WOES OF THE MIGRANT FORCE - A LEGAL ANALYSIS OF THE UNPRECEDENTED MIGRANT CRISIS DURING COVID - AZB & Partners
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WOES OF THE
MIGRANT FORCE
A LEGAL ANALYSIS OF
THE UNPRECEDENTED
MIGRANT CRISIS
DURING COVID
AUGUST 2020
ABOUT AZB AZB & Partners was founded in 2004 with a clear purpose to provide reliable, practical and full– service advice to clients, across all sectors. The Firm brought together the practices of CZB & Partners in Mumbai and Bangalore and Ajay Bahl & Company in Delhi. Having grown steadily since its inception, AZB & Partners now has offices across Mumbai, Delhi, Bangalore, and Pune. We have an accomplished and driven team of 450+ lawyers committed to delivering best–in–class legal solutions to help clients achieve their objectives. Our greatest strength is an in–depth understanding of legal, regulatory and commercial environments, in India and elsewhere. This strength enables us to provide bespoke counsel to help our diverse clients negotiate any dynamic or volatile business environment. At AZB & Partners, collaboration is an everyday reality – we combine individual and mutual strengths to achieve collective growth. Our Purpose is to be excellent lawyers, working as a team. To deliver creative solutions to problems, timely execution and seasoned judgment. To focus relentlessly on the interests of our clients as their business partners. The Firm’s clients include an array of domestic and international companies. These range from privately owned to publicly listed companies, including Fortune 500 Entities, Multinational Companies (MNCs), Investment Banks and Private Equity Firms. The Firm has also built, through its many professional engagements, strong relationships with specialists, regulatory authorities and several international law firms. The Firm has received wide national and international acclaim within the legal sphere, some of which include “Rank No.1” by RSG Top 40 India law firm ranking 2019.
ACKNOWLEDGEMENT The COVID pandemic laid bare the magnitude of the plight of our migrant work force. The images and tales of their travails brought tears to our eyes. While help did come from many sources, it became clear that in addition to some across the board introspection (including by employers), a deep dive into the ecosystem and legal regime is the need of the hour so that constructive solutions and next steps can be identified to ensure that this situation does not arise again. We at AZB decided to take this cause up and conduct a detailed study of the legal regime that was meant to provide security to India’s work force, and also assess the procedural and other hurdles that could potentially limit the ability of migrant workforce to benefit from welfare schemes announced by the Government of India. To this end, we formed a team of AZB lawyers to examine the legal framework, welfare schemes, relevant statistics and the banking ecosystem. The team has put together this detailed study which, amongst others, addresses the need for rationalising specific laws to encourage greater compliance by employers and identifies the procedural and practical obstacles that need to be resolved so that benefits of laws and welfare schemes can reach the intended beneficiaries, quickly and effectively. It also highlights areas where meaningful participation of the private sector is necessary to assist in this endeavour. I would like to acknowledge and appreciate the efforts of our team of lawyers comprising of Srishti Goyal, Navdeep Baidwan, Guncha Dhiman and Deepika Soni lead by our Partner, Rachit Bahl in preparing this study and all the hard work put in by them towards the research and to get it to its final form. I would also like to extend my sincere thanks to Mr. Ajit Menon (Director, Human Resources, Dalmia Bharat Cement), for his words of encouragement for the effort & output as well as for the incisive comments and inputs based on his vast experience in industry that helped incorporate balanced industry perspectives. It is my hope that this study will help implementing solutions that would contribute to the welfare of our huge and significantly important migrant workforce so that we do not ever see a repeat of the heart wrenching event. Ajay Bahl Founding and Managing Partner
03
INDEX
About AZB 01
Acknowledgement 02
Background 04
Objective 04
Methodology 05
Applicable legal framework 05
Prominent welfare initiatives 10
Process for opening bank accounts and documents required 12
Aadhaar Linking 15
Overview of key legislations applicable to migrant workers (Annexure - I) 18
Overview of central government schemes pursuant to economic hardship caused
25
in light of the COVID lock-down (Annexure - II)
Linking of MGNREGA job card with Aadhaar (Annexure - III) 32
Aadhaar linking with ration cards (Annexure - IV) 34
Documents required to open different type of bank accounts (Annexure - V) 35
Documents required to obtain certain officially valid documents (Annexure - VI) 37
Status of Aadhaar saturation (Annexure - VII) 40
04
1. BACKGROUND
The Government of India declared COVID-19 labourers may have returned to their home
a pandemic pursuant to which it declared a states, they continue to face issues regarding
nation-wide lockdown which commenced their future prospects as well as their ability to
on March 25, 2020.1 Necessary stringent benefit from well-intentioned welfare schemes
conditions significantly impacted construction, of the Central Government. The COVID-19
manufacturing and other industrial crisis has brought to fore the plight of India’s
establishments, resulting in economic socially and economically most vulnerable
hardship on the labour force. Consequently, citizens, and the gap between implementation
many migrant labourers lost their source of of welfare measures and their effectiveness at
livelihood and undertook arduous journeys ground level.
to their hometowns. While many migrant
2. OBJECTIVE
The objective of this study is to identify a. If India’s legal framework adequately
the factors that have contributed to this protects the interests of migrant labour; and
humanitarian crisis and which continue to
b. Were the welfare measures introduced
push India’s migrant labourers into a condition
by the Government of India effective in
of extreme poverty. For this assessment, this
their penetration and if they alleviated the
study analyzes: -
extreme conditions for migrant labourers.
1. Ministry of Home Affair’s Order No. 40-3/2020-DM-1(A) dated March 24, 2020.
05
3. METHODOLOGY
In order to make the above assessment, this study examines: -
Key legislations which would be applicable to migrant workforce, compliances under
the same and issues under the current legal structure;
Prominent welfare initiatives introduced by the Central Government for the less
privileged and their intended beneficiaries;
Documentation required for beneficiaries to be able to receive benefits in their bank
accounts, under various Central Government initiatives; and
Dependence and issues connected with Aadhaar linkage under 2 prominent Central
Government schemes, MGNREGA & national food security.
It appears from our assessment that the crisis that migrant workforce of India finds themselves
in, is not attributable to a single reason. Rather, it appears to be a result of systemic & collective
failures (including the failure of our conscience as a society), which together compounded the
problem into a humanitarian crisis. Some of these issues have been discussed below.
