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Managing Unspent Funds when Money is Scarce: Karnataka State Construction and Other Workers Welfare Board (kcowwb)

G. K. Karanth

Abstracts

This chapter explores the funds collected by the Karnataka Construction and Other Workers Welfare Board (KCOWWB)a welfare institution in the Indian state of Karnatakathrough a special tax, or ‘cess’. It discusses the controversies surrounding the collection and management of cess funds, including contentious issues regarding their non- or mis-utilisation, and analyses the different purposes for which they have been used, particularly given the fact that they have been drawn upon to provide relief in special cases (such as the COVID-19 pandemic). It argues, therefore, for the suitable modification of the laws that govern these funds so that they may be drawn upon when necessary in unforeseen situations without becoming a perpetual fallback option for the State.

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Grateful thanks go to Sanjeev Kumar, M. Maheshwara Rao, Aditya Amlan Biswas, Vasanth Kumar Hittanagi, K. G. Johnson, and Ravikumar. I am indebted to Khaleeil Shahi, Himamshu Upadhyay and Christine Lutringer for sharing much of the data required for the writing of this paper. The views expressed are those of the author.

1. Introduction

  • 1 Lakhs, in the Indian numbering system, a unit one hundred thousand (100,000). During March 2022, on (...)

1This chapter focuses on the funds accumulated over a decade and a half by a welfare institution established in the State of Karnataka, Indiathe Karnataka Construction and Other Workers Welfare Board (KCOWWB; henceforth, the Board). The primary source of funds for such boards is the collection of ‘cess’, a special tax, from persons and associations and from corporate bodies that build, repair or establish building infrastructure or carry out civil works. The establishment of associations or Boards dedicated to the welfare of workers in specific industries or occupations is quite an old practice in India (Kotha, 2018; Rao, 2009). The story of accumulated and unspent money is also common to all the country’s States. The Boards, autonomous bodies functioning within the Department of Labour and Employment in each State government, is an institution registered under the State’s Registration of Cooperatives Act, 1950. Each State has constituted such a Board in accordance with the central government’s Building and Other Construction Workers’ (BoCW) Welfare Cess Act, 1996. Any construction activity incurring a cost of above INR10 lakh (approximately USD 13,150)1 is legally bound to collect, from the builders, and deposit with the State’s Boards a cess of up to 2 per cent of the cost of the construction. Cess is also collected from government/public bodies and private sector bodies when they engage in any construction activity.

  • 2 One crore equals 100 lakh, thus denoting ten million.

2This ‘cess fund’ has become an important issue with regard to governance in all States, the sums collected having grown into a huge fund. For the 12 major Indian States aloneincluding Uttar Pradesh, Maharastra, Andhra Pradesh, Madya Pradesh, Bihar, Tamil Nadu and Karnatakait amounts to over INR 52,000 crore (approximately USD 6,842,000,000)2 (Sharma 2020b). Had there been a proper database of construction workers, Including those who are independent, at the department concerned at the State level, this money could perhaps have been efficiently used for the welfare of such workers, who constitute the second largest segment in the Indian economy. An annual fatality rate (fatal accidents per 1,000 workers) of 0.22 has been estimated for the construction sector for the year 2012 (Patel and Jha, 2016). And this may be a conservative estimate. There are as many, if not more, unreported accidents, without counting those who may have suffered injury, chronic illness or the loss of limbs and therefore of livelihoods.

  • 3 These financial rules and procedures are prescribed in the Guidelines for Operation of Funds in Ban (...)

3Accusations have been rife since the day cess began to be collected that it was not being used for its stated purpose. Some even argue that the money is lying idle, earning huge sums in interest from the banks at which it is deposited. This chapter aims to give an account of the circumstances under which the fund grew to the size it did in Karnataka state, and of how it was not used as per the financial rules and procedures prescribed by the government.3 Following a few introductory remarks regarding the constitution of the Board and of the funds collected in the form of the cess in the State, the chapter discusses some of contentious issues regarding the collection and management of the Fund. The third section consists of a brief account of the different purposes for which the Cess Fund has been used over the years, includingcurrentlyfor the purposes of ameliorating the hardships arising from the COVID-19 pandemic. The final section raises, in conclusion, some important issues and challenges with regard to the future of such Cess Funds and the welfare of those workers for whose sake the cess is levied and collected.

  • 4 The Building and Other Construction Workers’ (Regulation of Employment and Conditions of Service) ( (...)

4The central government legislation itself took nearly eight years to elaborate, and its adoption at the level of the constituent States took much longer. The State of Karnataka, for example, adopted the legislation only in 2006, ten years after the Act came into force. This long gap between the passing of the Act in 1996 and the actual adoption of its principals by the different States is a clear indication of the relatively low level of unionisation in the sector and of a lack of government response to the demands made by unions. The rules were first adopted by the State’s Legislative Assembly on November 1, 2006. Following the broad set of rules framed by the central government, the State developed further rules4 concerning the formation of a Board, the formation of a State Advisory Committee, the registration of establishments hiring construction workers, and the roles and responsibilities of the Board’s members and of its chairperson.

  • 5 The Law permits levying a cess of up to 2 per cent.

5The rules for the State of Karnataka establish that any building or construction activity involving a cost of over INR 1,000,000 (approximately USD 13,150) shall pay a cess of 1 per cent of these costs.5 This cess shall be collected by the authority responsible for granting the license for or approving the plan of work proposed. The sum thus collected shall be credited to the account of the Board within a month of the date of the collection of the cess. The collection authorities are thus those that sanction a building project: village Panchayats, municipalities, municipal corporations, and city administrative bodies.

  • 6 The tasks for which MGNREGA stands for are rural and are compensated through a whole network of rur (...)

6As our focus in this chapter is on the workings of the Board and on the management of the Cess Fund, it may be helpful at this juncture to make a few points that are indicative of certain lacunae, even at the planning stage. Firstly, the rules regarding cess make it clear that building and/or construction activity may be undertaken by any of the following: i) government departments and related undertakings, ii) local authorities, where the work is carried out directly or through a contractor, c) the builders or developers of large complexes or groups of houses, or offices, malls, etc., and d) individual owners of houses or buildings, which they construct or repair, alter or modify. Under a recent order of the government of Karnataka, works undertaken through the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) also come under the purview of the rules regarding cess. It is not clear whether the works assigned to workers have an allocation for the cess to be paid, for such activities are to be defined as Construction work under the Act.6

  • 7 The Cess collected is based on the estimate of costs for a construction – as submitted at the time (...)

7Secondly, when any building work is proposed and the plan is approved, it is not necessary that the total projected cost be assessed, especially with regard to additional work such as carpentry, electrical work, flooring, and other ornamental finishing of the structure(s) in question. The workers engaged in these specialisationselectricians, carpenters, tilers, painters, etc.are, however, included in the definition of construction workers. The point worthy of note here is that the cess is generally assessed based on the costs as proposed at the time of seeking approval, but that quite a substantial portion of costs are neither assessed nor known at that point. Consequently, much of what could have been accrued in the form of cess is not covered under the present dispensation. There is no reassessment of the actual costs or the cess payable by the time construction is completed,7 even though the costs may end up being much higher than the original estimate.

  • 8 Professor D. Rajasekhar, Institute for Social and Economic Change, Bengaluru. Personal interview on (...)

