Economics, Government of India, Stories

Towards an Unchained Country?


The Government of India in May this year, modified the Scheme for Rehabilitation of Bonded Labourers by significantly increasing the rehabilitation amount. But will this help?


In May, the Ministry of Labour and Employment released the operational guidelines for the new Central Sector Scheme for Rehabilitation of Bonded Labourers, 2016.  This story outlines the issue of bonded labour, highlights the important features of the 2016 scheme and compares it with earlier central sector schemes for rehabilitation of bonded labourers to understand if the new scheme will help in making any substantial progress.

A Relic of the Past Thriving in Present Economic Depravity

Bonded labour is an asymmetric relationship between a creditor and a debtor in which the repayment of debt is demanded by labour and enforced through the violation of human rights of the debtor. Bonded labour is a variant of slavery. Its subjects are forced to work long hours in hazardous conditions, are denied wages, fall victim to physical and sexual abuse and lack social protection, freedom of employment and movement. Bonded labour robs the debtors of dignity and autonomy, keeping them in a vicious cycle of dependence on the creditor. It can continue for several years and even pass on to the next generation, even though a report sponsored by the Planning Commission found (from a survey of rehabilitated bonded labourers) that nearly half of the loans were for less than Rs 5,000 and that most loans were for less than Rs 10,000.

Bonded labour preys on the chronically poor in India who are disadvantaged and vulnerable due to the lack of livelihood opportunities, assets, illiteracy, caste inequalities and the feudal structure. Most bonded labourers are landless and belong to the Dalit or Adivasi communities. They lack economic power and access to social goods and opportunities. Unable to sustain themselves, they are forced into taking debts and enter into unfair agreements. In recent years, agents have been luring the penniless with promises of fair employment only to traffick them to a different part of the country and enslave them as bonded labourers. Usually, the male head of the deprived household is trapped into bondage and resultantly the women and children are also enslaved.

A plethora of laws and international conventions prohibit bonded labour. They are

Yet, the system operates insidiously across India in agriculture, mining, quarries, construction, brick kilns, silk and cotton production, bidi making, informal sector etc. Escaping from bonded labour is next to impossible. Therefore, the Bonded Labour System (Abolition) Act required State Governments to establish Vigilance Committees to identify, release and rehabilitate bonded labourers. In 1978, the Central Government established a scheme to provide assistance in rehabilitating bonded labourers. This scheme has been revised in 1986, 1995,1999 and 2000. The latest revision is the 2016 scheme.

Entitlements under the 2016 Scheme

The 2016 scheme is noteworthy as it recognises the differential needs of marginalised groups trapped in bonded labour. It provides cash assistance of:

  • Rs 1 lakh for male bonded labourers
  • Rs 2 lakh for female and child bonded labourers and children rescued from forced labour or organised or forced begging
  • Rs 3 lakh for differently-abled, physically challenged, trafficked, commercially sexually exploited, transgender and other severely vulnerable bonded labourers

The male rehabilitated bonded labourer provided with Rs 1,00,000 can opt for depositing the money in an annuity scheme or receiving the sum. The district administration will assess his cash requirement and put the money in an annuity scheme with his consent.

For the females and children receiving Rs 2,00,000 cash assistance, at least Rs 1,25,000 will be deposited in an annuity scheme and the remaining amount will be transferred to their bank accounts through electronic clearing service.

Rehabilitated bonded labourers who are extremely vulnerable and thereby receiving Rs 3 lakh cash assistance will similarly have at least Rs 2 lakh deposited in an annuity scheme and the balance will be transferred to their bank account through electronic clearing service.

Non-cash assistance provided to all rehabilitated bonded labourers must include:

  1. Allotment of house-site and agricultural land
  2. Land development
  3. Provision of low cost dwelling units
  4. Animal husbandry, dairy, poultry, piggery etc.
  5. Wage employment, enforcement of minimum wages etc.
  6. Collection and processing of minor forest products
  7. Supply of essential commodities under targeted public distribution system
  8. Education for children

Adult male bonded labourers must be compulsorily given employable skill training. Children, female and disabled bonded labourers must be provided with proper education, counselling, short stay home until Class 12 and skill development. Financial and other assistance for marriage must be given to women and disabled bonded labourers. Disabled bonded labourers are also entitled to the special care enlisted in the national policy for the disabled.

The Scheme mandates that a Bonded Labour Rehabilitation Fund be created by the State Government in each district to provide immediate help to release bonded labourers. This Fund must have a minimum permanent corpus of Rs 10 lakh. The District Magistrate (DM) must provide an advance of at least Rs 5,000 to released bonded labourers from this fund as immediate relief. If the DM finds any bonded labourer in need of greater assistance, he/she can provide the maximum entitlement prescribed to the category that the person belongs to under the scheme.

