Only 10% construction cess spent on labour welfare

State governments have raised thousands of crores for the welfare of urban laborers through construction cess paid by homebuyers, but only a fraction of that amount has been spent for the benefits of daily wage earners, the Supreme Court observed on August 21, 2015 and asked the Center why collection of the cess shouldn’t be stopped. A social justice bench of Justices Madan B Lokur and U U Lalit rapped the state governments for neglecting the welfare of construction workers and misusing the funds by spending it for other purposes. Around Rs 27,000 crore collected through cess remains unspent with the state governments. 

After going through the data filed by various states, the bench noted that most of the amount was being spent on administrative and advertisement purposes and not on the social welfare schemes for urban labourers, who had to live a miserable life. 

The Supreme Court observed, “We are extremely disturbed. The (state) governments are sitting over Rs 27,000 crore but labourers are not getting any benefits. The governments must file affidavits, stating the names of labourers, who benefited from the fund with their Aadhaar card number, and we will get it verified.” The Bench said, “It is a shameful and amazing situation as the amount is not spent on labourers, and the governments used the fund for other purposes”, and added, “Let’s stop collection of cess immediately”.

It directed the Union Labour Secretary to file affidavit stating how to stop misuse of the fund, and ensure that Rs 27,000 crore is spent on labour welfare. According to the data placed before the SC, around Rs 4,179 crore of cess was collected by eight states in the last three years and only Rs 361 crore was spent for the welfare of construction workers.

Maharashtra, Meghalaya, Delhi, Rajasthan, Tamil Nadu, Haryana, Jharkhand and Himachal Pradesh have collected Rs 868 crore in 2011-12, Rs 1,606 crore in 2012-13
and Rs 1,705 crore in the last financial year. 

Advocate S Wasim Qadri, appearing for Delhi, told the bench that the NCT government was running 18 welfare schemes and has spent Rs.39.08 crore on their welfare since 2009.
The Building and Other Construction Workers’ Welfare Cess Act, 1996 provides for levy and collection of cess on the cost of construction incurred by employers, and the amount is to be deposited with the Building and Other Constructions Workers Welfare Boards. 

The state governments contended that they were running various welfare schemes for the workers and the labourers were getting benefits.  But the bench was not satisfied as the data placed by the Centre told a different story. The court asked the state government to place before it a list of labourers who benefited from schemes to substantiate their claim.

The SC is monitoring the implementation of the social welfare act and it had earlier directed all the states to set up the board to frame and implement welfare schemes for the

benefit of construction workers. Under the act, every state is required to constitute a state welfare board to provide financial assistance for children education, medical treatment, etc.

The board is also supposed to give financial help in case of accidents and provide pension, loans and group insurance to workers. The court took the task of ensuring implementation of the welfare law after a PIL was filed by an NGO, National Campaign Committee for Central Legislation on Construction Labour, alleging that the state
governments were not passing on the cess amount to the welfare boards. 


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