8Thirdly, a good deal of civil work gets carried out, including repairs to roads, drains, and railways, but as none of these ever require approval they remain outside the cess’s net. Finally, there is no way of assessing how many construction plans are approved each year. Even if local bodies collect the cess that is payable by individuals and builders, there is no way of knowing whether what was collected has indeed been remitted in the favour of the Board and its Fund. According to the Act and to the pertaining to payment, local bodies are expected to transfer the money within 30 days of its collection. According to one scholar who is an expert on Panchayat Raj institutions, a common feature of most Panchayatsnot only in Karnataka but also elsewhereis that they ‘drag their feet in remitting the different cesses they collect to the respective accounts’.8 The Act provides for the regular monitoring of and for social audits of the activities of the Board. No study has properly assessed the basis of collection or estimated the sums that are collectable but have not been collected.

9Thus, not only was there substantial delay in the enactment of the legislation and rulesboth centrally and at the level of the Statesthere is also sufficient reason to believe that there is no proper assessment of the sums payable in the form of cess. Had there been, and had the payable sums been systematically assessed, perhaps the quantum of cess collected would have been higher, at least by half.

10Despite these limitations on expanding the base of what is collected in the form of cess, there has been impressive growth in the sums collected over the years. In the remainder of this section of the chapter, we shall look at the available data on cess collection and on registration of the workers to make them eligible for the various benefits concerned.

11Over the 11 years of the establishing of the Karnataka Building and Other Construction Workers Welfare Board (KBOCWWB) and the collection of cess, there was a gradual but impressive growth in the amount collected as cess. On June 30, 2020, the amount collected and interests accrued had reached the staggering sum of INR 9,233.8 crore (approximately USD 1,214,000,000). Add to this the sum of INR 23.84 crore (approximately USD 3,137,000) in the form of the fees received for enrolment or membership renewal from construction workers and the amount rises to INR9,257.64 crore (approximately USD 1,218,000,000). This from a starting point as low as INR 1,006 crore (approximately USD 132,000,000) in the first and INR 48.84 crore (approximately USD 6,000,000) in the second year following the establishment of the Board.

Table 1: Collection of Cess and Related Income Through the Years (KBOCWW) (in INR)

Year

Cess Collected

Interest from Fixed Deposit**

Interest from savings

Registration fees

Total

200607

 

 

62,404

10,000,000

10,062,404

200708

450,258,266

8,100,698

77,751

10,000,000

468,436,715

200809

1,649,399,007

16,773,637

73,450

3,000

1,666,249,094

200910

2,275,668,572

238,337,346

 

16,060

2,514,021,978

201011

3,252,020,674

350,593,377

7,593,646

2,600

3,610,210,297

201112

3,606,168,040

984,649,868

8,011,132

13,467,708

4,612,296,748

201213

4,835,803,512

1,337,854,165

30,861,539

22,539,427

6,227,058,643

201314

4,808,724,064

1,987,532,910

6,090,787

61,032,380

6,863,380,141

201415

6,560,666,076

3,070,040,795

7,530,584

56,964,797

9,695,202,252

201516

6,211,145,167

2,689,498,847

22,585,797

6,509,413

8,929,739,224

201617

7,092,569,959

3,158,332,618

69,456,253

32,742,465

10,353,101,295

201718

7,699,335,557

3,489,266,372

172,121,883

51,405,447

11,412,129,259

201819

8,685,308,302

3,274,772,831

64,260,880

23,682,946

12,048,024,959

201920

9,023,039,219

4,719,619,229

 

 

13,742,658,448

202021*

381,971,892

91,928,768

 

 

473,900,660

Total

66,532,078,307

25,417,301,461

388,726,106

288,366,243

92,626,472,117

In crore

6,653.21

2,541.73

38.87

28.84

9,262.65

In USD

875,422,082.98

334,438,177.12

5,114,817.18

3,794,292.67

1,218,769,369.96

Note: * As on May 30, 2020.

** Fixed Deposit, in a commercial bank: The sum accumulated is deposited in a Bank for a period of a year or two. The sum thus deposited is not required for spending towards the purposes of the Fund, but instead to earn income by way of interest. Banks are invited to offer competitive rates of interest to bid for such deposits.

  • 9 Grateful thanks are due to Mr. M Maheshwara Rao, former Principal Secretary, Department of Labour f (...)

Source9: KBOCWWB Progress Report as on May 30, 2020

  • 10 The sums do not include interest earned or enrolment fees collected.
  • 11 Interview with Mr. Vasanthkumar Hittanigi, former CEO of the Board, 2122 October 2020.

12 Among the various states, Karnataka ranks second for the highest amount of cess collected and accumulated over the years (NCC-CL, 2020).10 Given the attention attracted by the growth and non-utilisation of Karnataka’s Cess Fund and the negative light in which these two elements are often seen (e.g. see Sharma, 2020a), it is, perhaps, worthwhile pointing out that at one time Karnataka led all other states in the mobilisation of cess funds, outstripping even Maharashtra State. This was possible mainly due to the formulation and to a systematic enforcement of the BOWCW (Regulation of Employment and Conditions of Service) Rules, 2006. ‘So much so, that by the third year of the implementation of the Act, the daily receipts of cess at the Board reached an average of INR1 crore [approximately USD 131,600]. Gram Panchayats (village Panchayats, the local governance body in the three-tier system) had started to send demand drafts drawn on commercial banks for sums as low as INR 1,000 [approximately USD 13.15], having collected the cess from house builders!’11 The State of Karnataka had also witnessed a very encouraging climate for the growth of real estate and building activities during the years 2005 to 2015. The quanta of outstanding housing loans through commercial banks and other housing finance companies during 2011 and 2020 are indicative of the growth in construction activities in the country, growing from as low as INR 5 lakh crore (approximately USD 65,789,474,000) in 2011 to an estimated INR 24 lakh crore (approximately USD 315,789,474,000) by 2020 (Reserve Bank of India, 2020). Home loans through these institutions alone had grown at over 17 per cent in a decade.

13While the growth in the amount of cess collected was clearly impressive, having risen to over INR 9,215 crore (USD 1,212,500,000) by the end of the financial year 201920, it is to how this Fund was managed that we shall now turn our attention, as the management of the Fund has not been free of contention.

2. Management of the Funds

  • 12 This section draws heavily on long and repetitive consultations with four Secretaries/Principal Sec (...)

14As the flow of monies into the Cess Fund of the Board began to rise, there had been demands for them to be used appropriately and for their stated purpose. Initiallyat least for the first four or five years following the establishment of the Boardrelatively little public attention was paid to its existence and its funds, but this was to change in subsequent years.12 As one former CEO of the Board points out:

The manner in which the funds are managed depends upon the structure and character of the Board that has the powers to manage it. Over the years, the members of the Board have not shown as much missionary zeal, humanitarian concern or […] commitment to a cause as [did their predecessors]. [The] involvement of non-official stakeholders (e.g. industry representatives, trade unions or […] representatives of [the] workers themselves) is crucial, but over the years [has] tended to become merely ornamental.

  • 13 See Writ Petition (Civil) NO. 318 OF 2006, Supreme Court of India, the National Campaign Committee (...)

