UNUSED CESS FUNDS FOR CONSTRUCTION WORKERS IN INDIA

PRELIMS BITS

Key Issue: An RTI response from the Union Labour Ministry revealed that ₹70,744.16 crore in cess funds for construction workers remain unutilised. This raises concerns about the welfare of millions of workers in India.

Background: The Building and Other Construction Workers (BOCW) Act, 1996, aims to regulate employment conditions and ensure welfare for construction workers. State governments are required to form welfare boards to implement the Act’s provisions.

Cess Collection:

• Employers must pay a cess of 1%-2% on total construction costs.
• The funds are meant for welfare initiatives, such as accommodation, sanitation, and social security.

Current Situation:

• ₹1,17,507.22 crore has been collected since 2005, but only ₹67,669.92 crore has been allocated to workers, leaving a large portion unutilised.
• Maharashtra, for example, collected ₹19,489.25 crore but allocated just ₹13,683.18 crore, suggesting possible cess evasion.

COVID-19 Impact: The pandemic worsened the conditions for construction workers, exposing gaps in welfare support, especially during the lockdowns.

Future Concerns: The proposed Code on Social Security has raised concerns that it may reduce workers’ entitlements and weaken the cess collection process.

State-Level Variations: While some states have struggled with proper implementation, Kerala has been noted for better execution of the BOCW Act. Allegations exist in some states about diverting funds away from workers’ welfare.