Union Budget 2021
Every year, we bring the rundown of the Union Budget from the lens of the startup ecosystem through a mix of pre and post budget coverage showcasing the expectations and impact on the ecosystem.
Finance Minister Nirmala Sitharaman, on Monday, during her Union Budget 2021 speech, talked about extending social security benefits to gig and platform workers, which include food delivery workers and cab drivers with companies such as Swiggy, Zomato, Ola and Uber. Sitharaman said India would be the first country to bring in such a policy.
The minister talked about the implementation of four labour codes, uniform implementation of the minimum wage for workers across categories, including gig and platform workers as well as migrant workers.
The Code on Social Security, 2020, was introduced and passed in Parliament in September last year. The code recognised gig workers as a separate class of workers outside the traditional employer-employee relationship and proposed social security benefits from various social security funds operated by the central government and the states as well. The government also mandated aggregators engaging the services of gig workers, to dedicate 1-2% of their annual turnover or 5% of the wages paid to gig workers, whichever is lower, to social security benefits for these workers.
In a related announcement, Sitharaman talked about launching a portal to collect data on migrant workers, adding that women would be allowed to work in all areas and in night shifts.
Representatives from the Indian startup ecosystem have previously told Inc42 that the Code on Social Security, 2020, and the Motor Vehicles Aggregator Guidelines – 2020 could create a cost duplication for cab aggregators such as Ola and Uber. This is because the latter also mandates aggregators to make provisions for health and term insurance for cab drivers.
“The Code on Social Security, 2020, already mandates firms employing gig workers to make 1-2% of their annual turnover available for ensuring social security of their workers. As such, the guidelines asking cab aggregators to provide health and term insurance for their drivers would create duplication of costs,” said Rameesh Kailasam, CEO of IndiaTech.org, an association representing Indian consumer Internet companies and their investors.
Earlier this month, Inc42 reported that ecommerce platforms such as Amazon, Flipkart, Ola, Uber and Urban Company had asked the Ministry of Labour to clarify the definition of ‘turnover’, which is to be used to calculate the company contribution to a proposed social security fund for gig or platform workers.
The companies that would fall under this scheme feel ‘turnover’ should only account for revenue from the unit that hires gig workers and not the company’s overall turnover.