15A senior civil servant has remarked that a study of the minutes of the mandatory meetings of the Board would reveal the true purpose for which its members were aiming to make use of the funds. There had been attempts to systematically hijack the Board and its funds for purposes that do not advance the goals for which the Board had been established. He drew our attention to a formal complaint lodged, by activists fighting for the rights of construction workers, with the Supreme Court of India.13 Despite repeated directives of the Supreme Court, the States had not taken the necessary steps to constitute State-level Advisory Committees as per Section 4 of the BoCW Act. The Comptroller and Auditor General (CAG) Report for the year 2014 had also remarked that the committees had not been constituted (GoK, 2014). It is notable that the web pages of the State’s Board make no mention of either the constitution or the existence of the Advisory Committee, which is meant to advise the State government on matters arising from the administration of the Act. The CAG Report also notes also that as per Section 5(1) of the Act there ought to have been an Expert Committee constituted to advise the State government and the Board on the functioning of the Board and the implementation of the Act and its rules.

The State Government constituted an expert committee only in June 2012, more than five years after notification of the Rules, 2006, and the Committee’s advice had not been obtained before amending certain provisions in the Rules, 2006 on 1 February 2013... Thus, the requisite institutional mechanism for advising the State Government on effective administration of the Act was either not in place or not functional.

Comptroller and Auditor General of India, 2013, 81.

16 The most contentious issue concerning the Cess Fund has been the extent to which and the purposes for which it is being used. Various NGOs engaged in fighting for the rights of workers in the unorganised sector, and especially for those of construction workers, have taken up issues raised in the CAG Report for the year 2014, which found only meagre spending of the amounts collected. While on the national level 25 per cent of the funds collected were reported to have been spent, in Karnataka the figure was a mere 8 per cent. One senior district level Labour Inspector commented on why so little of the funds collected in the form of cess were spent:

There is an acute shortage of labour officers and inspectors. Because of the vacancies […], some of us are responsible for [a] whole district. Some labour officers are in charge of more than one district […] There are over 40 different labour laws and we are responsible for acting upon them. On top of this burden, we are expected to attend meetings either at the district headquarters or elsewhere at least once or twice a month […] The sad part of it is even though some posts are shown against the Construction Board, they are all at the State Headquarters, and as employees of the Labour Department we are responsible for the work of Board also. We are overburdened.

17In this respect, the CAG report had made critical remarks as early as 2014:

Against 164 sanctioned posts of LIs, 34 (21 per cent) remained vacant for 1 to 16 months during November 2009 to March 2011. As of March 2013, 25 posts (15 per cent) remained vacant for 1 to 24 months. In sampled districts, 11 out of 45 posts of LIs had remained vacant during November 2009 to March 2011 and two remained vacant during April 2011 to March 2013. As a result, the registration of building and other construction workers under the Act suffered.

Comptroller and Auditor General of India,2013, 81.

18Though not in a consistent format, the annual reports of the Board do make reference to the human resource situation. In April 2021, according to interviewed officials of the Board, there were over 147 male and 128 female Data Entry Operators working for the Board, at the district level and in the State Headquarters. Officials with the rank of Labour Inspectors, Labour Officers, and Assistant Labour Commissioners from the Labour Department have additional responsibilities related to the Board. The Annual Report of the Board for the year 2019 states that there were around 16 people working on a dedicated basis at the Board and another 10 to 15 of various ranks working in the Labour Department attending to the Board’s work. This compared to 632 sanctioned posts of different ranks and designations. The bulk of the work is being outsourced to contract employees.

19 Given this situation with respect to human resources, carrying out a significant mandate of welfare activities throughout the State is a daunting task. A former Labour Commissioner, who had held the office of CEO of the Board, commented:

Had it not been for the deduction of the cess at source—at the stage of building approval by various bodies — […] the cess [collected] would not have been as much as it now is. Our own staff would not have had the time to attend to that task too.

20 The issue of unutilised cess funds became a hot topic and raised more serious concerns during two crises in the State of Karnataka. The first was an unprecedented flood, which particularly affected certain districts in the north and south. There was a huge loss of life and damage to property. Not only were crops destroyed, residential buildings collapsed, notably in the district of Kodagu, which in just ten days experienced 3.5 times the long-term average rainfall (Menon, 2019). And the devastation was not confined to Kodagu, but affected the whole State. When relief failed to materialise in the form of special assistance from the Union, and the state was finding it hard to rise to the challenges of relief and rehabilitation, there were demands that the State fall back on other resources. One such resource being the huge and unspent Cess Fund available to the Board.

21 As reports of the devastation began to pour in, like the waters the pressure on the government began to swell. By 10 August 2019, in as many as 237 villages in over 30 administrative blocks (taluk) across 17 districts, the flood situation had worsened, affecting hundreds of thousands of people (Deccan Herald, 2019). It was in this context that the Chief Minister of Karnataka announced that relief would be provided to affected families from the unspent cess available to the Board. Reportedly, however, the then Secretary of the Board declined to act upon the Chief Minister’s proposal, being of the opinion that the funds available to the Board were to be used only for the purposes for which they had been collected. As Kotha and Talekar state:

If the cess is levied, maintained or utilized contrary to the ‘specific purpose’ condition, it would amount to a fraud [with regard to] the Constitution. As a consequence of such[an] act, the quintessential feature not being met […], it could be argued that a cess tax loses its character of a cess and becomes a tax.

Kotha and Talekar, 2018, 9.

22Soon after, the Secretary to the Board was transferred out of his position, and the news became a hot topic for newspapers and TV channels and on social media. It was alleged that the Secretary of the Labour Department was responsible for the transfer of the Board’s secretary. Whatever the explanations offered or accusations made, the fact remains that the Board’s Secretary was transferred. The Board’s funds, however, were not transferred, and were apparently not to be used for any other purposes than those for which they had been accumulated.

23 The second crisis was the unprecedented ‘lockdown’ imposed during the COVID-19 pandemic. How and for what purposes the Cess Fund was then used is the focus of this chapter’s next section. For the present, it would also be appropriate to point out how there had been use of the funds in the name of benefits and/or advancing the cause of construction workers. Not much has been discussed about some of these, and therefore, a mention of it would be worthwhile in analysing the process of creation and management of Cess Funds.

2.1 In the Name of Skilling and Training

  • 14 Any supply of service, or material or civil work, if to be carried out by private persons or bodies (...)
  • 15 The relevant section reads as follows: ‘4. Exceptions to applicability. - The provisions of Chapter (...)

24 One large investment that the Board did make from the Cess Fund was to establish a skilling and training institution, named after a well-known engineer and key figure behind the construction of Karnataka as a modern Statethe Sir M. Visweswariaya Construction Academy. A plot of 20 acres was bought from the Karnataka State Industrial Area Development Board for a sum of over INR 13 crore (approximately USD 1,700,000), inclusive of taxes and registration fees. The aim was to establish a residential training institute to skill workers and new entrants to the profession in the various fields of building and construction activity. The institution was modelled on similar institutions in Pune (Maharastra) and Hyderabad (now Telangana). A very ambitious plan had been prepared for the construction of academic and administrative blocks, residential blocks, training laboratories, etc., with a budget of over INR 240 crore (approximately USD 31,600,000), for which the necessary approvals had been obtained from the competent authorities. A contract was to be awarded to a private builder for the carrying out of any supply of service, material or civil work, for which purpose a public sector undertaking, in this case a specially created State agency, was invited to take up the responsibility.14 Here we find an important means by which often the goals of transparency and equal opportunity for stakeholders are often, in a way, denied. Under the Karnataka Transparency in Public Procurement Act, 1999, for the procurement of any goods or services of a value greater than INR 1 lakh (approximately USD 1,300) and for construction work of a value greater than INR 5 lakh (approximately USD 6,500)a through tendering process, involving an e-portal, is required. The State, however, may waive this condition under special circumstancesthe concession generally known ‘Section 4G’. Chapter 4, Section G of the Act lists exceptions to the applicability of the Act.15 By indicating to the urgency of a matter, a special exception may be obtained from the government’s Finance Department, which is authorised by law to declare such exceptions. Besides private agencies or individuals, government undertakings are also permitted to apply for such an exception.

