Kerala Only State to Fully Use Labour Cess Funds; Overall Use of Funds by States/UTs Low

Collected under the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996 (hereinafter BOCW Act), the labour cess funds form an important resource for the welfare of building and construction workers, with appropriate state welfare board(s) created under the Act for its proper utilisation. 

Section 22 of the BOCW Act provides for the utilisation of the funds to “provide immediate assistance to a beneficiary in case of accident”, pay for group insurance schemes, make payment for pensions to beneficiaries, “sanction loans and advances to a beneficiary for construction of a house”, furnish financial assistance for the education of beneficiaries’ children, meet medical expenses of a beneficiary or their dependant for major ailments, make payment of maternity benefit to the female beneficiaries, and provide better facilities to the workers. Hence, effective utilisation of the financial resources by the welfare boards is essential for the benefits to materialise and trickle down to the beneficiary workers, especially given the monetary contributions of the workers under the BOCW Act.

However, except for Kerala, which has used 100% of its funds collected under the Act, most states/UTs have failed to effectively utilise the available funds for the benefits of the workers. This is revealed from the data provided by the Ministry of Labour and Employment during the current parliamentary session.

In response to the question posed in Rajya Sabha by G.C. Chandrashekhar, INC MP from Karnataka, regarding the utilisation of labour cess funds, the Minister of State for Labour and Employment, Sushri Shobha Karandlaje, provided the details about the utilisation of labour cess funds as of March 31, 2024. Whereas a total of Rs 1,12,331.09 crore have been collected across all the states/UTs till March 31 this year, the spending against the same is merely Rs 64,193.90 crore. Thus, effectively, Rs 48,137.19 crore remained unused by the welfare boards across the states/UTs.

Significantly, the total number of registered BOCW workers across India stood at 5,65,16,292. It is to be noted that data for the states of West Bengal and Sikkim was available as of January, 2024 and March 31, 2022, respectively.

Notably, Gujarat, which is a leading industrial state, spent a meagre sum of Rs 1,012.22 crore against its total collection of Rs 5,549.46 crore, with Rs 4537.24 crore remaining in its balance (including bank interests and other receipts).

States like Karnataka and Maharashtra had slightly higher relative spending among industrial states, though still worse from the other well performing states/UTs like Puducherry and Kerala.

Karnataka spent Rs 7,028.05 crore against its total collection of Rs 10,874 crore, while Maharashtra spent Rs 12,909.16 crore against whopping cess collection of Rs 18,579.82 crore. Kerala remained the only state to use all of its funds, with cess collection and expenditure both equalling Rs 3,457.32 crore.