In India, important concerns with hyper-concentration of wealth among the super-rich can often elide an equally important feature of social inequality: What is life like for the bottom 50%? A comparison helps. In the 1980s, Brazil was a cautionary tale with inequality much higher than India. Then the story reversed. In 2011-12, their inequality for both rural and urban wages was far narrower than in India. It is not that the top 10% (and the top 1%) did not get significantly richer there. The difference was that, in Brazil, the bottom 50% grew faster than the top 10%. Inequality narrowed because they raised the floor.
A core strategy for this was investing heavily in social protection. In urban areas, the Brazilian State, since the 1990s, upgraded low-income housing, raised minimum wages, built local and community infrastructure, expanded child support, and used targeted household-level income transfers. It is this growth lesson — and it is precisely a growth rather than a welfare lesson – that India would do well to emulate. Covid-19 showed us that our urban safety nets are threadbare patchworks, limited in scale and poorly delivered. Without them, even the decades of growth India has seen will not raise the floor.
It is in this context that a shifting focus to urban social protection across India’s states is welcome. Last week, Rajasthan passed the Minimum Income Bill which enshrines 125 days of an urban employment guarantee in law, finally matching rural entitlements. Importantly, the law has a ready vehicle for its implementation since Rajasthan started the Indira Gandhi Shahari Rozgar Yojana (IGSRY) in 2022. Similar programmes are being experimented by Odisha, Himachal Pradesh and Jharkhand, and Kerala and Tamil Nadu are deepening the scale of their existing ones.
Clearly, urban employment programmes are an idea whose time has come. Yet, if the target of such urban programmes is not just a safety net but a chance to take on urban inequality, then the work has only just begun. An urban employment guarantee cannot just copy-paste the rural jobs scheme into urban areas. Cities have different labour markets, governance, spatial arrangements, and cultures. Two ideas are key.
First, the programme must be bold and experiment with what it allows as permissible work. The more these works help improve the infrastructure and services within which workers live, work and seek leisure, the more they will indirectly and directly impact multiple forms of inequality. Internationally, these are thought of as community works programmes, currently used at scale in South Africa which took its inspiration, fittingly, from the employment programmes in Maharashtra that inspired the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). IGSRY has one excellent example: Allow the repair and maintenance of public housing under the urban employment programme. Odisha has directed its spending towards community infrastructure in slums, including re-designing public spaces and building community meeting halls. Researchers have suggested bolder proposals: Programmes to accelerate slum upgrading; childcare infrastructure such as creches; economic infrastructure such as vending zones; the revitalisation of urban commons and ecological assets such as rivers and ponds; or even using such programmes to support municipal services in community health care or care services for the children and the elderly. Inequality is not just about income — if urban employment programmes can help improve how and where workers live, they can raise the floor even through non-financial improvements.
Second, as outlined by Jean Drèze, such programmes could target skilling, apprenticeship and training. Programmes to skill workers in urban India have struggled, and apprenticeship within the informal economy remains the dominant mode through which most workers learn. Supporting such learning financially as well as opening options for more formal training incentivises workers to upskill and provides safety nets as they do so.
The implementation of these schemes still, no doubt, poses more questions than answers. How should the wage rate compare to market rates in the informal economy? Can urban local bodies — historically not as adept as panchayats — generate enough work and manage direct enrolment? What, if any, should be the role of contractors? How can work be allocated spatially near where workers live to rationalise transport and time? How can technology be used to include, rather than gatekeep workers? These are important challenges but shouldn’t hold us back. With urban employment guarantee being made law for the first time, cities can finally have a sustained chance to tackle challenges outside ad-hoc schemes and invest in the capacity of urban local bodies. Indeed, IGSRY created multiple new government positions across small and big urban centres just as Odisha leveraged newly formed RWAs in urban slums. Just like with MGNREGA, city authorities will learn and grow as they implement the scheme especially if they continue to collaborate with worker organisations, researchers and movements. Can Rajasthan afford to do it? Yes. The public treasury — driven by rising efficiency in state tax collections — is at the best it has been in a while, and its balance sheets indicate improving fiscal responsibility.
It would be even more economically defensible if the gains it could produce in demand are measured. This, unfortunately, will not happen because social protection is always treated as an expenditure rather than an investment, despite evidence — such as from Brazil — that raising demand is an equally viable growth strategy as building a metro in Jaipur whose fiscal worth, ironically, never faces such principled scrutiny. A more important question to ask, perhaps, is this: Can they afford not to do it? What are the human, political and social (let alone fiscal) consequences of not addressing structural inequality? India has a long way before its urban social protection expenditures match those of similarly placed countries. The need of the hour is more rather than less investment. May the tribe of states that have begun to invest in the people of their cities continue to grow.
Gautam Bhan and Shriya Anand teach at the Indian Institute for Human Settlements, Bengaluru. The views expressed are personal