  • 16 In a personal interview, the official concerned explained his rationale for standing firm in his op (...)

25 M/S Hindustan Construction Company Ltd. (HCC) was assigned the contract to build the campus. HCC in turn awarded the contract to a private builder who was all set to launch the project. Several trade union bodies and NGOs had raised objections to the contract, yet the State was going ahead with it. The minister concerned was keen on extending the contract amount by over INR 200 crore (approximately USD 26,300,000) and had been insisting upon building a hostel for resident trainees such that annually the needs of over 12,000 trainees could be catered for. The logic of this approach was not acceptable to the Secretary of the Labour Department, who was responsible for seeking the government’s approval for spending such a large sum of money. There was open disagreement between the minister concerned and the civil servant, the latter remarking in the prepared documentation that there was a potential legal hurdle to the expenditure. According to Section 24 (3) of the Act, in any given financial year the Board cannot incur administrative expenses (e.g. salaries and other allowances, other remuneration to its members, officers and other employees, and expenditure on administrative costs) exceeding five per cent of its total expenses during that financial year. Enhancing the allocation for the building project by over INR 200 crore would have certainly seen it exceed this 5 per cent limit.16 In his note to the cabinet, which approves all such proposal on behalf of the government, the official cited extensively the remarks that had been made by the CAG concerning the expenditure patterns of the Board in its Report on the General and Social Sector for the Year Ended on 31 March 2013.

26Since we are discussing the pattern of fund use by the Board, it is appropriate here to make special reference to these remarks. Page 91 of the Report (Comptroller and Auditor General of India, 2013) contains a table indicating the extent of total expenditures of the Board for each year during the period 200713, and the percentage of administrative expenses for the corresponding year.

Table 2 Administrative Expenses as a Percentage of Total Expenditure by the Board

Year

Expenditure (INR crore)

% Administrative Expenses

Administrative

Total

200809

0.81

1.5

54

200910

1.33

2.89

46

201011

2.32

6.85

34

201112

2.62

8.34

31

201213

3.45

11.35

30

Total

10.53

30.93

 

Total (USD)

1,385,526.31

4,069,736.84

Source: Adapted by the author from Comptroller and Auditor General of India,2013, 91.

27Even though the Board offered the explanation that in the initial years of such a Fund there is likely to be a higher share of administrative expenses, the CAG Report observed that there ought to have been a corresponding expenditure for which the cess was being collected. For such an expenditure to occur, it would be necessaryas a basic requirementto identify and register workers as members so as to make them formally eligible for welfare benefits.

2.2 In the Name of Spreading Knowledge about the Board and the Act

28 As we have seen, the collection of cess grew from around INR 165 crore (approximately USD 21,700,000) for 200809 (the third year following the establishment the Board) to INR 770 crore (approximately USD 101,300,000) for 201718. Even when the COVID-19 pandemic was declared and began to spread across India, a complete lockdown being enforced, the amount of cess collected stood at INR902 crore (approximately USD 118,700,000). Certain questions clearly arise at this point: What about the people for whose welfare the cess was being collected? How many of them were there, and what benefits were they receiving? Were they enrolled as registered members, enabling them to be beneficiaries of welfare schemes? Were they even aware of the Act, of the various schemes, and of their entitlements?

29 It is well known that occupational data for the working population is collected and made available once every ten years when the decadal census and/or the sample surveys carried out by the NSSOs (National Sample Survey Organisations) are conducted. But by the time the actual data is made available, the realities on the ground may have changed significantly, especially in sectors such as construction. There have been varying estimates of size of this particular sector’s workforce. The National Campaign Committee for Central Legislation on Construction Labour (NCC-CL) estimates it to have been 22,59,608 individuals for the year 201617 (NCC-CL, 2020).

30The Periodic Labour Force Survey (201718) reveals that over four decades, from 197778 to 201718, there had been a steep increase in the proportion of the rural labour force engaged in construction activitiesfrom 1.7 per cent to 14.5 per cent among men and from 0.6 per cent to 5.3 per cent among women. A similar increase can be seen among the urban workforce, from 4.2 per cent to 11.7 per cent among male workers and from 2.2 per cent to 4.1 per cent among female workers (NSSO, 2018, 6465). For the State of Karnataka, workforce data was available for the year 201112, which showed a 6.1 per cent growth in the proportion of the workforce engaged in construction activities (GoK,2015, 421). Yet, throughout the years of the Board’s existence, the enrolment of construction workers was not keeping up with the rate at which cess collection was growing.

Table 3 Workers enrolled and percentage benefited, 2008‒19 to 2019–20

Membership enrolment

Up to 201213

201314 to 201718

201819

201920

Total

Members enrolled

304,370

987,088

320,738

144,933

 

Cumulative member numbers

304,370

1,291,458

1,612,196

1,757,129

1,757,129

% members benefited

5.25

20.47

7.44

7.12

29.91

Source: Compiled from various KCOWWB reports.

31 What is to be noted from Table 6 and the discussion preceding it is disappointingly reflective of the nature of the functioning of the Board in fulfilling the goals of the Act. To begin with, there is no clear assessment of the extent of the workforce engaged in construction activities. Secondly, only a small fraction of the estimated workforce is being enrolled. Thirdly, even among those enrolled only a third of workers are benefiting from the Board’s spending on welfare.

32 When asked, Board and Labour Department officials pointed to the very low level of awareness of the Act, the Board, and the various welfare schemes. With a view to raising the profile of these schemes, huge sums of money are spent. A small, pocket-sized diary is printed listing the salient features of welfare measures, procedures for enrolment, and the steps to be followed in order to claim benefits under the Law. Likewise, huge banners are erected in prominent places at the block and the district levels. As for any other government programme, a publicity campaign is carried out once a year. The department prints a wall calendar, incurring huge costs for printing and distribution. And while there are restrictions regarding the printing of photographs of political figures, including the of minister concerned (an exception being the Chief Minister), these norms are violated. Put simply, these supports often become mechanisms for disseminating personal publicity, more so if the campaign takes place when a general election is just around the corner. There had been an appeal against showing the face of a Chief Minister advertising the different schemes available through the Construction Board in his state, but the advertisement campaign was being telecast throughout the nation.

33 Although the actual sums of money it spends on advertising are not made available, it is well known that Karnataka State has not been an exception to this trend in attempts to seek party publicity and/or personal publicity. During 2016, a Board official was asked to release INR 5 lakh (approximately USD 6,500) to pay for billboards that had been put up along a route taken by the Chief Minister. The ‘command’ to release the sum came from the office of the minister concerned. The Chief Minister was due to visit the minister’s constituency and the latter therefore wanted to welcome this prestigious guest. The display of similar banners and billboards has become part of popular political culture over the years. Failure to do so or to do so with sufficient pomp is considered an act of in subordination. In this particular case the minister in question had wanted to erect such billboards and to pass them off as elements in an awareness raising campaign to spread knowledge of the various schemes. The Board official was forced to oblige the minister, in the name of raising awareness.