4. APPLICABLE LEGAL FRAMEWORK
There are 4 key legislations that lay down c. Contract Labour (Regulation and Abolition)
obligations of employers vis-à-vis the migrant Act, 1970 (“CLRA Act”); and
workforce: - d. Unorganised Workers Social Security Act,
a. Inter-State Migrant Worker’s (Regulation 2008 (“UWSS Act”).
of Employment and Conditions of Service)
Act, 1979 (“ISMW Act”); 4.1 Despite multiple laws intended to protect
the interests of migrant workforce, these
b. Building and Other Construction Workers
laws have been found lacking in achieving
(Regulation of Employment and Conditions
their objective. Annexure I discusses
of Service) Act, 1996 (“BOCW Act”) and
issues under these key legislations, which
Building and Other Construction Workers
have been summarily discussed below.
Welfare Cess Act, 1996 (“BOCW Cess Act”);
06
4.2 How big is the migrant workforce? - There is a need to increase the awareness
There are various estimates of the number amongst migrant workforce about their
of migrant labourers currently part of the rights. It also suggests that as a society, we
workforce in India: the 2011 census pegs have not embraced and insisted on proper
the total number of migrant workers implementation of these laws, which have
(accounting for inter- and intra-state contributed to this humanitarian crisis
movement) at 13.9 crores,2 recent reports made worse in times of COVID-19.
estimate the number of inter-state migrant 4.4 BOCW Act
workers at 4.14 crores,3 6 crores,4 8 crores5
4.4.1 Low Registration Levels: The applicability
and 11 crores6. First of all, there does not
of the BOCW Act is not predicated on
appear to be a near-correct estimation
undertaking commercial activity and
of the size of the migrant workforce and
is applicable to any building or other
numbers are wide-ranging. Unless this
construction work (the only carve out
population is identified with some degree
being an individual, employing workers
of confidence, it would be difficult for the
for constructing a residence costing less
Government to plan and implement laws
than INR 10 lakhs13). The term “building
& welfare measures effectively.
and other construction work” is very
broadly defined and is not restricted to
4.3 ISMW Act: The contractors have construction of a bare shell only.
numerous obligations including
providing suitable accommodation
during the period of employment7 and 2. Available at: https://www.weforum.org/agenda/2017/10/india-has-139-million-
paying allowance for return journey, for internal-migrants-we-must-not-forget-them/.
3. As per the Status Report filed by the Central Government before the Hon’ble
the inter-State migrant worker8. To the Supreme Court of India in the case of Alakh Lok Srivastava vs. Union of India
(Diary No. 10789 of 2020) - there are approximately 4.14 crore individuals
extent this allowance has not been paid by working / employed in various states of India/ places other than their home
the contractor, the principal employers9 town and/ or villages.
4. Available at: https://www.orfonline.org/expert-speak/east-west-india-migrant-
are responsible for its payment10. crisis-looms-large-during-covid19-64880/. See also: https://www.barandbench.
However, pursuant to the lockdown, we com/columns/our-collective-failure-towards-migrants - India has 5.6 Crore
inter-state migrants, most of who come from Uttar Pradesh, Bihar, Jharkhand,
saw numerous migrant workers return to Rajasthan and Madhya Pradesh.
their native states often walking on foot.11 5. As estimated in the statement made by the Minister of Finance: https://
www.livemint.com/news/india/why-india-migrants-walked-back-
home-11590564390171.html.
This suggests that the contractors 6. As estimated in the statement made by the Minister of Finance: https://
www.livemint.com/news/india/why-india-migrants-walked-back-
failed in their obligation to provide home-11590564390171.html.
accommodation and other dues 7. Section 16 of the Inter-State Migrant Worker’s (Regulation of Employment
and Conditions of Service) Act, 1979 read with Rule 45 of the Inter-State
(including allowance for return journey) Migrant Workmen (Regulation of Employment and Conditions of Service)
under the ISMW Act and the principal Central Rules 1980.
8. Section 15 of the Inter-State Migrant Worker’s (Regulation of Employment and
employers have not monitored or insisted Conditions of Service) Act, 1979 read with Rule 22 of the Inter-State Migrant
on ensuring compliance by contractors Workmen (Regulation of Employment and Conditions of Service) Central
Rules 1980.
in letter and spirit. If migrant workers 9. ‘Principal Employer’ means; (a) in relation to government office / department,
the head of the office / department; (b) in relation to a factory, the owner or
were provided accommodation as per occupier of the factory and the manager of the factory named as such under
the provisions of the ISMW Act and paid the Factories Act, 1948; (c) in relation to a mine, the owner or agent of the
mine and the manager of the mine named as such; and (d) in relation to any
wages in accordance with the directions other establishment, any person responsible for the supervision and control of
the establishment.
of the Ministry of Home Affairs (MHA)12, 10. Rule 45 of the Inter-State Migrant Workmen (Regulation of Employment and
they may not have been left homeless Conditions of Service) Central Rules 1980.
and forced to return to their home states, 11. Available at https://qz.com/india/1826384/indias-coronavirus-lockdown-has-
triggered-mass-migration-on-foot/
including on foot. This indicates that laws 12. Ministry of Home Affair’s Order No. 40-3/2020-DM-1(A) dated March 29, 2020.
such as the ISMW Act should be strictly 13. Section 1(4) read with Section 2(j) of the Building and Other Construction
Workers (Regulation of Employment and Conditions of Service) Act, 1996.
enforced and their implementation needs
to be better monitored.