 How the Funds Reach the Rehabilitated Bonded Labourer

Under the 2016 scheme, funds will be released after bonded labour is proved in court and the creditor is convicted. Only proposals for financial assistance can be made by the District Magistrate upon finding prima facie proof of bondage.

The District Magistrate must submit a claims proposal to the District National Child Labour Project Society –  specifying the details of the rehabilitation assistance provided by the State government, a category-wise break-up of bonded labourers to be rehabilitated, a release certificate for every bonded labour to be rehabilitated and the penalty or punishment awarded to the creditors.

The District NCLP Society scrutinises this proposal and then submits it to the Ministry of Labour and Employment. The Ministry of Finance vets the release of funds. Then the Ministry of Labour and Employment sends the funds to the District NCLP Society.

According to the scheme, the District NCLP Society must release the funds along with the interest to the district administration and other implementing agencies. However, in response to a question in the Rajya Sabha, the Ministry of Labour and Employment stated that the benefits would be transferred from the District NCLP Society to the accounts of the rehabilitated bonded labourers through Direct Benefit Transfer. Moreover, the official DBT website lists the Rehabilitation Scheme as being DBT onboarded.

Comparison with Earlier Schemes

The previous 1999 scheme provided a meagre Rs 20,000 cash assistance to rehabilitated bonded labourers, irrespective of their identities and resultant disadvantages and vulnerabilities. The financial assistance provided was equally contributed (50-50 basis) by the Central and the State Government.

Under the 2016 scheme, the Centre disburses the full financial assistance. It has substantially increased the cash assistance provided and enhanced assistance for disadvantaged groups. It has also increased funds for survey identification of bonded labourers in each district from Rs 2 lakh to Rs 4.5 lakh.

Curiously, the non-cash assistance of protection of civil rights of rehabilitated bonded labourers finds no place in the scheme despite appearing in the 2016 draft scheme and 1999 scheme. Moreover, the non-cash assistance  provided falls short of the robust assistance proposed by the National Human Rights Commission which additionally provided for

  • identification of the delivery system of inputs – credit facilities, seeds, draught animals, fertilizers;
  • minimum veterinary cover from the existing extension of veterinary services for animal husbandry;
  • supply of raw materials, implements, working capital, work shed;
  • linkage with markets through cooperative or other State-aided institutions to eliminate exploitation by private middlemen.

Towards an Unchained Country?

The Ministry of Labour and Employment reports that around Rs 162 crores have been released for providing rehabilitation assistance throughout the country from 1978-2014. It noted that the provision of financial assistance was the norm. No adequate proposals for rehabilitation assistance have been put forward by the States. Only 2,28,429 bonded labourers have been rehabilitated until March, 2016. The government hopes to release and rehabilitate an estimated 1.84 crores of bonded labourers by 2024. This is a wildly optimistic goal for the status quo.

  1. Sparse Identification and Release: Identification, the very first step of rehabilitation, is callous. The District and Block Level Bonded Labour Vigilance Committees responsible for identification and release of bonded labourers are widely reported to be negligent and casual in performing their duties. The International Labour Organisation has noted the absence of Vigilance Committees in all districts. There are instances of the administration reporting zero or low prevalence of bonded labourers despite reports to the contrary by journalists and non-governmental organisations. No targets are set for identification nor are regular surveys conducted to identify bonded labourers. This is despite the Supreme Court’s order in PUCL v State of Tamil Nadu directing surveys to be conducted periodically every three years in all States and ordering the submission of survey reports to the NHRC. When surveys are conducted, they are limited to a few districts. They are conducted by lower ranked officials who lack adequate training and sensitivity. Surveys are often accused of under-reporting the actual magnitude of bonded labour. It is also not unheard of for the administration to drop cases after the identification of bonded labourers or encourage settlements and compromises between the creditors and bonded labourers. This lack of implementation in identifying bonded labour gives impunity to the creditors, jeopardises all measures and has resulted in a wide gap between policy and reality.
  2. Linking Disbursal of Funds to Conviction of Creditors: The Central Scheme has absurdly mandated that the funds will be given only upon the conviction of the accused. This is problematic because very few cases are registered against offenders. Even among the few cases that are registered, conviction rates are low with cases being dropped or pending in courts due to the creditors’ political and economic power. Years may lapse between release and conviction, delaying the rehabilitation assistance. This time gap could very likely result in many released bonded labourers falling into bonded labour again due to the lack of adequate resources for daily sustenance. In fact, the time gap between release and rehabilitation under the earlier scheme (anywhere between a month to a year or more) was criticised for creating space for released bonded labourers to fall into the system again. With financial assistance dependent on conviction, this time gap has only increased and the disbursal of assistance has become delayed and uncertain.

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About Author

Srujana Bej is an undergraduate law student at the National Academy of Legal Studies and Research (NALSAR). She has a keen interest in human rights law and public policy.

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