34Soon after the above incident, in the month of June 2016, a newly constructed building destined for the offices of the Labour Department was to be declared open. One among these offices was the Construction Board. The Chief Minister of the State was invited to perform the opening. The minister concerned had to demonstrate his ‘loyalty’ and to impress the Chief Minister with a ‘good show’ of worker participation. In haste, 100 workers, from various parts of the State, were identified as ‘beneficiaries’, and cheques ceremonially issued to them. Likewise, a few widows were invited to receive compensation for the accidental death of their spouses while at work. A few factories in and around Bengaluru were instructed to send delegations of workers to participate in the event. The net result was that over 3,000 people attended the inauguration of a building. Each was offered a packed lunch, but with strict instruction to the caterer not to commence distribution as long as the Chief Minister was at the venue. A stage had been erected at a cost of over INR 25 lakh (approximately USD 33,000). These costs were all to be divided among the different departments concerned, each being paid out by one or the other budget head. The costs of printing invitations, putting up the stage and providing for seating arrangements, catering, bouquets and garlands, ceremonial gifts, etc. were not necessarily within the limits permitted under the Karnataka Transparency in Procurement Act. But there was a special provision under Section 4G of the Act. The Board, too, had to pay its share, in the name of creating awareness among construction workers of the various schemes available for their welfare.

2.3 Trade Unions—The Vehicle for Enrolment

35 A former official of the Labour Department, who was also closely associated with the formation of the Board, has given a detailed account of efforts made in the Board’s early years (Hittanagi, 2019). One of the mechanisms employed involved approaching both national and mainstream trade unions and inviting them to play a greater role in reaching out to construction workers. In an interview, this former official narrated how he asked trade union leaders to ‘stop banging the doors of industrial houses [and] instead [to] reach out to [] construction workers at their [places of work] and enrol them as members [] enable them to get the benefits that are rightfully [theirs]’.

36 In the years following the formation of the Board, the number of trade unions actively furthering the cause of construction workers rose from around 8 to 10 to over 100 by 201819. One of the critical roles that trade unions had was to certify a person as having been a construction worker. As one prominent trade union leader, Mr. Shiva Prakash, pointed out, ‘Had it not been for trade unions, even the meagre number of persons who are now enrolled as members would not have been there’. Discussions with several Labour Inspectors and other officials in the field revealed that it is rare for a worker, on his or her own, to seek to enrol. Instead, many of political leaderselected officials and othersprocure hundreds of blank application forms to be distributed among their followers. These are encouraged to fill a form out and to hand it over to a better-informed follower, who in turn files the application for enrolment. There have also been reports of and complaints regarding middlemen demanding a fee, over and above the requisite fee, for enrolling construction workers as eligible members.

37Perhaps the statement made by Mr. Prakash uncovers a lot more. It would be unrealistic to expect Labour Inspectors or field officers to go about enrolling members. They are already overworked. Employers, for their part, do not see it as to their advantage to encourage workers to enrol, or to issue a certificate to the effect that a worker is in their employ. The social organisation of work is such that every individual working for a builder/contractor does so invariably on a casual, daily-wage basisif not on a piece-rate basis, payable weekly. While such workers are covered by the Act, formally certifying them as regular employees would entail the employers having to contribute to the Employee Provident Fund and Employee State Insurance. Even if aware of the Board and benefits of registering as construction workers, they would not proceed to enrolling merely because it was difficult to support their application with a regular employment certificate.

38 In such circumstances, the role of the trade union has become a critical one. It was decided that a worker who submitted an attestation issued by a trade union to the effect that he or she was a construction workerand that for at least 90 days of the year this person had been working as onecould enrol. But as another former CEO of the Board remarked,

39While much good was done by the unions, it also opened the flood gates [for] fictitious members. Many local unions, [] fly-by-night trade unions, began to create fictitious members and claim benefits in their names. We knew it when attempts were made to trace the beneficiaries. Many of them were non-existent. There had been instances of a 62-year-old woman who had affixed a signature on a form meant for claiming a benefit for the funeral of her deceased husband, but the husband had actually died ten years earlier.

2.4 Actual Disbursal of Benefits

40Focusing on actual expenditures with regard to the disbursal of welfare benefits to registered construction workers, we find that by March 2020the sum of INR 516 crore (approximately USD 67,890,000) had been spent. This constitutes a mere 7.76 per cent of the actual cess collected since the Board’s inception, not taking into account interest earned on the unspent cess deposited with commercial banks. Indeed, the interest earned until the end of March 2020 amounted to INR 2,541.43 crore (approximately USD 334,400,000). In other words, actual expenditure was barely 20 per cent of the interest earned by the Cess Fund. A shot in the arm for workers and for the trade unions representing them occurred after the CAG Report of 2013, when disbursals and expenditures rose considerably. Both slowed again, however, with the lowest figures occurring during the year 201718, the year when concerted efforts were made to identify fictitious members and to digitise the records new and earlier applicants. The then Department of Labour Secretary to the Government had been so vigilant regarding the affairs of the Board that he shifted his office from the Central Secretariat building (Vikasa Saudha) to the newbuilding in which the various offices of the Labour Department were housed. It was reported that many trade union activists protested over attempts to digitise the enrolment of construction workers as also over the strictness with which claims to benefits were being processed. During one meeting of Board officials, the minister is said to have remarked ‘Some officials of the department are sitting [on] the Board’s funds as [though] the funds are their inherited legacy!’

41

Table 4 Welfare benefits disbursed and % of beneficiaries, 2007–8 to 2019–20

Table 4 Welfare benefits disbursed and % of beneficiaries, 2007–8 to 2019–20

Note: All figures are percentages unless otherwise specified.

* Housing (Karmika Gruha Bhagya); Liquid Petroleum Gas (LPG) connection to registered construction workers (Karmika Anila Bhagya); BMTC or KSRTC bus pass; and assistance for preschool education and nutritional support of the child.

Source: Compiled by the author from KBOWW Board data.

Table 5 Type of benefits and amount Disbursed (INR, in % Share of Expenditure in the Fund) by the Board (2007‒08 to 2019‒20)

Table 5 Type of benefits and amount Disbursed (INR, in % Share of Expenditure in the Fund) by the Board (2007‒08 to 2019‒20)

Note: All figures are percentages unless otherwise specified.

Housing (Karmika Gruha Bhagya); LPG connection to registered construction workers (Karmika Anila Bhagya); BMTC or KSRTC bus pass; and assistance for preschool education and nutritional support of the child.

Source: Compiled by the author from KBOWW Board data.

42 As though in response to public criticism, but also due to changes in officials due to the transfer of some and to it being an election year, there was a steep increase in the number of beneficiaries as well as in the amount spent during 201819. In the following year, 201920, for almost four months there was no full-time minister in charge of the Department. Rather, the Chief Minister held several ministries personally until, after a gap of four months, a new minister was appointed. Whether as a result of there being no minister in office or of the enthusiasm of a government newly in office, 201920 saw the highest number of beneficiaries (125,188 individuals) and the largest amountINR 214.49 crore (approximately USD 28,220,000)disbursed, both record figures since the launch of the Board. These figures pertain too to the period just prior to the declaration of the COVID-19 pandemic.

  • 17 For a detailed list of the various schemes under which welfare benefits are disbursed, see the ‘Ser (...)