04 07
However, despite such broad applicability, workers under the Employees’ Provident
it should be determined whether significant Funds and Miscellaneous Provisions
majority of construction workers are Act, 1952 (“EPF Act”) have also not been
registered to be eligible for benefits under effective.17A On the other hand, the BOCW
the said law. For e.g., ordinarily construction Act is aimed at providing social security
workers undertaking building & construction and other benefits for construction
of residential premises are not registered. workers. The welfare boards established
Majority home owners may not even be under the BOCW Act are permitted
aware of their obligations under this law. As to utilize the funds for benefit of the
per reports, there are around 200 million beneficiaries for, inter alia: (i) assistance
construction workers which are not registered in case of accident; (ii) pension; (iii)
under the BOCW Act.14 & 15 medical expenses for major ailments; and
(iv) maternity benefits. This re-affirms
This problem would continue to persist
the need to increase awareness about,
unless the contractor is put under a positive
and registrations with the welfare boards
obligation to register building workers as
constituted under BOCW Act.
beneficiaries of the relevant state welfare
funds while, at the same time, the law is 4.4.2 Payment of Cess - Additionally,
revisited to address issues like the extremely employers/contractors (including
low threshold of even one time construction government agencies) are required to
work that triggers a number of obligations pay 2% of the cost of construction as cess
for the contractor or principal employers (which is to be utilized towards extending
some of which are not even possible to welfare benefits to the construction
discharge (for instance, the obligation workers). However, the constituents of
to provide accommodation and canteen what may be included and what could
facilities, irrespective of the nature and scale be excluded from the computation of
of construction work being undertaken). It is ‘cost’ are subjective & could be open
no surprise that contractors refuse to allow to interpretation. This could result in
construction workers to register under the disputes and/ or reduced payment of cess.
BOCW Act.16
Based on social audits undertaken
This would directly contribute to reduced by certain State Governments, we
payment of cess as well as such unregistered understand that other than private
construction workers not being eligible for players, cess payments have also not
benefits under the law. Hence, there is a need been appropriately undertaken for public
to increase the awareness about BOCW Act sector and government works. If requisite
and to have simple compliance obligations for payments are made in relation to public
employers, such that even individual home sector and government works, this could
owners are able to comply. The Supreme increase collection amounts significantly.
Court has also recognized the importance
in this regard and stated that registrations 14. We understand that only 350 million construction workers, out of a total of
510 million are registered under the BOCW Act. The Migrant Labour Mess,
under this legislation can be increased only by Kaushik Deka, India Today, June 8, 2020.
15. A recent study conducted by the NGO Jan Sahas, reveals that approximately
raising awareness amongst the construction 94% of the construction workers surveyed were unregistered. Available at:
workers.17 https://www.thequint.com/news/india/covid19-lockdown-economy-impact-
construction-workers.
16. The Migrant Labour Mess, Kaushik Deka, India Today, June 8, 2020.
The Employees State Insurance Act, 1948 (“ESI 17. National Campaign Committee for Central Legislation on Construction
Act”) provides for benefits such as sickness, Labour (NCC-CL) Vs. Union of India (UOI) and Ors (2018(3)BomC R347).
17A ‘Building and Construction Work’’ was brought into the purview of the
disability, maternity, benefits, etc. The ESI EPF Act with effect from October 31, 1980. Subsequently, the Employees’
Act is applicable to factories and certain Provident Fund Organization issued circulars seeking to utilize the details
provided under the BOCW Act to improve registration under the EPF Act. In
identified establishments. Consequently, 2014, the EPFO set office wise targets to improve enrollment of construction
workers. However, this does not seem to have been very successful, as in the
construction workers would not be covered by minutes of the meeting of the Sub-Committee on Construction Workers held
in 2017, it was noted that out of around 4 crore construction workers, only 11
the ESI Act. Endeavors to cover construction lakh had been enrolled under the EPF Act.
08
4.4.3 Underutilization of Funds: As per issuing a notification to the effect that
reports, building and construction if the other provisions of the CLRA are
workers welfare funds have been complied with by a principal employer/
underutilized.18 As a part of COVID-19 contractor/establishment, no claims
relief measures, the Central Government for regularization would be entertained
had directed the utilization of these state for a stipulated time period (unless a
funds to finance relief measures for the notification is issued under Section 10 of
construction workers.19 the CLRA by the appropriate government
with adequate notice).
4.4.4 Findings of Social Audits: The Supreme
Court also directed State Governments
4.6 UWSS Act: - The UWSS Act intends
to conduct a social audit of compliance
to create a database of unorganized
with the BOCW Act and the BOCW Cess
workers.24 While the applicability of
Act.20 Social audits undertaken by State
the UWSS Act is not predicated on the
Governments indicate that:
‘employer’ undertaking commercial
a. middle men dupe ineligible workers to activity, this act intended to cover workers
register under the scheme, and then who were otherwise not provided any
pocket the benefits intended for the social security. In our view, the database
workers;21 created would enable the Central and
b. many workers who are eligible for State government to estimate the number
benefits under BOCW Act, are not of beneficiaries and plan & implement
registered; measures accordingly. However, this
c. a large sample population was eligible has not been achieved as the number of
for benefits under various Government registrations under the UWSS Act is low.25
schemes, but were not aware of their It appears that till date, only a limited
eligibility and hence did not apply; and
d. assessing officers did not keep track 18. The Migrant Labour Mess, Kaushik Deka, India Today, June 8, 2020;
of the construction work undertaken 19. As on April 10, 2020, INR 3,066 crore had been disbursed to 2,16,00,000
construction workers by various States. This averages to approx. INR 1,500 to
by public sector undertakings/ each person.
20. National Campaign Committee for Central Legislation on Construction
Government departments resulting in Labour (NCC-CL) Vs. Union of India (UOI) and Ors (2018(3)BomC R347.
short fall in the quantum of deposits 21. Available at: http://www.nirmana.org/Documents/BOCW_social_audit_
report-udaipur_Rajasthan.pdf. This audit report is prepared by Aajeevika
deposited in the state welfare fund.22 Bureau which was selected on the basis of the recommendations of the
subcommittee set up by the Ministry of Labour.
4.5 CLRA Act: Section 10 of the CLRA Act 22. Page 52 of the Compliance Audit report available at: https://cag.gov.in/
sites/default/files/audit_report_files/West_Bengal_General_and_Social_
provides that the appropriate Government Sector_2_2014_chap_3.pdf
23. The Supreme Court has held that if the following conditions are established
may, by way of notification, prohibit the absorption of contract labour shall not be mandated : (i) wages are paid to
employment of contractual labour for the contract labourers by the contractor; (ii) the contractor regulates the
employment conditions – such as hours of work; and (iii) the contractor
any identified process, operation or other exercises ultimate supervision and control over the contract labourers. (See,
International Airport Authority of India v. International Air Cargo Workers’
work in any establishment. Following Union. (AIR 2009 SC 3063); and The Director Steel Authority of India Ltd. v.
