Cabinet approves nationwide urban job guarantee pilot in 100 cities

NEW DELHI, September 1: The Union Cabinet on Tuesday approved a nationwide pilot urban employment guarantee covering 100 cities, marking the Centre’s biggest move yet to create a statutory-style safety net for low-income urban households.

The scheme will offer up to 100 days of paid work per eligible household each financial year through civic projects, with enrolment and work allocation scheduled to begin on November 1.

Key points

- The three-year pilot will cover 100 cities selected on the basis of population, unemployment and climate vulnerability.

- Eligible urban households will be able to demand up to 100 days of work in a financial year, subject to verification.

- The Centre has approved an initial outlay of ₹60,000 crore, with costs to be shared with states.

- Work will include water conservation, flood mitigation, waste management, urban greening and maintenance of public assets.

- Registration will open on October 1, while the first work orders are expected from November 1.

Announcing the decision after a meeting of the Union Cabinet, Information and Broadcasting Minister Rajiv Malhotra said the programme was designed to provide “predictable income support with productive urban work” rather than a one-time relief package.

“This is a demand-driven employment pilot aimed at households facing insecure or seasonal livelihoods in cities,” Malhotra said at the Cabinet briefing. “The focus will be on creating and maintaining public assets that improve urban resilience and basic services.”

Under the approved framework, one adult member of an eligible household may apply for unskilled or semi-skilled work through urban local bodies.

Officials said women, persons with disabilities, transgender persons, single-parent households and families living in notified informal settlements would receive priority when demand exceeds available projects.

The government has set an indicative initial outlay of ₹60,000 crore for three years.

The Centre will bear 75% of the wage cost and 60% of the material and administrative cost in most states.

For the northeastern and Himalayan states, the central share will be higher, according to the Cabinet note released after the meeting.

The final list of participating cities will be notified within two weeks.

Each state will nominate cities, but the Union Housing and Urban Affairs Ministry will apply common criteria, including population growth, unemployment indicators, share of informal workers, exposure to heat and flooding, and the capacity of municipal bodies to manage projects.

A senior Housing and Urban Affairs Ministry official involved in drafting the scheme said the 100 cities would include a mix of metropolitan areas, state capitals, industrial centres and smaller municipal corporations.

“The pilot must tell us whether an employment guarantee can work across very different urban labour markets,” the official said, requesting anonymity because the detailed operational guidelines are yet to be notified. “It cannot be tested only in the largest cities or only in municipalities with strong administrative capacity.”

Applicants will receive digital and physical job cards linked to a household identification number.

Aadhaar-based authentication may be used, but officials said alternative verification would have to be provided where biometric or connectivity failures occur.

Municipal help desks and assisted registration camps are planned in informal settlements, labour markets and ward offices.

Participating urban local bodies will be required to offer work within 15 days of a valid demand.

If work is not provided, applicants may become eligible for an unemployment allowance, though the rate and liability-sharing mechanism will be specified in the rules.

Wages are to be transferred directly to bank or post-office accounts within 15 days of attendance certification.

The wage floor will be linked to the notified minimum wage for unskilled urban work in the respective state, rather than a single national rate.

State governments may pay a higher wage from their own resources.

The Cabinet framework also provides for equal wages for men and women.

At least one-third of the workers at each project site should be women, the government said.

Worksites employing more than a prescribed number of workers will have to provide drinking water, first aid, shade and childcare support.

Occupational safety standards will apply to drainage, waste-handling and flood-control work.

Projects permitted under the pilot include restoration of urban lakes and wetlands, desilting of drains, rainwater harvesting, heat-mitigation measures, tree planting, upkeep of public toilets, segregation of municipal waste, maintenance of footpaths and community facilities, and mapping of vulnerable neighbourhoods.

Hazardous sewer entry and the replacement of regular municipal posts with short-term workers will be prohibited.

The scheme will use a geo-tagged public works register and publish attendance, wage payments, project costs and completion status on an online dashboard.

Social audits will be mandatory twice a year in every participating city, with ward-level public hearings for grievances.

According to the Cabinet note, the pilot aims to generate up to 500 million person-days of employment over three years.

The Centre estimates that between 2.5 million and 3 million households could register in the first year, although actual employment will depend on demand and the readiness of municipal project lists.

Official labour-force surveys have repeatedly shown that urban employment is more exposed to economic shocks and that a large share of city workers lack written contracts or paid leave.

The government said the new programme would complement, rather than replace, existing skilling, housing, food-security and self-employment schemes.