43 In the years since its establishment, the range of benefits operating under the aegis of KBOCWW Board had widened. Some officials claimed that several of these benefits were so novel that other States began to adopt them in their own programmes. These include awards to construction workers for their exemplary services (Shram Samman), recognition accorded with a civic reception to children who excel in their studies, and financial support to workers to help meet the costs of the marriages of their daughters. The largest number of beneficiaries is consistently found across the years in the scheme of support for the education of the children of construction workers. Sums disbursed ranged from INR2,000 (approximately USD 26) for passing first-year school exams to INR 7,000 (approximately USD 90) for completing an industrial training course or a professional diploma. A sum of INR 25,000 (approximately USD 330) is paid out to persons enrolling on a Bachelor’s degree in engineering or a medical field, and for passing each successive year of such courses the student is paid INR 20,000 (approximately USD 260). If only data management had been a little more efficient at the Board, it would have been useful to assess the changing social character and aspirations of construction workers by looking at amounts disbursed and the number of beneficiaries of such educational support.17

44 Support for the education of the children of construction workers thus far remains the topmost scheme in terms of beneficiary numbers (83.62 per cent), but also in terms of spend (35.62 per cent). Considering the efforts that have gone into eliminating child labour and the incidence of ‘no where children’ in the construction sector (e.g. Wardle, 2013; Olsen and Morgan, 2015), the scheme for supporting education is a laudable one. It has, however, reached approximately only 20.06 per cent of the registered construction workers with children. Next in numerical preponderance in terms of beneficiaries is assistance towards marriage expenses, accounting for 8.77 per cent of all the beneficiaries until March 2020. A sum of INR 50,000 (approximately USD 660) is made available for the wedding of a daughter of a registered construction worker, and registered workers can obtain such assistance for the marriage of up to two daughters.

45 Fictitious membership is not the only means of illegitimately securing benefits from the Board. Welfare benefits have also been a target. For example, it became known that in one district there had been a steady increase in the number of claims for marriage assistance. An inspection was carried out, and it was discovered that in connivance with the official responsible at the district level, fictitious marriage certificates had been being submitted, along with other ‘proof’ such as wedding invitations and photographs of couples concerned. Several crore of rupees had thus been swindled. At the of time writing, in five or six districts there are now criminal cases pending. In an interview, an official of the Labour Department pointed out, rather interestingly, the following:

‘Cut and paste’ technology has strengthened the [hand] of those prone [to] fraudulent activities. They can manufacture any seal [and] stationary and forge the signature of any official of the land. But these [cases] are not confined […] to the Construction Board. There are fictitious ration cards [the document involved in the Public Distribution System of essential food grains), educational qualification certificates, papers[granting] property rights, stamp papers... You name it, and they make it! You [also] find [the] fictitious registration of beneficiaries […] under MGNREGA [the Mahatma Gandhi National Rural Employment Guarantee Act], [and from] recipients of compensation for flood [damage], or victims of a fire […]. What occurs in the Board is nothing new [and] nothing special!

46We may now proceed to the next section, which focuses on cess coming to the aid of governmentboth central government and government at the State levelas governments struggle to handle the unprecedented crisis arising from the COVID-19 pandemic.

3. The State Use of Cess in the Context of the COVID-19 Pandemic

47 When the writing of this chapter was embarked upon early in 2019, its key concern was the huge sums of money collected as cess and the substantial portion of the funds thus accrued that remained unspent. As already indicated in the preceding sections, the State of Karnataka had, over the years, been one of the leading States in both sums collected and amount unspent. It is not as though no one had paid attention to these points. The Comptroller and Auditor Generalthe supreme, national-level body that monitors the spending behaviour exhibited in government undertakingshad, in its several rounds of audits, taken serious note of the unspent money and activity that it regarded as having been in contravention of the established procedures. Trade unions too had repeatedly raised objections to these monies lying idle. The State Government too had, on occasion, sought funds from the KBCWW Board. Prior to the onset of the COVID-19 pandemic, there had been one particular such demand that resulted in discontent among a few high-ranking civil servants in the government, and in resentment between the head of the statethe Chief Ministerand a number of civil servants. During the months of August and September 2019, well before the onset of COVID-19, the State of Karnataka suffered heavy rains and devastation due to flooding. In its appeal for relief from the central government, the State government claimed the estimated loss due to floods and landslides to amount to INR35,160.81 crore (approximately USD 4,626,000,000) (GoK, 2019, ivv). The havoc caused by the rains and floods continued unabated, but relief from the central government was slow in coming. Around this time, the Chief Minister of Karnataka is reported to have sought INR 3,000 crore (approximately USD 394,000,000) of the unspent funds managed by the KBCWW Board (see, for example, Chatterjee, 2019, and Sanjiv, 2019).

48 An unprecedented crisis was, however, to follow: the global spread of SARS-CoV-2. A nationwide ‘lockdown’ was imposed, ‘social distancing’ was required, and personal protection was always to be maintained. All these measures were meant to contain the community transmission of the virus. The State of Karnataka adopted the nationwide strategy, bringing in State-wide and area-specific lockdowns, night and/or weekend curfews, and other measures. To begin with, a total lockdown (with the exception of essential services) was implemented, effective from 25 March 2020 for 21 days. In all, there were four lockdowns, across the 68 days from March to May 2020. The construction sector, like most sectors of the economy, came to a complete halt. There was an unprecedented movement of workers and their families, mainly returning to their homes, whether within the State or outside it. With government imposed restrictions on vehicular movement, the plight of these migrating workers was made even worse.

49 It was in such a context that the central government issued orders permitting State governments to make use of the unspent monies of Building and Construction Workers Welfare Boards to provide relief to construction workers (Press Information Bureau, 2020). The State government found, in this order, significant relief from the severe financial straits it had been in following the devastating rains and the flood-induced loss of crops and property. To begin with, funds were used to provide sanitisation kits and food supplies, including fruit, milk and eggs, to workers who were without employment or income support.

50 By the end of June 2020, a sum of INR 10 lakh (approximately USD13,000) had been released to each of the 41 District Labour Officers in the State. This money was to be used for the purposes of purchasing and distributing relief items among workers who were suffering significant distress due to lockdown.

Table 6 Money allocated for and spent on immediate relief for workers by the KBOWW Board, as of 29.06.2020

  • 18 Each district in the state and the Officials of the equivalent rank in the state headquarters – Lab (...)

Item

No.

Amount (INR)

Amount (USD)

Personal Protective Equipment

Sanitizer

193,501

7,754,084

Masks

563,331

5,273,755

Soap

250,792

1,913,730

Gloves, etc.

22,148

552,000

TOTAL (INR)

15,493,569

203,863

Information, extension, and communication

Pamphlets

597,750

1,425,854

Banners

3,169

252,878

Other

 

384,124

TOTAL (INR)

 

2,062,856

27,143

Food items

Food packets (prepared food)

2,250

72,690

Food kits (groceries)

7,186

3,586,029

Total (INR)

 

3,658,719

48,141

Miscellaneous

Vehicles

 

1,347,799

Mobile phones/Others

 

1,851,443

Total

 

3,199,242

42,095

Total amount spent (INR)*

 

24,414,386

Total amount spent (USD)

321,242

Reported as unspent (INR)*

 

8,416,020

110,737

Total released (41 x 1,000,000) (INR)18

 

41,000,000

539,474

Note: * Totals spent and unspent do not add up to the total released because in some districts the authorised official (Deputy Commissioner) released only a partial sum out of the allocated INR 1,000,000 (USD 13,158).

