The Aakhya Weekly #56 | Does Rajasthan's Gig Bill warrant the hype?

Jul 14, 2023

Gig workers, especially at the bottom of the skill ladder, lead difficult lives.

They routinely work long hours for meagre pay, with precarious work conditions and constant, algorithmically generated pressure to complete their tasks. Their work conditions are precarious, with a high risk of motor accidents. They routinely take on substantial work-related costs, such as those for vehicles, without a guarantee of continued pay. Unlike employees, every piece of work they complete is considered an independent transaction, and the myriad laws meant to protect employees do not apply to them.

Excessive enthusiasm in regulating the sector, however, can backfire. Gig work is one of the few easily available avenues of employment for millions, a valuable proposition in an economy that has seen stubbornly high unemployment rates for the last few years. Entry barriers in the industry are low, and allow workers to begin earning almost instantly. India suffers from an ‘employability crisis,’ with a population that is insufficiently trained to meet workplace demands, while the country lacks labour-intensive industry to absorb its low-skill workforce. As one of India’s fastest growing sectors, with room for up to 90 million jobs in the coming years, the gig economy offers welcome respite. The more the sector is regulated, the more its bounty of jobs dries up.

Many countries in the world are trying to create labour policies that balance the need to improve workers’ lives with the need to preserve its employment potential. It is little wonder that when, in April this year, Rajasthan released a draft of the Rajasthan Platform Based Gig Workers (Registration and Welfare) Act, 2023 (Bill) - a bill meant to promote gig worker welfare - it was received with great fanfare. The media heralded it as a first for Indian states, describing it as a “move to unburden gig and platform workers’ vulnerabilities”. Union leaders predicted that the law would become a “model for the world”.

Back in 2020, many had rushed to similarly eulogise the Central Government’s Code on Social Security, 2020 (Code), a bill that introduced gig work to India’s labour framework, and created a mechanism for giving them social protections. Years hence, the Code is yet to come into force, however, even while irate gig workers increasingly take to the streets, protesting low pay and poor working conditions.

This is a vacuum that state governments are looking to fill through state-level laws. Rajasthan’s draft Bill marks the first of these attempts.

Understanding the Bill

The Bill proposes a new 18-member board, the ‘Rajasthan Platform Based Gig Workers Board’ (Board) to administer its provisions. This is the primary implementing agency for the Bill - tasked with a range of functions, from registration of platforms and workers, to the collection of cess, to the formulation of schemes. It shall be headed by the state’s labour minister, with representation from several government departments. The state government shall also nominate representatives of gig workers, platforms and civil society on to the Board.

The Board shall look over a fund, the “Rajasthan Platform Based Gig Workers Social Security and Welfare Fund,” which it shall use to create and implement schemes. As part of its 2023-24 budget, the state has proposed to seed this fund with an initial corpus of ₹ 200 crore. It shall receive continued funding from a ‘Platform Based Gig Workers Welfare Cess’ that shall be levied on all platforms operating in the state. Platforms are also required to share the databases of their gig workers that they maintain with the Board, and such workers shall automatically be registered to its schemes. This framework mimics the one provided in the Code.

Beyond this, however, the Bill’s provisions are limited in scope. It does not create any obligations that flow from platforms to gig workers, instead channelling all measures through itself. It creates a set of rights for gig workers, but these merely restate the other provisions of the Bill, without creating any substantial benefits. The Bill also proposes a grievance redressal mechanism for gig workers for any contraventions of the Bill, but given that the Bill doesn’t dictate the behaviour of platforms vis-a-vis workers, it is difficult to see their relevance. Although the Board has been granted a broad set of powers, there is no direction on what it is expected to achieve, or concrete commitments that it is bound by.

