Opinion Licence to work

Simply put,this would mean those who ply a rickshaw,operate a vendor cart or sell wares moving house to house get a formal recognition to run their business. Calling this a licence could be difficult as this would draw up images of oppressive government machinery but a solution to that should be easy.

A formal right on livelihood is dynamic in an urban setting. The worker is not tied to the place he stays but can move anywhere in or across the cities,using the right as collateral to obtain loans,so vital to run his business. It also costs far less to the municipal bodies as they do not end up signing away scarce real estate that the owner can do little to improve. More,there is always the risk that those rights can be bullied away by a mafia. But a movable right is linked only to the worker carrying no collateral risk. Obviously the plan is urban centric where there is a rush to chase the most lucrative opportunity to attract customers. A rural area will suffer no such constraints.

Moreover,since it pretty much does not extend the means of the state to give anything more that the status quo,it is far more doable. The plan can be nicely dovetailed with the Unique Identification Numbers that Nandan Nilekani will start distributing from this year. The number plan can be the missing piece in the scheme as it would allow each worker to be accurately mapped with his licence.

In addition,it does not strain the ability of the respective governments to run the scheme. It would not need a mapping of the urban space through the dense slums to establish difficult rights,which in turn is sure to be contested. A profession on the other hand can be replicated across as many people as those who come up to claim the status.

For a fiscally strapped government,this is a more promising alternative to a right to provide jobs. Already the NREGA has begun to chip away more than Rs 30,000 crore from the annual government budget. If food inflation persists for long,that sum will be replaced by a much larger number. A national right to livelihood is therefore difficult to envisage in these circumstances.

Even without that hangover and the bill for stimulus,the space for effective economic policy-making this time has dwindled as the room for tax changes has been vacated by the government. Mukherjee has commissioned a rehaul of the tax policy through two major works that will stretch late into the year — the direct tax code and the goods and services tax. Without them he would obviously not take on a substantial rewrite of the tax laws. The changes,if any,will only be restricted to finance some of the tax breaks written in the fiscal stimulus bill. It has cost him

Rs 42,000 crore in 2009-10.

Would a plan of this sort get the financial institutions interested? One would believe so. To take an example from the small scale and micro sector,banks,when evaluating a line of credit assess the product line being churned by the unit to decide if a loan is worth it. Only after they are satisfied about the income generating and sustaining property of the unit,do they move on to the next phase. At that stage,the bank moves on to assess the cover on the loan,based on the collateral the factory or unit owner can offer. In most cases,the additional collateral is the property.

In the case of the workers from the urban slums too,the loan or even the chance to sell their licence would depend on the income generating potential of the business. This would obviously provide space for very small loans,but those would be based on more clear assessment of the risks than a plot or even a house. The Indian banking sector has begun taking some quite interesting steps to make this section of urban India bankable. Models like business correspondents and no-frills savings accounts tap into this segment. But thereafter when it comes to the logical next step of giving a loan,the plan comes unstuck. We are back in the rolls of paperwork with miles of guarantors and referees.

Extension of property rights in an urban space is sure to create a crazy rush for construction of hovels plus creation of another set of differences among the poor,without too much of a gain. The work-based scheme will avoid all those traps and allow the state to play an unbiased role in creating a bottom-up approach to prosperity. As it turns out,it could be

a very easy call for the finance minister.

The writer is Executive Editor (News),‘The Financial Express’ subhomoy.bhattacharjee@expressindia.com