Source: Information furnished by the Secretary, KBOWW Board, Bengaluru, by e-mail dated June 29, 2020

  • 19 Most print newspapers had stopped publication owing to lockdown. E-papers remained in circulation h (...)

51 Owing to the lockdown, the plight of casual and unorganized labour, especially construction workers, was becoming a politically critical issue (see Jesline et al., 2021). Opinions were expressed in the audio and visual media,19 particularly highlighting the misery experienced by migrant workers, who were leaving the cities in large numbers. With no transportation available, thousands were covering great distances on foot, accompanied by women and children. Their lives had, devoid of any income, become extremely vulnerable, and there were demands for short-term cash transfers to ease their plight.

52 Even though the central government had permitted the use of unspent cess from the construction boards across the country, it had not clearly stated the amount of money to be given to workers. The State of Karnataka decided to release INR 5,000 (approximately USD 66) in the first instance (‘lockdown 1.00’), and an additional INR 3,000 (approximately USD 39) to construction workers.

  • 20 Direct Benefit Transfer (to the beneficiary) to eliminate delays, cumbersome procedures, pilferages (...)

53 Drawing upon the accumulated, unspent cess was not an easy task, even if doing so helped State governments to ease the situation. Over the 13 years of its existence, the KBOWW Board had spent a mere INR 516.03 crore (approximately USD 68,000,000) of its Cess Fund, for the welfare of 435,563 workers. Compared to these figures, in 2020 alone between the months of April and June as much as INR 562.31 crore (approximately USD 73,900,000) was spent in the form of cash transfers, distributed among 702,890 construction workers. These cash transfers amount to a mere 5.57 per cent of the total cess collected and accumulated by the end of May 2020INR9,262.65 crore (approximately USD 1,219,000,000). It is worth noting, however, that the Board faced a major challenge in the shape of its lapsed membersso, those who had not renewed their membership and/or had not linked their bank accounts to the Unique Identity number issued by the government, popularly known also as Aadhaar. Cash transfers were meant to operate as Direct Benefit Transfers, and this could only occur if the registered member’s bank account was linked to his or her Aadhaar number. Thus, out of the approximately 708,000 workers to whom cash transfers were intended to be made, as much as 14.54 per cent did not receive the funds. In response to a question raised in the Indian parliament, the Ministry concerned stated that in Karnataka around 88.3 per cent of the workers registered (as per data available on 25 November 2019) had received a cash transfer during the first wave of COVID-19. Thanks to are laxation introduced with regards to Aadhaar-linked Direct Benefit Transfers (DBTs20), by the time of the second wave the cash transfers had reached a high of 126.3 per cent of registered workers, on 10 March 2021 (see Jha, 2021, 1052, 1056).

  • 21 Interview with prominent trade union leaders, led by Mr. Shivashankar of Trade Union Coordination C (...)

54 Of course, there has been a string of allegations regarding, and protests over, what is claimed to be the misuse of the funds and materials issued by the Board by Department officials, middlemen claiming to be working for the benefit of workers, and politicians.21 It has been alleged that local leaders affiliated with various political parties collected food kits and other preparatory prevention materials, repacked them in pouches closed with the seals of their party or their own pictures, and redistributed them to their followers, whether or not they were eligible beneficiaries.

55 What is important for the purposes of this chapter is that hitherto unspent cess funds were used for the purpose of providing relief during a severe crisis in the lives of workers. This was the Fund that had, over the years, been subject to popular criticism and official strictures for remaining idle. One formerly high-ranking official of the Board pointed out:

  • 22 Respecting the wish of the individual to remain anonymous, name not revealed. Telephone interview o (...)

It would have been inhuman not to draw upon the Cess Fund in [order to offer] help to the very workers in whose name the money was collected. As in any other matter of governance, there is room for leakages or misuse. That has happened in the case of flood relief, accident relief, [and] any other scheme [intended] to support the affected population. It is not that I make a plea [that we] exonerate such misuse. But of greater concern for me [is] the fact that we have opened [the] flood gates of drawing upon the Funds to ease the State’s burden of providing relief in emergencies. This Fund has certain commitments […] having to provide social security also [in] normal times, and we all hope normalcy returns sooner or later. There is a commitment to provide insurance to […] workers when they retire, support education and medical care [for] their dependents, offer loans and help to build their homes, [and] meet [the] expenses of [the] marriages of their daughters. These are commitments and the State is legally obliged to fulfil them. Alongside providing emergency relief, the State has to also ensure [the] proper management of the funds for this purpose.22

4. Conclusion

56 As two years of life and governance orientation under the stress of a severe COVID-19 pandemic and as new variants of the virus keep surfacing, one should not lose sight of other obligations. The cess collected with a set of specific goals regarding the social security of workers in the sector cannot be seen as a perpetual fallback option. The official view of the unspent funds should not be solely that they are a source into which the State may dip its hands. The laws that govern the Funds need to be modified in such a way that there is room to drawing upon them to meet unforeseen contingencies, such as those we have witnessed these past two years. Of equal importance, however, is that the Boards’ house be kept in order. This means the enrolment of beneficiary members, ensuring the timely receipt of the cess collected by various agencies, ensuring that at the completion of a project construction costs match those estimated at the plan-approval stage and when the cess was paid, and the timely treatment of applications for relief from eligible workers.

57 One issue of critical importance is to find a solution to the problem of the social security needs of migrant workers. Although there is a law requiring migrant workers to register themselves when they entera different State for work purposes, this is rarely done. Consequently, migrant workers fail to benefit from the social security measures available through the Building and Other Construction Workers Welfare Boards in all States, including Karnataka. The cess collected becomes a redundant resource for migrant workers if they are ineligible to even receive benefitsan especially serious issue considering that they make up more than half, if not more, of the labour force in the construction sector.

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References

Chatterjee, S. (2019) Controversy erupts as Karnataka govt transfers Rohini Sindhuri IAS out of Labour Dept, The News Minute, 25 September, https://www.thenewsminute.com/article/controversy-erupts-karnataka-govt-transfers-rohini-sindhuri-ias-out-labour-dept-109462 (accessed on 4 February 2021).

Deccan Herald (2019) Floods, heavy rain claim 11 lives in Karnataka, Deccan Herald, Banglore, 8 August, https://www.deccanherald.com/state/top-karnataka-stories/floods-heavy-rain-claim-11-lives-in-karnataka-752846.html.

GoK (Government of Karnataka) (2019) Memorandum Presented To Government of India Seeking Central Assistance For Relief And Emergency Works Due To Flood And Landslides In Karnataka During August 2019, Department of Revenue (Disaster Management), (Bangalore: Government of Karnataka), https://ksdma.karnataka.gov.in/storage/pdf-files/Flood%202019.pdf (accessed on 4 February 2020).

GoK (Government of Karnataka) (2015) Economic Survey 2014-15. Department of Finance (Bangalore: Government of Karnataka).

GoK (Government of Karnataka) (2014) Report of the Comptroller and Auditor General of India on General and Social Sector for the Year Ended 31 March 2013, Report No. 3 of the Year 2014 (Bangalore: Government of Karnataka), https://cag.gov.in/cag_old/sites/default/files/audit_report_files/Karnataka_Report_3_2014.pdf (accessed on 2 February 2020).

