Rhetoric and Reality III: Construction workers’ funds unutilised in K’taka

The poor utilization was attributable to shortfall in registration of beneficiaries, absence of database of registered workers, rigidity and inconsistencies in Karnataka Building and Other Construction Workers’ (Regulation of employment and conditions of service) Rules, 2006, inordinate time taken to process claims, insufficient publicity, etc., CAG report said

Utilisation of Cess Proceeds

• 1% Cess on construction cost collected for welfare of workers
• Only 5% of funds spent in Karnataka
• Act says 95% of the funds should be utilized for the benefit of construction workers

New Delhi: From the speeches and statements they make, it looks like politicians’ hearts bleed for the poor, including construction workers. Examining the reports prepared by the Comptroller & Auditor General (CAG), we noticed earlier that the Delhi government under the Aam Aadmi Party and the Uttar Pradesh government under the Bharatiya Janata Party (BJP) spent small fractions of the cess collected on providing benefits to the workers. The Karnataka government between 2014-15 and 2018-19, which was mostly under the Congress, did no better than the other two State governments.

The Karnataka Building & Other Construction Workers’ Welfare Board “utilized a mere five per cent of the funds available at its disposal on welfare schemes during the period 2014-15 to 2018-19,” the CAG report said.

It went on to point out that “it is distinctly evident that the Board did not comply with the provisions of the Act as the administrative expenses ranged between 9 and 72 per cent of the total expenses during the period 2014-15 to 2018-19.”

The Building & Other Construction Workers’ (Regulation of Employment & Conditions of Service) Act, 1996, stipulates that administrative expenses should not exceed five per cent of the total expenses in a year. Further, at least 95 per cent of the funds should be utilised for the benefit of construction workers.

The major source of funds to the board is collection of Cess at the rate of one per cent of the cost of construction incurred by the employers of workers.

Not just the total expenditure on workers’ welfare was very low; almost half of that expenditure was on administrative expenses. During the period 2014-15 to 2018-19, administrative expenditure was Rs423.56 crore, or 49 per cent, of the total sum of Rs862.01 crore spent for the welfare of construction workers.

The poor utilization was attributable to shortfall in registration of beneficiaries, absence of database of registered workers, rigidity and inconsistencies in Karnataka Building and Other Construction Workers’ (Regulation of employment and conditions of service) Rules, 2006, inordinate time taken to process claims, insufficient publicity, etc., the CAG report said.

The report also noticed laxity and absence of adequate checks and balances at the board. “The issues such as non-realisation of Cess, non-remittance of Cess by collecting authorities, discrepancies in sanction of benefits, etc., were observed during the current audit also. Further, the board had incurred inadmissible expenditure and failed to avoid tax liability.”

Also, the CAG Audit observed that neither the State government nor the board had conducted any survey or devised any system to estimate the number of eligible beneficiaries in the state so as to build a database and aid in decision making.