(The Gist of Kurukshetra) PMAY-GRAMIN: IMPACT ON EMPLOYMENT [AUGUST-2018]

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(The Gist of Kurukshetra) PMAY-GRAMIN: IMPACT ON EMPLOYMENT
 [AUGUST-2018]


PMAY-GRAMIN: IMPACT ON EMPLOYMENT

Providing shelter for poor has always been a challenge for India and the problem is more prominent in rural areas. The governments over the years have initiated various housing schemes to address this issue. The current government, in an effort to accomplish its target of ’Housing for all by 2022', the existing Indira Awaas Yojana (IAY) was restructured and transformed into Pradhan Mantri Awas Yojana Gramin (PMAY-G), for fulfillment of gaps identified in IAY as outlined in the report of “the Comptroller and Auditor General (CAG) on Performance Audit on IA ” (CAG, 2014), and the report on “Unspent Balances and Flow of Fund Mechanism under Some Rural Development Schemes” (Bhanumurthy et al., 2015).Being the world’s largest programme for rural poor, it aims to provide a pucca house, with basic amenities such as piped drinking water, electricity connection, and Liquefied Petroleum Gas (LPG) connection by convergence of different schemes and programmes run by government to all homeless and those households living in kutcha and dilapidated houses by 2022. The Ministry of Rural Development (MoRD), for proper and effective implementation of the programme and construction of quality houses, has issued General Guidelines and Housing Designs -PAHAL. In its first phase, it aims to construct one crore houses by 2019, and the beneficiaries will be selected through Socio-Economic Caste Census (SECC) 2011.

The beneficiaries are provided with the unit assistance of Rs 1.20 lakh for plain areas and Rs 1.30 lakh for the hilly, difficult, and Integrated Action Plan (IAP) areas, and the funds are transferred digitally directly to the account of the beneficiary from the Single Nodal Account established at the State level. Apart from the unit assistance, they are provided with the option of availing institutional finance up to Rs 70,000 and are entitled to 90-95 days of employment under Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), Rs 12,000 for constructing toilets under Swachh Bharat Mission, etc. In addition to these benefits, the beneficiaries are endowed with a number of other support services such as training of masons and skill certification for the good quality construction of the houses, sourcing of construction material, support to old and disabled beneficiaries in getting the house constructed, development and provision of house design topologies, etc. The minimum size of the PMAY-G house is increased to be 25 square metre including a dedicated area for hygienic cooking. Furthermore, for PMAY-G to operate in a transparent manner, ensure quality and timely construction of the houses, monitoring of physical progress of the construction is done with the help of AwaasSoft at level of both Government of India and State/UT Government.

Impact on Employment: As the expenditure on housing generates both direct as well as indirect employment, an attempt has been made to understand the overall impact on employment since 2016-17, the year when the revamped scheme is implemented. The estimation is done under two stages. In the case of direct effect, the study uses PAHAL designs provided at the State level, and for indirect effects, the study uses Input-Output tables.

Direct employment based on PAHAL: PAHAL gives more than 100 designs, and, based on these designs, a broad estimation of cost for each component is presented in Figure 1. However, these estimations could change, although marginally, depending on the designs. It is also important to note that the cost of most of the designs provided in PAHAL exceeds the amount provided in the scheme. Similarly, the area exceeds the minimum requirement area of 25 sqm set by the scheme (PAHAL, 2017a, 2017b). The cost composition from Figure 1 indicates the share of various inputs, including labour, in constructing PMAY-G houses. Overall, the composition of materials used and the workforce employed do not vary much across the designs and States.

While most of the designs do not provide details with regard to inputs, here for further analysis, we have taken the design that has some information about the materials and labour cost break-up. For the plain area, we have selected a design from Bihar, and in the case of a hilly region, one design from Assam is chosen.

Assumption for Estimation: As we need to understand the direct and indirect impact of construction on both employments, there is a need to disaggregate the whole construction output in terms of inputs, especially into materials and labour. However, PAHAL do not provide the disaggregated data. Following assumptions were made for estimating the value of materials and labour.

  •  The calculation of steel has been made considering the materials used in constructing the houses such as steel for reinforcement, chicken mesh, rod binding wire, shuttering materials, hardware (nails, lashes, and ropes), and the steel frame for the doors and windows. The rates for these materials are taken from PAHAL.