Ispat Khandan Janta Mazdoor Union (AIR 2019 SC 3976)).
such a notification, principal employers 24. Which will include a home based worker, a self-employed worker or wage
fear that contract labour may be mandated workers in the unorganized sector (includes a worker in the organized
sector who is not covered by any of the prescribed legislations). Section 2(b)
to be absorbed into their establishment, defines a ‘home-based worker’ as, “a person engaged in the production of
goods or services for an employer in his or her home or other premises of his
thereby increasing their employee costs & or her choice other than the workplace of the employer, for remuneration,
compliance obligations.23 irrespective of whether or not the employer provides the equipment, materials
or other inputs”. Section 2(k) defines ‘self-employed worker as, “any person
who is not employed by an employer, but engages himself or herself in
This threat of absorption should be any occupation in the unorganised sector subject to a monthly earning
of an amount as may be notified by the Central Government or the State
mitigated, especially in the post COVID-19 Government from time to time or holds cultivable land subject to such ceiling
as may be notified by the State Government. Schedule II of the UWSS Act lists
scenario, and hiring of contingent the prescribed legislations as: (i) the Workmen’s Compensation Act, 1923; (ii)
the Industrial Disputes Act, 1947; (iii) the Employees’ State Insurance Act,
workforce should be encouraged 1948; (iv) the Employees’ Provident Funds and Miscellaneous Provisions Act,
even if such opportunities are ad hoc/ 1952; (v) the Maternity Benefit Act, 1961; and (vi) the Payment of Gratuity Act,
1972.
temporary. This could be facilitated by 25. The Migrant Labour Mess, Kaushik Deka, India Today, June 8, 2020.09
number of States (approximately 11) have order to employ workers for undertaking
taken some steps to implement the UWSS work. Further, involvement of middle-
Act by framing rules and establishing men at grass-root level by officials who
State Social Security Boards.26 Therefore, have been appointed to ensure “effective
while the UWSS Act is technically, in force, implementation”28 seems to be having
it has not been effectively implemented by an adverse impact resulting in a large
the Center and the State Governments. number of migrant workers being left
If implemented in letter & spirit, it outside the formal system. The Central
could benefit a large number of migrant Government may consider doing away
workforce in the unorganized space. with the licensing and registration
regime and establishing a compliance
4.7 Other Key Considerations: - The regime based on self-certification and self-
following key considerations emerge declaration of compliance with applicable
from our analysis: - statutes.
4.7.1 Multiplicity of applicable legislation: 4.7.3 Positive obligation on contractors/
There could be instances where each of principal employers to assist in the
the ISMW Act, the BOCW Act and the opening of bank accounts: The ISMW
CLRA Act are simultaneously applicable Act, BOCW Act and the CLRA do not
to an establishment, thereby increasing place a responsibility on the contractor/
compliance costs significantly. In this principal employer to aid in, or open
regard, having one state authority and bank accounts for the workers. Principal
one statute which provides for all the employers/ contractors should be
compliance requirements might be a encouraged to bring workers into the
step to effectively achieve on-ground formal system. The Central Government
implementation and enforcement. For may consider requiring principal
instance, the proposed Occupational employers/ contractors to ensure
Safety, Health and Working Conditions workers have a functional bank account
Code, 2019 subsumes 13 legislations and their Aadhaar is linked with the same
(including the ISMW Act, the BOCW Act with a stipulated period of employment.
and the CLRA).27 Further, infrastructure It would assist in reaching the workers
which permits inter-state portability of (including migrant workers) quickly and
registration under the BOCW Act can directly.29
also be considered in order to encourage
registration under this legislation and
avail welfare benefits in different states.
26. Available at: https://thewire.in/labour/national-social-security-fund-
4.7.2 Significant compliance obligations: unorganised-workers
27. The Occupational Safety, Health and Working Conditions Code, 2019 was
Annexure I highlights the compliance introduced in the Lok Sabha on July 23, 2019 and was subsequently referred for
scrutiny to the Parliamentary Standing Committee on Labour.
obligations of contractors & principal 28. Available at (i) https://www.deccanherald.com/city/tainted-labour-
employers under each of the above inspector-707899.html; (ii) https://www.business-standard.com/article/
pti-stories/cg-labour-dept-inspector-held-for-accepting-rs-40-000-
mentioned legislations. Under the CLRA, bribe-119101401420_1.html; (iii) https://timesofindia.indiatimes.com/city/
coimbatore/labour-department-official-arrested-while-accepting-bribe-of-
there is a requirement for contractors to rs-11200/articleshow/67478662.cms; and (iv) https://timesofindia.indiatimes.
obtain a license which is establishment com/city/chennai/Assistant-labour-inspector-arrested-for-taking-bribe-in-
Chennai/articleshow/45068223.cms
specific. The ISMW Act further requires: 29. Pursuant to the Employees’ State Insurance Corporation circular bearing
reference no. I-11/13/04/2020-ICT dated June 26, 2020, employers have
(i) the principal employer to obtain been mandated to update mobile number & bank account details of their
a registration; and (ii) contractors to employees while registering them with the ESIC. The directions further state
that cash benefits/claim reimbursements will be settled only if the correct
obtain a license from both the states of bank account details of the employees are available in the ESIC systems. This
is likely to ensure prompt settlements of benefits to the employees. However,
recruitment and the states of employment this circular assumes that the beneficiaries already have bank accounts.