A mere framework, unfortunately, is no guarantee of actual impact. Indian labour policy is littered with the husks of well-intentioned measures that have fallen well short of their objectives. In 1996, for instance, the Central Government passed a legislation that intended to provide for the welfare of India’s construction workers, a group that today comprises over 50 million people. States across the country were required to set up welfare boards that would implement a variety of social security schemes. The result is utterly underwhelming. These boards levy a 1% cess on all construction projects, having collected more than ₹ 80,000 crore as of date. A majority of this amount lies unspent. For instance, the Comptroller and Auditor General found that in 2019, only 1.7% of Delhi’s 1 million+ workers were registered with its welfare board, while only 5.6% of the cess it had collected since 2002 had been spent. In 2017, the Supreme Court found that less than 10% of the funds spent by these boards actually met their purpose. Most of their money was, instead, diverted into frivolities like purchasing laptops and washing machines, on paper for the benefit of construction workers. Two years before that, the state of construction workers’ welfare funds had prompted the Supreme Court to say “it cannot get worse than this.”

Rajasthan’s three cardinal sins

Of course, policy measures rarely meet the expectations they begin with. But although we can’t foresee all possible obstacles, there are some early signs that the state runs a high risk of failure.

For one, the Bill is not animated by a clear objective. Good policy begins with a thorough understanding of the problem one wants to solve, followed by creating clearly defined objectives that it seeks to achieve. This informs the measures one puts in place. Rajasthan’s Bill seems to have little understanding of what it wants to achieve, beyond alleviating the plight of gig workers. For such a hazily defined problem, the means are appropriately hazy. It has done little more than setting up a new bureaucracy, with massive omnibus powers to do as it sees fit. The hard problem of designing policies tailored to the specific needs of gig workers, in essence, has been left for later.

Two, because the Bill isn’t clear on what it aims to achieve, it sets no objectives, standards or expectations for the Board to follow. Its functioning, in essence, has been left entirely to the personal initiative of the Board’s members. No institutional set-up has been created around the Board, beyond allowing it to hire its own officials. Even if this system works well for a while, without a strong legal and institutional framework, what it can achieve is heavily dependent on its immediate circumstances. Changes in political or funding priorities can doom its operation.

Three, in setting up this structure from scratch, it ignores existing social security machinery. In its functions, it duplicates the National Social Security Board envisaged by the Centre, which shall perform the same function of creating and implementing welfare schemes for gig workers. The very same gig workers are also being enrolled on the e-Shram portal, with the promise of very similar benefits. The gig workers’ board shall run alongside other parallel state bureaucracies for unorganised workers, mine workers and construction workers, that perform identical functions for marginally different work profiles. Across the world, social protection has best been delivered from strong institutional ‘homes’ with abundant administrative capacity, coordinating various schemes through the same machinery. Instead, we have an array of fragmented, parallel agencies from the state and the centre, repeating the same role with little effect. In a country already plagued with chronically low state capacity, this confused muddle is unlikely to generate significant returns.

While these sins do not guarantee a failure of Rajasthan’s proposed measures, they certainly make it fragile. Given its susceptibility to multiple risks, only an extraordinary feat of governance shall permit the Bill to achieve its goals.

The congratulations are premature

With the Bill, Rajasthan lays claim to being the first Indian state to introduce legislation for the welfare of gig workers. It does little more, however. With the Code on Social Security in limbo for over two and a half years, Rajasthan had the opportunity to present a model that was better than the Code’s vague promises of a Central fund coordinating welfare schemes. Its policy package could have been framed around its existing welfare infrastructure, using the additional influx of funds to shore up a more universal social security system, while enacting robust measures, such as a comprehensive accident insurance program, to accommodate the specific needs of gig workers.

Instead, it has chosen to merely mirror the Central scheme. If Rajasthan has any claims to having furthered the cause of gig workers, those do not lie in the domain of policy design. At best, it can promise that the Board it has created shall, somehow, be better at formulating and implementing schemes than its national counterpart. Rajasthan has not yet announced a concrete plan to improve the lot of gig workers. It has merely signalled that it shall do so.

The proof of the pudding, of course, is in the eating. And right now, there is none. Rajasthan has done little more than announcing a Pudding Department that, it promises, will serve up pudding some day.

