Urban Employment Guarantee Scheme

2022 SEP 16

Mains   > Economic Development   >   Indian Economy and issues   >   Urban poverty


  • The Indira Gandhi Urban Employment Guarantee Scheme has rolled out in Rajasthan with the objective of providing economic support to the poor and needy families living in the cities through work to be provided on demand for 100 days in a year.


  • The Rajasthan government has prepared the employment guarantee programme after studying similar such schemes operative in other States. These schemes include the:
    • Ayyankali Urban Employment Guarantee Scheme in Kerala
    • Urban Wage Employment Initiative under UNNATI in Odisha
    • Mukhya Mantri Shramik Yojana in Jharkhand
    • Mukhya Mantri Yuva Swabhiman Yojana in Madhya Pradesh


  • Fulfill constitutional objectives:
    • Such a programme would give urban residents a statutory right to work and thereby ensure the right to life guaranteed under Article 21. It can also be used as a means to address the rising inequality in the country.
  • Address urban unemployment:
    • The unemployment level stood at 7.6% in April-June 2022, as per the Periodic Labour Force Survey (PLFS). Also, while rural unemployment is mostly seasonal, unemployment in the cities exist throughout the year.
  • Enhance quality of employment:
    • Majority of the employed population in urban areas work in the informal sector, where low wages and precarity are widespread. Assured employment can help reduce these vulnerabilities.     
  • Support urban growth:
    • India is transitioning from a mostly rural to a quasi-urban country. 50% of the population will be urban by 2050. To accommodate this growth, quality employment and infrastructure are needed, which can be created through an urban employment scheme in the lines of MGNREGA.
  • Promote public investment:
    • Such a programme can bring in much-needed public investment into towns to improve the quality of urban infrastructure and services, restoring urban commons, skilling urban youth and increasing the capacity of ULBs.
  • Prevent ecological degradation of urban spaces:
    • Indian urbanisation is characterised by uncontrolled migration from small and medium towns to large cities (top heavy pattern), resulting in urban sprawl and degradation of urban ecological commons like air and water.
    • Having guaranteed employment, especially in lower-tier cities, can help ensure balanced urbanisation.   
  • Realise the potential of urbanisation:
    • Urbanisation contributes to nearly 60% of India’s GDP. However, National-level urban programmes such as the Smart Cities Mission and AMRUT benefit only a fraction of the cities. Here, having a scheme with wider scope can help
  • Attain SDGs:
    • Having an assured employment scheme can aid India in attaining th UN’s Sustainable Development Goals (SDGs), specifically Goal 11 (making cities inclusive, safe, resilient, and sustainable).
  • Absence of assured employment:
    • Deendayal Antyodaya Yojana (National Urban Livelihoods Mission) (formerly Swarna Jayanti Shahari Rozgar Yojana) provides self-employment and skilled wage employment opportunities to unemployed urban poor. But it does not provide “guaranteed” employment.
  • Multiplier effects on the economy:
    • An urban employment guarantee programme will boost local demand in small towns, improve public infrastructure and services, spur entrepreneurship, build skills of workers and create a shared sense of public goods. 
  • Asset creation and management:
    • A large variety of works that require a range of education and skills may be undertaken through this programme.
    • Eg: Public works such as building and maintenance of roads & footpaths, creation and management of urban commons like wetlands, surveying of environmental quality, apprenticeship in municipal offices, public schools, and health centres; and provisioning of care for children and the elderly.
  • Social empowerment:
    • Reservations in employment under the scheme can be offered to women and other vulnerable sections, which can boost the efforts of social upliftment.


  • Financing:
    • A huge surge in demand for MGNREGA works was witnessed in pandemic times, but the government funding was insufficient. Eg: Rs. 73,000 crores was allocated for the year 2021-22, but this was much lower than the revised estimate of Rs.1,11,500 crores. Extending the legal right to work to urban areas can add to the stress on public exchequer.
  • Actual working days:
    • Under MGNREGA, despite the assurance of 100 days of wage employment, the average days of employment provided per household is less than 50. Extending similar assurance to urban centres may face the same issue.
  • Poor quality of assets created:
    • There is no monitoring mechanism to ensure that assets created meet the required standards. Also, there is limited incentive for workers or local governing bodies to maintain the assets created under such schemes. 
  • Non-payment of unemployment allowances:
    • Most of the state-level UEGs are backed by very modest Budget allocations. Hence, many states are unable to pay an unemployment allowance when work is not given on demand.
  • Potential rise in migration:
    • The scheme will attract more migrants to urban areas, as it will now provide another incentive to live and work in the cities. This can add stress to an already dilapidated city infrastructure and administration.
  • Skills For Urban Areas
    • An employment guarantee scheme in urban areas will require a greater skill sophistication than in rural areas.
  • Challenges in identification:
    • The selection and definition of urban areas (metros, cities, towns) would also be a challenge, including deciding city boundaries where the scheme would be applied.
    • If an urban job guarantee scheme is implemented, it raises the question of whether a person can a person avail both MGNREGA and the urban scheme.


Former RBI governor Raghuram Rajan and development economist Dr Jean Dreze have also hinted at the need for such a scheme to alleviate the extreme poverty that people face due to the subsequent lockdowns. But to realize its full effectiveness, support systems such as health facilities, education, housing, etc. need to be augmented. There should also be efforts to strengthen skill and vocational training efforts in urban areas.



Q. Do you agree with the view that a national urban employment guarantee programme is necessary for boosting the recovery of Indian economy. Justify.