Background

India’s principal employment guarantee, the Mahatma Gandhi National Rural Employment Guarantee Act, applies to rural households and provides up to 100 days of wage employment in a financial year.

It does not extend to workers living in statutory towns and cities, even when their livelihoods are informal or seasonal.

Demand for an urban counterpart intensified after the Covid-19 lockdown exposed the vulnerability of migrant workers, street vendors, domestic workers, construction labourers and other low-income groups in cities.

Several economists and parliamentary committees have since argued for an urban employment programme that could act as an automatic stabiliser during downturns.

Some states have introduced their own urban employment initiatives, offering the Centre a base of administrative experience.

Those programmes have varied in scale, eligibility and wage rates, and most have operated as budget schemes rather than enforceable guarantees.

The Economic Advisory Council and policy researchers have previously suggested that urban public works should focus on care services, environmental restoration and maintenance, areas where city governments often face staffing gaps.

Municipal bodies, however, have warned that weak finances, limited engineering staff and poor worker databases could constrain implementation.

The newly approved programme stops short of immediately creating a permanent nationwide legal entitlement.

Officials described it as a three-year pilot whose results would guide a decision on whether to expand the scheme to all statutory towns or place it under a dedicated law.

What it means

For low-income urban households, the policy could provide a fallback source of wages during construction slowdowns, extreme weather, layoffs or gaps between casual jobs.

Because employment will be demand-based, its effectiveness will depend on whether residents can register easily and obtain work within the promised period.

For city governments, the programme brings a significant new source of funding for labour-intensive maintenance.

Many municipalities struggle to keep drains, lakes, footpaths and community assets functional because capital budgets favour new construction while routine upkeep receives less attention.

The design also places heavy demands on municipal administration.

Cities will need to prepare shelves of viable projects, measure work, record attendance, process wages, prevent the displacement of permanent workers and conduct social audits.

Smaller municipalities may require technical teams from state governments to comply with these conditions.

Labour economists said linking wages to state minimum wages was important, but cautioned that delayed payments could undermine the scheme.

They also called for portable registration so that migrant households do not lose access when they move between cities.

“An urban employment guarantee can reduce distress only if workers can demand work without excessive documentation and are paid on time,” said Dr Meera Kulkarni, a labour economist at a public policy research institute in Delhi. “The pilot should be judged by actual days of work delivered, not merely registrations or sanctioned spending.”

Reactions

Opposition parties welcomed the acceptance of an urban jobs framework but questioned why the government had chosen a pilot rather than immediate nationwide coverage.

The principal Opposition’s labour spokesperson, Anil Deshmukh, said Parliament should be asked to create a legally enforceable right to work for urban households.

“A pilot is better than inaction, but unemployment allowance and timely work must be enforceable, not discretionary,” Deshmukh said. “The allocation must also rise automatically when demand rises.”

The National Federation of Municipal Workers said the prohibition on replacing regular posts was essential.

Its general secretary, Kavita Nair, urged the government to issue clear safeguards against using scheme workers for sanitation tasks without protective equipment.

Municipal leaders broadly supported the additional funding but sought flexibility in choosing projects.

Ramesh Iyer, commissioner of a municipal corporation expected to apply for inclusion, said cities would need at least a month to prepare ward-level work plans.

“Drainage, lake restoration and heat mitigation can absorb substantial labour while improving services,” Iyer said. “The challenge will be matching daily work demand with technically approved projects and making wage payments without delay.”

An association representing street vendors welcomed the proposal for physical enrolment camps.

Its national coordinator, Shabana Qureshi, said many workers had smartphones but lacked stable internet access, updated identity documents or bank accounts capable of receiving direct transfers.

Industry groups said the scheme could support consumption without distorting labour markets if wages remained aligned with statutory minimums and employment was concentrated in periods of weak demand.

They asked the government to monitor whether workers moved away from small businesses during peak seasons.

What happens next

The Housing and Urban Affairs Ministry will issue detailed guidelines and notify the first 100 cities by September 15.

States must then establish nodal agencies, nominate grievance officers and submit initial city employment plans before registration opens on October 1.

Urban local bodies will conduct household registration, verify applications and publish ward-level project lists during October.

The government expects work allocation to begin on November 1, with the national dashboard going live at the same time.

An independent evaluation will examine employment generated, participation by women and vulnerable groups, wage delays, asset quality and the fiscal capacity of municipalities.

The first formal review is due after six months, followed by an annual report to Parliament.

The Cabinet has authorised the finance and housing ministries to revise operational rules during the pilot, but any expansion beyond the approved outlay will require a fresh decision.

The government said it would consider nationwide rollout after evidence from two full financial years is available.