In this context, it is useful to note that the ESI Act only penalizes failure to
of migrant workers. As a result, principal pay contributions. Therefore, an argument can be made that the employers’
responsibility is limited to making contributions and not ensuring that the
employers and contractors may be beneficiaries are recipient of the same (which they will not be in case the bank
required to seek multiple licenses in account details or mobile number details are captured incorrectly).10
5. PROMINENT WELFARE INITIATIVES
5.1 Annexure II provides an overview of 5.3 MGNREGA and the current ration card
the various schemes which the Central system: The implementation of the
Government has introduced for the MGNREGA scheme and benefits linked to
less privileged (including for migrant ration cards are limited to States in which
labourers) and assesses their effectiveness they have been issued. A MGNREGA
with respect to the migrant workforce. job card entitles the holder to a job in
Based on an analysis, it appears that: - the limits of the rural area (which must
be within a specified radius of where the
a. many of the schemes do not
applicant resides). The distribution of
contemplate migrant labourers as
grains to a ration card holder is limited to
beneficiaries; and
the State which has issued the ration card.
b. many schemes which may be extended
to migrant labourers, may not provide In practical terms, it appears that
immediate relief to migrant labourers. territorial limitations on use of ration
cards cause difficulties for the migrant
Some other challenges which we have workers. Acknowledging the importance,
observed and which are likely to interfere the Hon’ble Prime Minister has
with effective implementation of welfare initiated the process of working towards
initiatives, have been discussed below. establishing the ‘One Nation, One Ration
Card’. It may also be useful to have an
5.2 Migrant workforce outside formal MGNREGA equivalent in urban areas as
banking system: When society and the well.
Government stepped in to aid these
migrant workers, a practical difficulty
arose in the provision of benefits as
many migrant labourers were completely
outside the formal banking sector. In our
view, this could be because of: (i) lack of
awareness about such welfare schemes;
and (ii) lack of documentation that
impacts the ability of migrant labourers
to be part of the formal banking set up.
Therefore, a detailed field analysis should
be undertaken to:
a. assess whether the most vulnerable
section of society actually have the
documents required to open a bank
account and if they can avail these
documents easily;
b. the difficulties faced by them in
obtaining these documents; and
c. why the poorer sections of society
continue to not use bank accounts
despite having the required documents.11
5.4 Linking of Aadhaar to avail benefits Practically, at the village level this is
under various schemes: The Central often not the case, as there are minor
Government has released a series of inaccuracies in the spelling of names,
notifications pursuant to which provision poor records, mismatched mobile phone
of benefits under various Central numbers, etc. If any detail does not match,
Government schemes such as MGNREGA, the link will not be successful. There
and the NFS Act are contingent upon appears to be a process in place requiring
linking of an Aadhaar Number. This has programme officers to undertake on-
created a two-step problem at the rural ground verification. However, the
level: - graphical representation provided for
under Annexure III and Annexure IV is
a. linking of Aadhaar Numbers to the
indicative of the fact that this is presently
job card issued under MGNREGA or
not effective and can be improved.
ration cards has not reached 100%
saturation; and
b. there are practical difficulties faced
in the verification of details provided
under the Aadhaar because of mistakes
/ errors in details such as name or
address of Aadhaar holder, mismatch
in mobile phone numbers, etc. For
successful linking, it is required that
every detail provided in the Aadhaar
matches with the details provided
under the job/ ration card.12
6. PROCESS FOR OPENING BANK
ACCOUNTS AND DOCUMENTS REQUIRED
6.1 It seems to emerge that a beneficiary d. Small Account: In 2014, the Reserve
who has: (i) an Aadhaar card; (ii) a bank Bank of India (“RBI”) clarified
account; and (iii) a mobile number, and that, persons who do not have the
these three are linked (“Trinity”), is documents required to open a Regular
most well placed to receive the various Account or a PMJDY Account, are
cash benefit schemes introduced by the permitted to open ‘Small Accounts’
Central Government. We have therefore with banks.32
examined process for opening a bank
Small Accounts are subject to certain
account as well as the documents required
limitations,33 especially regarding the RBI
to obtain an officially valid document,
mandated validity period of 12 months.
which can be submitted to open a bank
Thereafter, such accounts are permitted
account.
to be open for an additional period of 12
months, in the event the account holder
6.2 Opening a bank account - Annexure V
provides evidence of having applied for
provides for a comparative analysis of
one of the officially valid documents within
document required for an individual to
12 months of opening the Small Account.
open a:
Upon submission of the officially valid
a. Regular Account: A regular bank documents obtained, the Small Account
account with a commercial bank can be converted into a PMJDY account34
(“Regular Account”); or a Regular Account upon completion of
b. Prime Minister Jan Dhan Yojna KYC norms.35 Small accounts therefore
(“PMJDY”) Account: The PMJDY is only appear to be a stop gap arrangement
a scheme ensuring access to financial and relief while a person applied for more
services such as saving and deposit formal documentation.
accounts, credit insurance and
pension benefits. There is no eligibility
criteria to apply for accounts under
the PMJDY. These accounts have
beneficial features, such as: (i) zero
balance accounts in any bank branch;30
(ii) earn interest on deposits; and (iii) 30. Available at: https://pmjdy.gov.in/scheme
31. Assuming a population of 135 crores. However, there is no clarity with respect
accidental coverage up to a certain to: (i) whether the term “beneficiaries” would include family members of the
account holder – which would then mean that the number of accounts opened
amount. As per official statistics there is actually significantly lesser; and (ii) how many of these accounts are held by
are 38.72 crores beneficiaries as on migrant workers.
32. Available at: https://www.rbi.org.in/commonperson/English/Scripts/
date (i.e. approximately 28.14% of the PressReleases.aspx?Id=1497
population);31 33. These limitations include: (A) aggregate credits (not more than INR 1,00,000
in a year); (B) aggregate withdrawals (nor more than INR 10,000 in a month);
c. Post Office Account: The documents (C) balance in the accounts (not more than INR 50,000 at any point of
time). Government benefits can be availed by beneficiaries holding “Small
required to open an account with a Accounts”. Therefore, the KYC Directions clarifies the limit on balance would
not be applicable in the context of government grants, welfare benefits and
post office (“Post Office Account”) payment against procurements.
depends upon categorization. The 34. Available at: https://pmjdy.gov.in/files/E-Documents/faq.pdf
35. Available at: (i) https://sbi.co.in/web/personal-banking/accounts/saving-
applicants are divided into: (i) low account/basic-savings-bank-deposit-small-account; (ii) https://www.rmgb.
in/small-account; and (iii) https://www.indiapost.gov.in/Financial/DOP_
risk, (ii) medium risk; and (iii) high PDFFiles/Small%20Account.pdf
risk; and13
6.3 Other Key Considerations w.r.t Bank Therefore, it is unclear if this avenue
Accounts is still available to open a PMJDY
a. Inability to open Regular Account: bank account. Additionally, it should
Since 2018, submission of PAN or be determined whether such identity
such equivalent documents under cards or letters are being issued to
the Income Tax Rules has become migrant workers and its effectiveness.
