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Formalization of the informal sector must be the top priority of Budget 2021

The year 2020 was a huge blow for businesses across the globe. The pandemic bought livelihoods to a standstill, causing businesses to incur hefty losses. The first quarter was rather gloomy, but as things gradually opened up, the economy too gradually started recovering. Welcoming the New Year with an array of hopes, I am optimistic that the year ahead will be promising and that we will continue seeing the economy progress on a positive progression.

All eyes are going to be set on the upcoming Union Budget 2021, as this will be the first budget to be presented post the arrival of the pandemic. Many sectors that have incurred inevitable losses, will be expecting the budget to bring some relief and aid. Though the government has bought in several relief packages in the past few months, it will be interesting to see what the budget will hold for the various sectors across the country.

During the lockdown, the people that were hit the hardest were people from the informal sector, domestic workers, gig workers and MSME workers. These were the people that were most vulnerable, as most of them lost their jobs or received partial payments and were left in complete uncertainty and lurch. Many of them constituting migrant laborers were forced to return back to their hometowns with no job opportunities left for them to explore in the midst of the pandemic.

The Union Budget must focus on the formalization of these informal sectors, to not only provide workers with safety and security but to also improve the economic/financial stability and to maintain social balance in the society. To bring about this change, the government must allow staffing companies to bring these informal workers under their wings for formalization. These staffing companies must ensure that these workers are provided with minimum wages, appointment letters and all statutory benefits that they are liable to.

It is a request to the government for evaluating a reduction in GST from existing 18% to 5% with ICT as a merit of services for staffing industry, for their valuable contribution in enabling employment. The government must also include provisions for the extension of PMRPY schemes for at least three more years and should introduce a similar scheme in ESI. They must also introduce lower levels of PF and ESI, in accordance to the varying sizes of the MSME companies, as this will be very beneficial in bringing formalization in the informal sector.

The Budget 2021 must also focus on implementing the new labour laws, recently passed by the government. These laws would provide a social safety net for workers and would make them less vulnerable to exploitation by guaranteeing them minimum wages and maximum working hours. The law would also aid in generating employment and providing workers with better welfare schemes.

This would ensure a holistic solution towards achieving much better living standards and lifestyle for many deserving and aspiring workers/employees across the nation.

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