits that accrue from the nation’s march towards economic growth and prosperity? Data from PRICE’s ICE 3600 surveys (2016 and 2021) provide some major insights into the current status of this population.

In terms of size, they form a third of the country’s population: 500 million people equivalent to 100 million households who earn their livelihood through daily wages. Nearly half of them are residents of just five states  - 15% are residents of Uttar Pradesh, followed by Maharashtra (11%), Bihar (9%), West Bengal (8%) and Tamil Nadu (7%). If the effect of population is removed, the top five states with the highest concentration of labour are: Bihar (50%), Madhya Pradesh (46%), West Bengal (42%), Jharkhand (40%) and Odisha (38%).

The labour households have an average annual income of Rs 126,000 (2020-21) which is one-eighth of the national income. Undoubtedly, a large segment has been able to extricate itself from grinding poverty, but their economic condition continues to be precarious at best. For the overwhelming majority of these households, savings is minimal. They spend almost all of what they earn and regularly borrow to meet their routine expenses. In 2016, 28% labour households reported that they were in debt and by 2021 this figure had risen to 40%. The share of indebted households (ranging from 13% to 57%) is highest in Bihar, Maharashtra and Telengana where more than half of labour households were reported in debt in 2020-21.

Not suprisingly, such indebted households have to resort to borrowing from informal sources to meet their daily expenses. While nearly half of such households borrowed money from friends and relatives, a third took loans from landlords or moneylenders. Nearly 12% borrowed from self-help groups and other sources were cited by 4% of these households.

Meeting food and daily expenses was the primary reason for such borrowings for 37% of loan takers. Nearly 12% of households borrowed money for medical emergencies and healthcare expenses. Spending on social events like marriages, children’s education and other expenses were some of the other reasons. Significantly, nearly 3% of households borrowed money to pay back loans. This clearly indicates that labour households shell out extortionist interest rates and are prone to exploitation because of the emergency nature of their credit requirements. Also, these households were the worst hit by the impact of lockdowns and the consequent job losses that took place during the pandemic. Nearly 28% of households reported that their income had fallen compared to the pre-Covid period. Of these nearly 43% said their income was between 25-50% lower than what it had been. Therefore, there is a need to tackle this important aspect in a participatory social security framework by the government.

On the positive side, labour households are today far better off in terms of financial inclusion, thanks to the digital phenomenon sweeping through the country. Nearly 98% of households have bank accounts, and three-fourths have smartphones. Almost 45% of households used digital platforms to make payments or receive salary/wages.

Significantly, penetration of electricity, toilets, tap water and LPG connections, which are significant markers of social inclusion, have increased during the 2016 to 2021 period. By 2021, toilets were available to 87% households compared to just 44% in 2016. LPG gas connections also more than doubled; electricity was available to 89% and tap water to 43% households.

One of the most remarkable changes has been the rise in usage of LPG gas for cooking purposes. This has had a positive impact on the health of women in labour households as use of firewood, dung cakes and other sources of fuel has come down dramatically. LPG penetration rose from 27% in 2016 to 73% in 2021 making a significant dent in the use of hazardous cooking fuel. As a result use of firewood which was prevalent in 60% of households slumped to 12% in 2021. 

The significance of financial support and subsidies to this population cannot be over-emphasised. The pandemic threatened to push them back into crippling financial crises. Nearly 72% of labour households surveyed by PRICE revealed that they had received food or free rations from the government during the lockdowns. Another 58% reported receiving subsidised rations. NGOs provided food support to 14% of households while for 19% of such households, food support came from friends, relatives and neighbours.

Cash transfers from the government helped mitigate the financial crunch for nearly 32% of households and free medical aid was a much-needed resource - 23% received this from the state government and 15% from the central government. Another 23% confirmed that they had benefited from LPG subsidies.

There is no gainsaying that the lot of the workforce has improved and millions have been pulled out of sheer poverty.  But if the government’s goal of growing this large population base into a skilled and sustainable workforce is to be achieved, substantial investment will need to be made in improving their skillsets and their access to affordable medical, housing and educational infrastructure.

 While hailing the contribution of the workforce in our quest for economic development, we need to reiterate our commitment to building the skillsets, and social and economic well-being of this very large and significant segment of our population. Only then will we truly realize the potential of the “trinity of demography, democracy and diversity” in fulfilling our objective of becoming a developed economy by 2047.