Financial Daily
from THE HINDU group of publications

Tuesday, May 30, 2000



Macro Economy | Prev

A `realistic' agenda for slum-dwellers

G. Rambabu


THE fate of the poor cannot be left to the free market forces as the bargaining power of these people is negligible, according to an internal study of the Ministry of Urban Development.

The Government has to, therefore, play a greater role in ensuring higher productivity, adequate income and gainful employment of the urban poor and economically weaker sections, it states.

The study, ``Employment and economic status of slums in the era of economic liberalisation _ an agenda for reforms'', points out that the main focus in employment strategy should not only be on mandays of employment generated but also on generation of qu ality employment/ work opportunities yielding higher income and return on a sustainable basis.

It notes that the most critical need for economic upgradation and self-employment generation is the provision for long-term loans at nominal interest rates.

``The increasing privatisation of banks may perhaps lead to a situation where the desired level of credit may not flow to the strata of population despite earmarking a certain amount of funds for their economic activities.''

Inaccessibility of credit is one of the major bottlenecks in the development of a micro-entrepreneurial class of the informal sector which is capable of absorbing the unutilised workforce at any time, it notes.

The study calls for the setting up of urban co-operative banks on the lines of the primary agricultural co-operative banks and regional rural banks, under Nabard to extend cheap credit to tiny entrepreneurs.

It has also recommended the setting up of entrepreneurial development centres in notified and resettled slum clusters for providing training, guidance and feasibility reports of tiny industrial units and self-employment ventures in potential areas. Finan cial assistance in the form of monthly stipend has to be given to the unemployed during the training period, it notes.

Apart from setting up a common workshed/complex for micro enterprises, the Government should also encourage backward and forward linkages between micro-enterprises and organised sector industrial associations such as FICCI, Assocham and CII, it says.

``These associations should identify certain areas of work that could be given to skilled and semi-skilled entrepreneurs under their technical guidance and training. The linkages, if properly established, would be an effective instrument of generating pr oductive and qualitative employment on a sustainable basis,'' the study notes.

After completion of training and short-term and long-term courses on gainful self-employment and skill upgradation, the job seeker should be given a loan depending upon the type of work and investment requirement, to be paid back in a period of 20 years with a minimum rate of interest. For this a consortium fund for self-employment venture should be started, it recommends.

The Urban Ministry study also calls for revamping of the regulatory mechanism for employment in the informal sector. It notes that there is no proper regulatory mechanism for the implementation of labour laws/Acts, creation of quality employment, payment of minimum wages, working conditions and other labour welfare measures in the informal sector.

It recommends that minimum wages in terms of wages per hour be paid instead of daily wages. This would not only ensure fair wages to the poor workers but also enhance the level of aggregate demand, which is necessary for accelerating the tempo of economi c growth and generating substantial productive employment.

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