An urban jobs safety net

Source: TheHindu

Relevance: Impact of COVID on economy & employment

Synopsis: The article signifies the need to formulate a wage employment-based national urban livelihood scheme on lines of MGNREGA.

Impact of COVID on the economy

World Economic outlook report presents a grim picture of the global economy. It states that – all of the world countries excluding China experienced economic contraction last year. Global GDP shrunk by 3.3% and Indian GDP shrunk by 8%. A similar impact can be seen on the unemployment rate

At the same time, an analysis of the Indian economy by the Centre for Monitoring India’s Economy estimates that the unemployment rate in India peaked at 23.5% in April 2020 before falling to 6.9% in February 2021

Rural-Urban Livelihood Divide

Presently, MGNREGA scheme is implemented only in rural areas. Urban areas do not have any guaranteed safety cover. During the Corona pandemic, a large amount of migration was seen to rural areas because of the guaranteed livelihood safety net. There is a need to introduce similar programs for the urban areas on lines of MGNREGA.

Lessons need to be learnt from Himachal Pradesh (HP)

HP launched Mukhya Mantri Shahri Ajeevika Guarantee Yojana (MMSAGY). Its objective was to enhance livelihood security in urban areas by providing 120 days of guaranteed wage employment to every household at minimum wages in FY 2020-21


  • Any adult member of a household, less than 65 years of age, willing to do unskilled work is eligible for that scheme.
  • The member should be residing in the jurisdiction of the Urban Local Body (ULB)
  • Issue of job card within seven days of registration to the beneficiaries & employment is provided within a fortnight
  • Compensation of Rs 75/day to a beneficiary in event of failure to provide job within the prescribed time
Insights into the functioning of schemes:
  • The scheme can be launched with existing fiscal space or by pooling the resources of the Centre and State together
  • Separate minimum wages for rural and urban areas will not cause migration to urban areas because of the high cost of living in urban areas
  • The focus must shift from asset creation to service delivery & on enhancing the quality of municipal services
  • The scheme will work as an “economic vaccine” and will protect people against unemployment.
  • The scheme should be administered at the national level rather than the State level to boost the rural and urban economies.

Terms to Know


 World Economic outlook

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