Minutes of the meeting of the National Commission on Enterprises in the unorganized/informal sector held under the Chairmanship of Dr. Arjun Sengupta, on 31st December, 2004 in Udyog Bhawan, New Delhi. 

Dr. Arjun Sengupta, Chairman, NCEUIS, welcomed all the members and Advisory Board of the Commission for the third meeting.  The Chairman underlined the urgency of drafting a preliminary report with the joint efforts of all members of the Commission to reflect the ideas of the Commission in the coming budget session.  For this purpose, it is important that the Commission takes a view on the definition of the unorganized sector.  Some of the issues under consideration for this purpose are : 

  1. Number of persons employed; the units could be considered consisting of persons employed being 1-10; in fact by taking a definition of 1 to 6 persons in an enterprise, practically the whole population (almost 90%) of the unorganized sector would be taken up; 

  2. Other factors for defining the unorganized sector may be capital, assets and qualifications of the sector units; 

  3. Third criteria could be total income of the unorganized enterprise (as they do not pay income tax, this would need elaborate consideration). 

2.         The Chairman stated that unorganized sector faces a number of institutional, legal and administrative obstacles.  For this purpose, a sub-group may be formed to study and suggest measures to overcome and remove the impediments in the informal sector.  The Chairman desired that Dr. Jayashankar may coordinate the sub-group comprising Swami Agnivesh, Ms. Madhu Kishwar, Shri Joginder Kumar and Prof. B.Mungekar.  The following obstacles faced by the unorganized sector may be examined in particular : 

  1. Problems in the access to markets for both inputs and outputs in the informal sector; this would include transportation, road network, power, communications and telecommunications constituting the physical/hard infrastructure, while development of knowledge capabilities of the informal sector would constitute the soft infrastructure development.  The market access needs should be incorporated into the mainstream activities of the informal sector and linked to particular geographical areas.

  2.  Access to finance, including micro credit and savings.

  3.  Access to skill upgradation and relevant technical knowledge

  4.  Social security issues, including unemployment and health benefits.

 3.         The Chairman stated that the questions of mobilization of savings and insurance may be examined in depth, as this would raise security concerns.

 4.         The Member Secretary described various initiatives in the field of induction of Information and Communication Technologies in rural communities and how these have served to improve livelihoods initiatives such as Community Information Centres, Akshya, Chirag and E-chapauls have also given a boost to the economy in the areas served by them.

 5.         The Chairman suggested that the Commission may propose the convergence of the interventions of various Government agencies, civil society and the private sector in identified Growth Poles to kick start the growth of the unorganized/informal sector enterprises and create large scale employment.  The Industrial Infrastructure Upgradation Scheme of the Department of Industrial Policy and Promotion, the Small Industries Cluster Development Programme of the Ministry of SSI, the scheme of Provision of Urban Amenities in Rural Areas proposed to be taken up by the Ministry of Rural Development and the initiatives of induction of ICT technologies in the rural areas and other schemes aimed at the development of the unorganized sector in specific domains may be converged in these Growth Poles.  The ideas being developed by the Commission in the field of micro finance, social security and skill formation in the unorganized sector may also be tested in the Growth Poles to be taken up during the Pilot phase.

 6.         Dr. Mungekar suggested that the papers to be presented in each meeting should be sent in advance so that the participants may get adequate time to examine the papers.  Dr. Mungekar also suggested that the papers of Viji Srinivasan on Informal Economy should be studied by the Commission.  He also stated that out of 37 crore workers in the country, there are about 24 crore workers in Agriculture.  Of these, 11 crore are agricultural labourers, who face the danger of being marginalized and excluded from the schemes and programmes of the Government.  Dr. Mungekar also observed that a national wage policy was inalienably linked to price, incomes and wages.  It may also be necessary to look into the suggestions given by the Farmers Commission headed by Dr. Swaminathan.

 The Chairman requested Dr. Mungekar to send his considered views to the Commission on the studies of Viji Srinivasan as well as the other subjects allowed to by him.

 7.         Smt. Mirai Chatterjee highlighted the problems of extending the reach of micro finance in this sector.  She stated that the unorganized sector has a preponderance of own account workers.  Women workers in particular work primarily as piece rate workers with contractors.  These categories require customized micro finance products suited to their special needs.  She also made out a case for development and providing the services of micro credit, savings, insurance and pension under one umbrella by creating a separate development and regulatory authority for this purpose. 