Until that day, any congratulations are premature.

Top Stories of the Week

50th GST Council Meet: highest tax levied on online gaming

The Group of Ministers (GoM) met on 11 July 2023 and after a series of deliberations, determined that a 28 percent tax shall be levied on the full value of online gaming, horse racing, and casinos. The taxes will be imposed at the entry point on full face value of the bets. No distinction has been made between games of chance and skill for the purpose of taxation. Further, Finance Minister Nirmala Sitharaman has said that the GST law will be amended to state that winnings under these three categories will not be actionable claims, as is the case with lotteries. The tax rule, as stated by the Minister, will come into effect after the GST law is amended. All States have reportedly participated in the discussions on this subject, and there appears to be consensus on this issue.

The decision to tax these industries at such a prohibitively high rate supposedly relates to “moral” considerations on imposing a higher tax in such categories as opposed to essential items - a perspective seemingly shared by the Chairman of the Central Board of Indirect Taxes and Customs. While the sentiment is admirable, it does raise the question of why the distinction between games of chance and games of skill has not been taken into account. However, the Finance Minister has indicated that the GST Council is conferring with MeitY on the issue and that the Council will align with the regulation brought by the Ministry.

TRAI releases new Consultation Paper on regulation of OTT communication services

On July 7, 2023, the Telecom Regulatory Authority of India (TRAI) released a consultation paper on the regulatory mechanism for over-the-top (OTT) communication services. It seeks inputs from stakeholders on two key issues: (a) whether to regulate OTT services like telecom services; and (b) the potential for selective banning of OTT services rather than complete internet shutdowns.

This marks TRAI's second attempt at regulating OTTs. In 2018, TRAI issued a similar consultation paper on the regulatory framework for OTT communication services. After stakeholder feedback, TRAI recommended allowing market forces to respond without immediate regulatory intervention. They also stated that no regulatory intervention was needed for privacy and security issues at that time. However, at the request of the Department of Telecommunications (DoT), the TRAI is inviting stakeholders to provide suggestions on a suitable regulatory mechanism for OTTs, including selective banning of services.

The Consultation Paper highlights the different regulatory regimes that telecom service providers (TSPs) and OTT communication apps are subjected to, despite providing similar services. OTT services are regulated under the Information Technology Act, 2000, while the TSPs are regulated by a myriad of telecommunication legislations. TSP service providers point out that OTT platforms are not subject to restrictions like lawful interception. TRAI also recognised that shutdowns of telecommunications or the internet can have "significant ramifications for a country's economy." It has cited the economic and social ramifications of internet shutdowns as a reason to explore selective banning of OTT apps instead of imposing internet shutdowns. This is a recommendation that was first made by the Parliamentary Standing Committee on Information Technology.

Stakeholders can submit written comments until 4 August 2023.

A Few Good Reads

Last week, Dr. Shamika Ravi wrote about how India’s statistical systems had poor data collection frameworks, understating India’s growth as a result. Dr. Pronab Sen responded with a defence of the numbers, arguing that “statisticians aren’t stupid”. Dr. Ravi responded in turn, addressing some of Dr. Sen’s arguments and retorting that while not stupid, statisticians can certainly be wrong. A fascinating exchange.
More on Indian statistics: Pramit Bhattacharya traces the history of India’s statistical machinery, analyses its failures, both old and new, and makes the case for reform. Former Chief Statistician of India, TCA Anant, pushes back, writing that the prevailing narrative of a statistical golden age in the 1950s and 60s followed by subsequent decline is flawed.
Can artificial intelligence replace human central bankers? Many tasks will be outsourced to AI, believes Jon Danielsson, but human decision-making will continue to be essential.
Amidst a clash of competing ideologies, J Sai Deepak reiterates his argument for the inclusion of civilisational awareness in the fabric of constitutional morality.
Is Singapore falling behind in the global game for the uber-rich being played out across the financial centers of the world? Andy Mukherjee explores.

The Aakhya Weekly