mandatory to open a Regular Account. d. Limited Reach of Small Accounts:
Given that migrant labourers are Small Accounts can only be opened
unlikely to have a PAN card, a Regular at ‘core banking solution’ linked
Account is not really a viable option branches, which are unlikely to have
for them. a high level of rural penetration. Small
b. PMJDY Accounts: It appears that the Accounts are a temporary measure
documents required to open a PMJDY for those who do not have any OVD
account are not very cumbersome, (including Aadhaar Card). Even if a
especially if the migrant labourer has Small Account is opened, it would not
an Aadhaar card. As per the Master enable a person to avail benefits under
Directions– Know Your Customer schemes such as MGNREGA and the
Direction, 2016 (updated until April NFS Act until an Aadhaar card has
1, 2020) (“KYC Directions”), in the been obtained & linked (and the Small
event the address mentioned in the Account has therefore been converted
Aadhaar card does not match the into a PMJDY Account or a Regular
current address, a self-declaration Account). The Government may
may be issued to this effect by the reconsider its approach towards Small
applicant. This is a positive step, Accounts to enable people take benefit
making it easier for migrant labourers of welfare schemes or implement
to open PMJDY accounts.36 However, initiatives to ensure high conversion
this has not been specifically clarified of Small Accounts into other accounts.
on the websites of all the banks. There
should be a wider dissemination of 6.4 Officially Valid Documents - As
such important information to ensure obtaining OVDs is an essential milestone
there is adequate communication and in order to get a bank account open, we
uniform implementation. have provided a detailed analysis on the
c. “Simplified measure” under PMJDY documents required to obtain: (i) an
Account: Simplified measures are Aadhaar card; (ii) a Voter identification
applicable when the bank determines card (“Voter ID”); (iii) a job card
the applicant to be a “low risk” issued under the Mahatma Gandhi
candidate, then the documents National Rural Employment Guarantee
required may be limited to: (i) Identity Programme launched under the
Card with applicant’s photograph provisions of the MGNREGA; and (iv)
37
issued by Central/State Government a Ration card/Public Distribution System
Departments, Statutory/ Regulatory (“PDS”) card- which are the documents
Authorities, PSUs and Scheduled a migrant labourer is likely to obtain.
Commercial Banks; and (ii) Letter Please refer to Annexure VI for the stated
issued by a gazetted officer, with detailed analysis in this regard.
a duly attested photograph of the
person. However, based on our review 36. KYC Directions issued by RBI are available at: https://www.rbi.org.in/Scripts/
BS_ViewMasDirections.aspx?id=11566
of the KYC Directions, we note that 37. Section 2(o) of the MGNREGA Act defines rural as “any area in a State
except those areas covered by any urban local body or a Cantonment
this provision has been deleted from Board established or constituted under any law for the time being in force”.
the said master direction vide an Therefore, the demarcation of a rural and urban area for the purposes of the
MGNREGA scheme is the local governance body, in case such body is a block
amendment dated April 20, 2018. of the municipal corporation, the area does not qualify under the MGNREGA
scheme.14
6.5 Areas for Consideration – Obtaining scheme, the interests of the migrant
Certain OVDs workmen and urban poor should
a. Need to increase Aadhaar be balanced against the additional
penetration: Given the broad range burden that bigger cities might have
of documents that can be furnished to bear, owing to becoming even more
as proof to obtain Aadhaar, perhaps a attractive migration destination with
migrant worker would not find it very employment guarantees.
difficult to obtain Aadhaar. However, d. NFS Act as a State specific relief:
despite such ability, the number of As discussed in Annexure VI, the
people without Aadhaar seems high procedure for obtaining ration card
(15.5 crore people). In this regard, it differs for each state with differing
might be useful to undertake a study levels of documentation required to
to identify States which have low be submitted. A ration card issued in
Aadhaar penetration and undertake a state is valid only in that particular
drives in partnership with local state. As migrant workers often leave
social workers to increase the level of their villages and move to cities in
Aadhaar penetration. other States, they are unable to receive
b. Low number of functioning benefits under NFS Act outside their
MGNREGA job cards: Basis an analysis home state. In this regard, the Central
of documents required to obtain a Government is already in process
MGNREGA job card, it appears that of establishing the ‘One Nation,
a migrant worker would not find it One Ration Card’ regime that will
very difficult to obtain such a card. eliminate this problem by introducing
However, Annexure III reflects, the nationwide portability of ration cards.
number of people without functioning However, as per data released by the
job card is very high (only around 50% Central Government only 490 ration
of bank accounts have been converted cards have been issued under this
to Aadhaar based payments). regime.39
Therefore, it appears that steps need
to be taken at a ground level to correct
the discrepancies in details provided 38. Section 2(o) of the MGNREGA Act defines rural as “any area in a State
except those areas covered by any urban local body or a Cantonment
by persons in their bank accounts, Board established or constituted under any law for the time being in force”.
MGNREGA job card and Aadhaar card Therefore, the demarcation of a rural and urban area for the purposes of the
MGNREGA scheme is the local governance body
to enable functioning job card. 39. Available at: http://impds.nic.in/portal?month=6&year=2020
c. MGNREGA limited to rural areas: The
application of the MGNREGA Scheme
is limited to ‘rural’ areas.38 If an area is
governed by a ‘municipal corporation’,
residents of such area would not be
eligible to avail employment under
the MGNREGA Scheme. As migrant
workforce often leave their villages for
cities owing to poor work opportunities,
they are left outside the benefits
under the MGNREGA Scheme. In this
regard, an employment guarantee
scheme similar to MGNREGA may
be considered for urban areas as
well. However, in formulating such a15
7. AADHAAR LINKING
7.1 At present, an Aadhaar Number is Number, address etc., are authenticated
required to be: (i) linked with a bank with the details available at the Aadhaar
account; and (ii) furnished before availing database with UIDAI.40 As per the KYC
benefit under scheme covered by Section Direction, it appears that in the event
7 of the Aadhaar (Targeted Delivery of the address mentioned in the Aadhaar
Financial and Other Subsidies, Benefits card does not match the current address,
and Services) Act, 2016 (“Aadhaar a self-declaration may be issued to this
Act”). For the purposes of “seeding” effect by the applicant. Often a one-time
an Aadhaar card to a bank account or password is sent to the registered mobile
another document (e.g. ration card), number to link the Aadhaar card to a
the Aadhaar Number and subsequently, bank account. This cannot be achieved if
the demographic/biometric inputs are the correct mobile number is not part of
matched against the stored data within the Aadhaar database, in which case the
Central Identities Data Repository which relevant person is required to visit the
was provided by the Aadhaar holder Aadhaar Kendra Centre to get it rectified.
during the enrolment/ update process.