 Smt. Jayasree Vyas representing SEWA suggested the creation of a Micro Finance Regulatory and Development Commission with a corpus of Rs 200 crore.  She acknowledged that the figure of Rs 200 crore has not been arrived after a rigorous exercise of assessment.  The Chairman requested SEWA to furnish detailed papers on these issues by the end of January 2005.

 8.         Dr. B.N. Yugandhar cautioned that by creating a separate authority for micro credit we may inadvertently relieve the banking sector of its responsibility for meeting the credit needs of the poor.  This may work against the interest of the informal sector.  Efforts should be made to ensure that the banking sector develops greater empathy for the specificities and requirements of the sector.

 9.         Shri Joginder Kumar underlined the urgency of reviewing the incidence of customs and excise duties applicable to the key inputs and outputs of the small scale sector and suggested that representative associations of the SSI sector invariably be invited for pre-Budget meetings of the Finance Minister.  The Chairman advised Shri Joginder Kumar to take up specific operational issues concerning the sector with the Ministries concerned.  However, at a conceptual level, the generic issue would be the concern of the Commission.

 10.            Secretary (SSI) stated that there are number of initiatives and schemes currently in vogue in the Government.  Each one of them relates to specific sections of the population.  There is an urgent need to coordinate the availability of these initiatives and the schemes over a period of time.

 11.       Swami Agnivesh emphasized the importance of giving a voice to the voiceless.  In his view, the adoption of a decent National Minimum Wage indexed on the starting pay of the lowest paid Central Government Servant is central to the concept of special security for the unorganized sector.  While the Employment Guarantee Scheme is a good beginning to achieve this, without a National   Minimum Wage Policy, it may not be possible to achieve the results desired by the Government.

 12.       Dr. K.P. Kannan outlined the concept of a Social Security Fund for the unorganized/informal sector and suggested that agricultural labour should also be covered by the Fund.  These are useful lessons to be drawn from the working of sectoral welfare funds, such as those for construction workers in Kerala and Tamil Nadu.  Since we do not have a National Social Security Policy, there is no defined social security mechanism.  The unorganized sector generates 58-60% of the national income; it will be appropriate to allocate 2% of their contribution for their social security.  This would work out to Rs 2500 crore.  This is a fraction of one year’s contribution to the National Employment Guarantee Programme.  He suggested that provisions for the National Social Security Fund should come from the Government of India, RBI, National Development Banks, public and private corporate sector and All India Boards that have a stake in the welfare of the workers in the unorganized/informal sector.  The Chairman desired that a detailed discussion paper may be prepared by Dr. Kannan on these lines for consideration by the Commission.

 13.       The Member Secretary mentioned that the Unorganized Workers Bill 2004 had been received for the comments of the Commission.  The Chairman indicated that the Bill 2004 would be discussed with all the members in a meeting to be held shortly.

 14.       Dr. Bibek Debroy requested the Members to give their feedback on his paper on Growth Poles.  A presentation of Growth Poles was made by Smt. Manisha Shridhar.  In this presentation, the salient features of different programmes of cluster development being implemented by the Ministry of SSI, the Department of Industrial Policy and Promotion and the scheme of Provision of Urban Amenities in Rural Areas (PURA) to be taken up by the Ministry of Rural Development (RD) were outlined.

 15.       Prof. Subashish Gangopadhyay and Lt. Gen. S.S. Mehta, Principal Advisor C.I.I. made a presentation on skill development and employment generation.  Gen. Mehta outlined the main features of the programme of skill formation being implemented by development programmes initiated wherein CII is in partnership with City and Guilds.  This constitutes a major step in achieving social inclusiveness by training and re-skilling the disadvantaged so that they can become a part of the mainstream development process and addressing the problem of skill incongrnance prevailing in the national economy by creating a “multi collar task force – white, grey, blue and rust”.  Eventually, India should emerge as the “Skills Capitals of the World.  The Project aims to train 1 million multi-skilled workers in the next three years.  The hallmark of the programme in the scheme of independent certification of the skills imparted.  This would make for integration of the labour market and ensure the mobility of skilled labour across regional and national boundaries.

 The Chairman requested Gen. Mehta to present a detailed paper on this initiative.

 The meeting ended with a vote of thanks to the Chair.