Hittanagi, V. N. (2019) ‘Redemption of Building and Construction Workers in India: Will - O’- The – Wisp?’, in K. R. Shyam Sundar (ed.) Globalization, Labour Market Institutions, Processes and Policies in India: Essays in Honour of Lalit K Deshpande (Singapore: Palgrave Macmillan), pp. 301-320.

Jesline, J., J. Romate, E. Rajkumar and A. J. George (2021) ‘The plight of migrants during COVID-19 and the impact of circular migration in India: a systematic review’, Humanities and Social Sciences Communications, 8(231), DOI: 10.1057/s41599-021-00915-6

Jha, A. (2021) ‘Vulnerability of Construction Workers During COVID-19: Tracking Welfare Responses and Challenges’, Indian Journal of Labour Economics, 64pp. 1043–1067, DOI: 10.1007/s41027-021-00348-4

Kotha, A. P. (2018) ‘Cess or Surcharge: The Distinction is Significant for the Taxpayer’, Economic and Political Weekly, 53(8), pp. 2349-8846, https://www.epw.in/engage/article/cess-surcharge-distinction-significant-taxpayer.

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NCC-CL (National Campaign Committee for Central Legislation on Construction Labour) (2020) NCC-CL Circular Dtd.14-04-2020 (New Delhi: Nirmana), http://nirmana.org/Documents/NCC-CL%20%20Circular%20Dtd.14-04-2020(%20English).pdf (accessed on 20 October 2020).

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Notes

1 Lakhs, in the Indian numbering system, a unit one hundred thousand (100,000). During March 2022, one US dollar (USD) was worth approximately 76 Indian rupees (INR). The conversions in this chapter will use this exchange rate. In April 2022 1 US dollar was worth INR 75.29.

2 One crore equals 100 lakh, thus denoting ten million.

3 These financial rules and procedures are prescribed in the Guidelines for Operation of Funds in Banks by State Government Departments, Local Bodies or Authorities, Boards, Corporations, Societies, Universities and other State Autonomous Bodies. Karnataka Government Order No. FD 5 TAR 2017 dated 30.1.2017.

4 The Building and Other Construction Workers’ (Regulation of Employment and Conditions of Service) (Karnataka) Rules, 2006, as notified by the Karnataka Gazette Extraordinary No. 1424, dated 1.11.2006 vide a notification by the Department of Labour No. LD 168 LET 2004 dated 1-11-2006.

5 The Law permits levying a cess of up to 2 per cent.

6 The tasks for which MGNREGA stands for are rural and are compensated through a whole network of rural administrative bodies. Similar works are also undertaken – but not as MGNREGA, in urban bodies. Those engaged in the latter are not, theoretically, beneficiaries of the Cess fund under reference. Secondly, the specific tasks under MGNREGA are all primarily ‘agricultural’ work in nature and are carried out by individuals as casual wage workers. They may not have been registered or the work may not have been carried out as an approved project under the MGNREGA scheme.

7 The Cess collected is based on the estimate of costs for a construction – as submitted at the time of obtaining the plan for construction. But, in actuality, the plans get modified, altered, by the time construction is completed, and the costs may have been much higher than the original estimate.

8 Professor D. Rajasekhar, Institute for Social and Economic Change, Bengaluru. Personal interview on the subject, June 14, 2020, Bengaluru.

9 Grateful thanks are due to Mr. M Maheshwara Rao, former Principal Secretary, Department of Labour for making this data accessible.

10 The sums do not include interest earned or enrolment fees collected.

11 Interview with Mr. Vasanthkumar Hittanigi, former CEO of the Board, 2122 October 2020.

12 This section draws heavily on long and repetitive consultations with four Secretaries/Principal Secretaries, two Commissioners, and three Additional Labour Commissioners who had, from time to time, been CEOs of the Board, and three former or present Joint or Assistant Labour Commissioners of the Labour Department. With certain exceptions, the author is not free to disclose their names.

13 See Writ Petition (Civil) NO. 318 OF 2006, Supreme Court of India, the National Campaign Committee for Central Legislation on Construction Labour (NCC-CL) vs. Union of India & Ors.

14 Any supply of service, or material or civil work, if to be carried out by private persons or bodies, it is to be assigned as a contract. Prospective service / material / building producers have to make an offer of the cost as their fee for undertaking the task – referred to as Tenders. But this Tendering is exempt under special circumstances – e.g., matters of urgency, or if the agency is state owned (a public enterprise). In the instance here, a specially created State agency enabling this exemption was assigned the responsibility.

15 The relevant section reads as follows: ‘4. Exceptions to applicability. - The provisions of Chapter II shall not apply to Procurement of goods and services: [] (g) in respect of specific procurements as may be notified by the Government from time to time’.

16 In a personal interview, the official concerned explained his rationale for standing firm in his opposition to the minister’s proposal to incur additional expenses. Judging by the press reports and rumours in the corridors of power at the time, it was widely speculated that the minister would lose his seat in the cabinet. The minister too was, it seems, aware of this, and was thus in a hurry to see the proposal approved as he would stand to gain, from the contractor, a cut of the increase in the sum allocated. Such rumours and speculation were not misplaced, and the minister concerned was soon dropped from the cabinet, and faced multiple charges of irregularities.

17 For a detailed list of the various schemes under which welfare benefits are disbursed, see the ‘Services and Schemes’ drop-down menu on the Board’s website: https://karbwwb.karnataka.gov.in/english.

18 Each district in the state and the Officials of the equivalent rank in the state headquarters – Labour Inspectors – numbering 41, were each allocated INR. 1,000,000 (INR Ten Lakhs), which together amounted INR 41,000,000.

19 Most print newspapers had stopped publication owing to lockdown. E-papers remained in circulation however.

20 Direct Benefit Transfer (to the beneficiary) to eliminate delays, cumbersome procedures, pilferages, and the role of middlemen. Also meant, transfer of money to the bank account of the beneficiary and not by way of cheque or other banking instruments, or by cash.

21 Interview with prominent trade union leaders, led by Mr. Shivashankar of Trade Union Coordination Centre, in Bengaluru on October 10, 2021.

22 Respecting the wish of the individual to remain anonymous, name not revealed. Telephone interview on September 20, 2021, Bengaluru.

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List of illustrations

Title Table 4 Welfare benefits disbursed and % of beneficiaries, 2007–8 to 2019–20
Caption Note: All figures are percentages unless otherwise specified.
URL http://journals.openedition.org/poldev/docannexe/image/5053/img-1.png
File image/png, 276k
Title Table 5 Type of benefits and amount Disbursed (INR, in % Share of Expenditure in the Fund) by the Board (2007‒08 to 2019‒20)
Caption Note: All figures are percentages unless otherwise specified.
URL http://journals.openedition.org/poldev/docannexe/image/5053/img-2.png
File image/png, 227k
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Cite this article

Electronic reference

G. K. Karanth, Managing Unspent Funds when Money is Scarce: Karnataka State Construction and Other Workers Welfare Board (kcowwb)International Development Policy | Revue internationale de politique de développement [Online], 14.1 | 2022, Online since 19 August 2022, connection on 11 December 2025. URL: http://journals.openedition.org/poldev/5053; DOI: https://doi.org/10.4000/poldev.5053

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About the author

G. K. Karanth

Professor of Sociology, and formerly Director, Karnataka State Labour Institute, Bengaluru. G.K. Karanth is also Research Associate at the Albert Hirschman Centre on Democracy, Geneva Graduate Institute.

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