7.3 Linking Aadhaar under welfare
Approximately 15,67,88,702 (~ 15.5 crore) schemes - Section 7 of the Aadhaar Act
people do not have an Aadhaar Number stipulates that as a condition for receipt
(“Excluded Persons”). To the extent of a subsidy, benefit or service for
the Excluded Persons are the intended which the expenditure is incurred from
beneficiaries of the various schemes the Consolidated Fund of India or the
introduced by the Central or State Consolidated Fund of States, the relevant
Governments (which require proof of Government may require the individual
Aadhaar), they would be unable to avail to undergo Aadhaar authentication. We
the benefits thereunder. For further understand that for most of the prominent
details in relation to this statistic, please schemes (including: (i) MGNREGA; (ii)
refer to Annexure VII. NFS; and (iii) the Employees’ Pension
Scheme, 1995 introduced under the EPF
7.2 Linking Aadhaar with Bank Account: -
Act)41, a notification under Section 7 has
The linking/ seeding process is complete
been issued - making it mandatory for a
only when the details of the individual
beneficiary to have an Aadhaar Number
such as name, date of birth, Aadhaar
in order to avail the subsidy or benefit.
Any mismatch in details, such as spelling
of name, date of birth or other detail
results in failure to link Aadhaar number
with the bank account or the ration
card / provident fund universal account
number etc.) which thereby results in the
intended beneficiaries not receiving the
benefits.
40. The Aadhaar Authentication API Specification which specifies the process
flow in which authentication is undertaken is available at: https://uidai.gov.
in/images/FrontPageUpdates/aadhaar_authentication_api_2_0.pdf
41. The Ministry of Labour and Employment issued a notification dated January
4, 2017 stating that proof of Aadhaar would have to be provided in order
to continue membership with and avail benefits under the the Employees’
Pension Scheme, 1995 introduced under the Employees’ Provident Funds and
Miscellaneous Provisions Act, 1952.16
7.4 Aadhaar Linking with MGNREGA - Accordingly, State Governments are
Under MGNREGA an eligible household required to undertake a ‘seeding’ process
situated in a rural area42 may register which entails: (i) completing Aadhaar
for a job card. The work which the authentication of beneficiaries: (ii)
Government is required to provide to verifying beneficiaries who have provided
a job card holder must be situated in a Aadhaar details but their authentication
rural area (applicants are eligible to be has not been validated; and (iii)
provided with work within a radius of 5 addressing failures of Aadhaar based
kilometers of their village of residence). authentication by introducing alternate
methods for identifying such beneficiary.
The Ministry of Rural Development
In case of failure in linking the bank
first issued a notification dated January
account with Aadhaar details, the bank
3, 2017 under Section 7 of the Aadhaar
accounts of the workers may be ‘frozen’,
Act, pursuant to which it has become
that is, payments or withdrawals from the
mandatory to obtain an Aadhaar card
account in question maybe suspended.44
in order to avail benefits under the
Therefore, while it may not be mandatory
MGNREGA scheme. Subsequently,
to have an Aadhaar Number to apply for
MGNREGA was brought under the
a job card under the MGNREGA scheme,
“direct benefit transfer” scheme of the
a worker would have to have/enroll for an
Government of India. Therefore the
Aadhaar Number, and link the same to
wages would be paid only under the bank/
post office account mentioned in the job
card.43 Newspaper reports suggests that 42. Section 2(o) of the MGNREGA Act defines rural as “any area in a State
except those areas covered by any urban local body or a Cantonment
payment of wages under MGNREGA Board established or constituted under any law for the time being in force”.
should be undertaken as ‘Aadhaar Based Therefore, the demarcation of a rural and urban area for the purposes of the
MGNREGA scheme is the local governance body, in case such body is a block
Payments’ (i.e. wages should be paid in of the municipal corporation, the area does not qualify under the MGNREGA
scheme.
bank/post office accounts linked with 43. We understand that cash payments under the MGNREGA scheme are
Aadhaar card). Consequently, State allowed only with prior knowledge and approval from the Ministry and State
Governments respectively. Therefore, while it is not necessary to provide
Governments are required to undertake bank account/post office number details at the time of application, the State
Governments are also required to undertake frequent verification for the
Aadhaar verification at the time of purposes of, inter alia, updating the job cards with bank account/post office
number details and detail of work demanded, work allocated and payment
crediting wages. details.
44. Available at: https://scroll.in/article/911575/in-jharkhand-aadhaar-woes-are-
depriving-nrega-workers-of-their-wages17
their relevant account to actually receive Section 12 of the NFS Act read with the
wages for the work done pursuant to the Cash Transfer of Subsidy Rules, 2015,
MGNREGA scheme; failing which the State Governments may extend direct
beneficiaries would be unable to receive cash transfers in lieu of distribution
the benefit. of grains in certain cases. To avail this
flexibility, ration cards are required to be
The graph reflected in Annexure III
seeded with a bank account.
(‘Table MGNREGA-I’) indicates that of
the total number of people enrolled under The graph reflected in Annexure IV
MGNREGA, bank/ post office accounts (‘Table NFS Act’) reflects that 19.33%
of approximately 50% have been frozen ration cards which have been issued (i.e.
(and accounts of approximately 50% 4,15,83,741 ration cards) have not been
have been converted into Aadhaar Based seeded with an Aadhaar Card – which
Payments). Many newspaper reports directly impacts the ability of citizens
seem to also suggest that wages have been to receive food grains under the public
often deposited into the wrong accounts distribution system as well as their ability
due to incorrect seeding. Please also refer to receive corresponding cash benefit in
to Annexure III (‘Table MGNREGA-II’) their bank accounts. The aforementioned
which provides for these statistics on a statistic does not take into account that
pan-India level. many persons who should be covered by
the NFS Act, are in fact not its beneficiaries.