  •  It is assumed that the total cost of whitewash is distributed between material and labour in 60:40 ratio. The labour cost thus obtained is added to the skilled labour cost. The rate for material-dry distemper is Rs 26 per kg.

  •  The sand type is selected based on the higher percentage usage in constructing the house. The rate considered here is taken from PAHAL.

  •  The wage rate for the labour is taken from the notification issued by respective state governments (2016 for Bihar and 2017 for Assam)

  •  The rates of brick, cement, aggregate, steel, and sand are taken as per the market rates and the rates for CGI sheet and Bamboo are taken from PAHAL.

Estimation of Direct Employment Generated and the Total Cost of the PMAY-G Houses: Based on the estimates per house derived separately for the plain areas and for the hilly areas, an attempt has been made to estimate the direct employment and additional expenditure made for constructing the PMAY-G houses during April 2016 to 2018 (March 2018) in this section.

Direct employment through PMAY-G: The completed houses and houses under construction under PMAY-G till March 05, 2018 are around 23.52 lakh and 21.28 lakh, respectively. The estimated overall direct employment due to PMAY-G house for completed houses appears to be approximately 40.07 crore person-days. Of this, nearly 16.04 crore person-days are skilled labour and the remaining 24.03 crore person-days are unskilled labour force. For houses under-construction, the total employment generated for both the years turns out to be 4.82 crore for skilled labour and 7.60 crore person days for unskilled labours till March 05, 2018. If all the beneficiaries have taken the support of MGNREGS and utilised 90 days or 95 days of unskilled labour under the scheme, then the estimated number of person-days would have been 21.46 crore till 5th March 2018.

Estimation of Indirect Employment: In this section, we try to understand the indirect effect of PMAY-G expenditures on both employment and output in India. The analysis is done using Input-Output Analysis propounded by (Leontief, 1936). The Input-Output analysis is widely used as an analytical tool to analyse the inter-linkages between the sectors of an economy through the use of Leontief Inverse Matrix, which is also known as ‘multiplier matrix’ (Leontief, 1936). The method allows the estimation of both
direct and indirect impact of a particular sector on different parameters of economic performance.

Estimations based on different Scenarios: The estimates made earlier are based on total volume of expenditure including assumed beneficiary contributions. However, the beneficiary contribution varies both in terms of quantum and beneficiaries affordability. All the beneficiaries may not be in a position to contribute additionally. Therefore, an attempt is made to estimate the impact of PMAY on direct and indirect employment in three scenarios where beneficiary contributes no additional resource (Case A), upto 35000 (Case 8) and upto 70000 (Case C). This is based on our earlier estimates where we found that beneficiary contributes about 69,000 to 75,000 as per PAHAL design.

Conclusion: In this paper, an attempt has been made to present a summary of results on the impact of rural housing scheme on the employment in India that are estimated in Bhanumurthy et al (2018). As the construction in general and rural housing, in particular, is expected to have strong forward linkage with other sectors in the economy, the impact on employment can be through direct as well as indirect channels. Here the estimations are made for the period April 2016 to March 5, 2018.The direct employment has been calculated in terms of person-days generated based on the sample designs for rural housing. In the case of indirect employment, the report uses the Input-Output table as it provides the multipliers for employment, value addition as well as output. Based on information on completed and under construction houses since 2016-17, the scheme could have generated about 52.47 crore person-days. Of this, nearly 20.85 crore person-days are for skilled labour and the remaining 31.62 crore person-days are for the unskilled labour force in both years. The direct employment generated through completed houses stands at 40.07 crore person-days (24.03 crore person-days unskilled and 16.04 Crore person-days skilled labour force) and that of under construction houses is 12.42 crore person-days (7.60 Crore person-days unskilled and 4.82 Crore person-days skilled labour force). If all the beneficiaries have taken the support of MGNREGS and utilised 90 days or 95 days of unskilled labour depending on the region, then the estimated number of person-days generated under MGNREGS scheme could be 21.46 crore person-days for completed houses and 7.16 crore person days for under construction houses that adds up to a total of 28.62 Crore person-days.

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Courtesy: Kurukshetra