7.5 Aadhaar Linking under the NFS Act: The As per the Central Government’s press
NFS Act provides for ‘Targeted Public release, there are around 8 crore migrant
Distribution System’. The Ministry of workers that are not covered by the NFS
Consumer Affairs, Food and Public Act.45
Distribution has issued a notification
This requires serious consideration by
dated February 8, 2017 under Section 7
the Central Government as food security
of the Aadhaar Act pursuant to which
benefits do not reach a large number of
existing ration card holders and new
migrant workers.
eligible beneficiaries are required to
provide proof of Aadhaar or enroll for
Aadhaar in order to receive subsidized 45. Available at: (i) https://pib.gov.in/PressReleasePage.aspx?PRID=1627985;
and (ii) https://www.livemint.com/news/india/rs-20-trln-package-free-food-
food grains under the NFS Act. As per grains-to-80-mln-migrant-workers-for-two-months-11589455837556.html18
ANNEXURE I
OVERVIEW OF KEY LEGISLATIONS
APPLICABLE TO MIGRANT WORKERS
BOCW Act and
Basis ISMW Act CLRA Act UWSS Act
BOCW Cess Act
Applicability • to every • to every establishment • to every • to every
establishment in in which 10 or more establishment unorganised
which 5 or more building workers are in which 20 or worker.
inter-State migrant employed or were more workmen
workmen are employed on any are employed or
employed or were day of the preceding were employed
employed on any 12 months, for any on any day of
day of the preceding building or other the preceding
12 months. construction work. 12 months as
contract labour.
• to every contractor
who employs or who • to every
employed 5 or more contractor who
inter-State migrant employs or who
workmen on any day employed 20 or
of the preceding 12 more workmen
months. on any day of
the preceding 12
months.
Establishment • any place where • any establishment • any place where • Unorganized
any industry, which employs building any industry, sector: an
trade, business, workers in any building trade, business, enterprise:
manufacture or or other construction manufacture or (i) owned by
occupation is carried work.1 occupation is individuals or
on. carried on. self-employed
workers; (ii)
engaged in the
production or
sale of goods
or providing
service of
any kind
whatsoever;
and (iii) in case
the enterprise
employs
workers, their
number is less
than 10.
1. Note: This does not include an individual who employs such workers in any building or construction work in relation to his own residence; the total cost of such
construction not being more than INR 10,00,000.19
BOCW Act and BOCW
Basis ISMW Act CLRA Act UWSS Act
Cess Act
Stakeholders • Inter-state • Building worker: • Contract • Unorganized
migrant worker: person who is employed labourer: a worker: a home-
a person recruited for any skilled, semi- workman hired based worker,3
through a skilled or unskilled, in/ in connection self-employed
contractor for manual, supervisory, with the work of, worker4 or a
the purposes of technical or clerical an establishment wage worker in
employment in an work for hire or reward, by or through a the unorganised
establishment in whether the terms contractor.2 sector (includes
another State. of employment be a worker in
• Contractor: (in
expressed or implied, the organised
• Contractor: (in context of an
in connection with sector who is
context of an establishment)
any building or other not covered
establishment) person who
construction work. by any of the
person who produces a given
prescribed
produces a given • Contractor: person who result for the
legislations).5
result for the produces a given result establishment,
establishment, for the establishment, other than a • Wage worker:
other than a other than a mere mere supply of a person
mere supply of supply of goods or goods or articles employed for
goods or articles articles of manufacture of manufacture remuneration in
of manufacture to such establishment, to such the unorganised
to such by the employment of establishment, by sector, either
establishment, by building workers or to the employment directly or
the employment supply building workers of contract labour through any
of workmen to the establishment. or to supply contractor,
or to supply The scope of this contract labour to whether
workmen to the definition includes a the establishment. exclusively or
establishment. sub-contractor. The scope of this non-exclusively,
The scope of definition includes for wages in
• Employer: in relation
this definition a sub-contractor. cash/ kind,
to a building or other
includes a sub- whether as a
construction work • Principal
contractor. home-based
carried out in an employer: (i)
worker, or as a
• Principal establishment means any person
temporary or
employer: (i) the owner thereof responsible for
casual worker,
any person and includes: (i) in the supervision
or as a migrant
responsible for relation to building and control of an
worker.6
the supervision or construction establishment;
and control of an work carried out and (ii) owner/
establishment; by or through a occupier/manager
and (ii) owner/ contractor, or by the of a factory (as
occupier/manager employment of building the case may
of a factory (as workers supplied be) under the
the case may by a contractor, Factories Act,
be) under the the contractor; and 1948.
Factories Act, (ii) without any
1948. contractor, the chief
executive officer of the
establishment.
2. A plain reading of Section 2(1) (b) of the CLRA makes it clear that the primary aspect to be considered in determining whether a workman is ‘contract labour’ is
whether the concerned workman was hired in connection with the work of a particular establishment through/by a contractor. Therefore, it may be concluded that
where the employment of a workman is not linked solely to the work of a particular establishment and he is employed for assignments with multiple establishments,
such a workman cannot be considered as ‘contract labour’.
3. Section 2(b) defines a ‘home-based worker’ as, “a person engaged in the production of goods or services for an employer in his or her home or other premises of his
or her choice other than the workplace of the employer, for remuneration, irrespective of whether or not the employer provides the equipment, materials or other
inputs”.
4. Section 2(k) defines ‘self-employed worker as, “any person who is not employed by an employer, but engages himself or herself in any occupation in the unorganised
sector subject to a monthly earning of an amount as may be notified by the Central Government or the State Government from time to time or holds cultivable land
subject to such ceiling as may be notified by the State Government.”
5. Schedule II of the UWSS Act lists these as: (i) the Workmen’s Compensation Act, 1923; (ii) the Industrial Disputes Act, 1947; (iii) the Employees’ State Insurance Act,
1948 ; (iv) the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952; (v) the Maternity Benefit Act, 1961; and (vi) the Payment of Gratuity Act, 1972.
6. Includes workers employed by households including domestic workers, with a monthly wage of an amount as may be notified by the Central Government and State
Government, as the case may be.You can also read
