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5 recommendations from the Niti Aayog to regulate the platform and gig economy

The government’s think tank has made recommendations on platform regulation, work benefits, and taxation pertaining to the burgeoning gig economy in India

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Niti Aayog, the government’s think-tank, released a report studying and giving recommendations on improving gig and platform work in India on 27th June. Called ‘India’s Booming Gig and Platform Economy’ the report contains statistics estimating the size of India’s gig economy- hitherto hard to estimate; recommendations on how the sector could be improved, financial inclusion of gig workers could be ramped up, and so on.

In this piece, we have summarised their recommendations on improving the sector as well as statistics on the same. According to the report, officials from Niti Aayog’s Skill Development & Employment (SDE) Vertical Team, professors from institutes like BITS-Pilani, V.V. Giri Institute of Labour Studies, as well as researchers from private sector organisation Ola Mobility Institute were involved in formulating it.

Why it matters? Regulation of the gig and platform economy – businesses and workers- is a matter that is still shaping up. Last year the Ministry of Labour and Employment tried to include gig workers in its database of migrant workers so they could get access to better jobs, welfare scheme benefits, etc. The safety and security of gig workers has been a matter of concern with delivery partners reportedly saying that deadlines on delivery, and penalties creates road safety risks for them. Earlier this year Congress MP Karti P. Chidambaram said in the Lok Sabha that, in light of such a lack of protection, the government should revamp the classifications made for gig and platform workers in the Code on Social Security, so as to include them better. Niti Aayog’s report and recommendations could provide a direction for such regulation in the future.

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Definitions of Gig and Platform workers under the Code of Social Security

As per the CoSS 2020 , platform workers are a sub-type of gig workers. The CoSS defines a gig worker as the following:

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“A person who performs work or participates in a work arrangement and earns from such activities outside of traditional employer-employee relationship,” the report says.

Meanwhile a platform workers is defined as the following:

“A person engaged in or undertaking platform work, while platform work is ‘a work arrangement outside of a traditional employer employee relationship in which organisations or individuals use an online platform to access other organisations or individuals to solve specific problems or to provide specific services or any such other activities which may be notified by the Central Government, in exchange for payment.”

How regulation of the gig economy could be improved

“The multiplicity of policies and rules and regulations as seen today not only needs to be simplified and streamlined but any licensing requirements for aggregators too should be reconsidered,” the report says.

  1. Streamlining existing multiplicity in regulation

The report refers to multiple regulations that currently govern or are in the works to govern platform businesses. Such as:

  • The Companies Act, 2013
  • Information Technology Act, 2000
  • Consumer Protection (E-Commerce) Rules, 2020
  • Ministry of Commerce’s upcoming E-commerce policy 2022
  • Income Tax Act, 1961
  • Central and States Goods and Services Tax Acts
  • Motor Vehicles Act, 1988
  • Sectoral and State-wise legislations, as applicable, such as Aggregator Rules issued by different States

According to it, these regulations impose regulatory costs, thereby increasing the cost of the business and of ‘job creation’. Thus, it gives the following recommendations:

1. Implement the no commercial licence rule uniformly: While the central government has removed the commercial licence requirement, state governments have not applied the rule uniformly, the report says. According to it, removal of the requirement makes the initiation of women and persons with disabilities into the platform economy easier and cuts down on an erstwhile one year wait time in securing the licence. Thus, it recommends that State government enforce the rule uniformly.

2. Allow ferrying of passengers in a variety of vehicles: The report recommends permitting ferrying of passengers in two-wheelers (in the form of bike taxis or bike-pool), three-wheelers (rickshaws, auto- rickshaws), four-wheelers (taxi- cabs and carpool), and 10-12-seater vehicles (mini-buses). It uses the case study of bike taxis to highlight the need for uniformity in this area:

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“Bike taxis disincentivise ownership and usage of private vehicles, and incentivise the usage of public transit by offering first and last-mile connectivity. Accordingly, the Central Motor Vehicles Act legalised bike taxis in 2004. The Motor Vehicles (Amendment) Act, 2019 allows for the aggregation of all vehicles including bikes. In this backdrop, even though over 15 States16 and Union Territories such as Gujarat, Haryana, Punjab, West Bengal, Mizoram, Telangana, Madhya Pradesh, etc. have allowed the operation of bike taxis, several key states including Maharashtra, Delhi, Tamil Nadu, etc. are yet to notify rules on this front (Raman, 2020). Since 2021, Karnataka, on its part, is permitting the operation of electric bike taxis, but is silent on conventional bike taxi operations.”

3. Release regulations at both State and Central level on shared-mobility: State governments should create rules and regulations to legalise and operationalise shared-mobility, while the central Ministry of Road, Transport and Highways (MoRTH) should put out guidelines to promote it. Shared mobility includes carpooling, bike-sharing services, etc.

  1. Possible pain points recognised with licensing requirements

The report also brings out the following concerns with the requirement for licences under various State regulations:

  1. Variability of the size of the platform: “More often than not, the licence fee is determined by the size of the platform, and this is a problem. Since, platform workers have a transient identity switching from one platform to another and moving in and out of the platform economy to pursue agriculture, education or employment elsewhere,” the report says.
  2. Short validity of the licence: The report also says that the licence comes with a validity of ‘a mere one year’.
  3. Other recommendations for easing regulatory burdens

1. Reduce entry barriers for workers: “Removing operational restrictions such as high permit fee, past experience, requirement of CCTVs in vehicles, conservative floor on the age of the vehicle, etc. might help in ensuring that the mobility-based livelihoods are not prohibitively expensive for India’s youth to access,” the report says.

2. Promoting mobility as a service: “Central and state governments should issue necessary guidelines for the same while also promoting both passenger mobility and hyperlocal deliveries using the same vehicle, in an integrated fashion,” the report says, adding that such services are referred to as ‘Mobility-as-a-Service’.

  1. Improving financial gains made by platform workers

Fairer taxation of gig and platform work

The report recommends fairer taxation for platform workers. According to it, the process of filing income tax returns for platform workers at present is not streamlined, and thus recognising them as a separate category of workers in income tax return forms is recommended.

“At present platform drivers have only limited options to file Income Tax Returns (ITR). For instance, under Section 44AD presumptive income option (India.com Business Desk, 2018), meant for those running their own business. Recognising platform workers as a separate worker classification would thereby necessitate their recognition under various ITR forms. This would streamline the process of filing taxes,” the report says.

It also notes that a recent inclusion of app-based auto rides into the Goods and Services Tax (GST) regime could prove to be detrimental to such workers. “This tax will lead to a rise in platform fares and a corresponding drop in demand, directly affecting the income of drivers. Therefore, there is a need for supportive tax mechanisms, designed to help the platform economy grow,” the report says.

Credit facilities for gig workers

The report advocates for services that use data available on workers with platforms to assess their creditworthiness and thereby extend credit. “New-age companies, banks, and micro-finance institutions (MFIs) may, thus, develop innovative products including loans for individuals with intermittent but predictable income, or tools for running freelancer businesses,” the report says.

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It thus uses the example of Ola and Avail Finance’s tie-up. In such tie-ups Avail Finance offers lower-cost options for healthcare, institutional credit, insurance, and retirement savings that individual platform workers would not be able to access themselves, the report says.

5. Incentivising ‘platformisation’ through Start-Up India like programs

Lastly, the report also asks that apart from easing regulations and incentives, the government make efforts to accelerate ‘platformisation’ i.e., give impetus for more platform businesses by starting a program called ‘Platform India’ along the lines of the government’s earlier Start Up India initiative.

“A Platform India initiative built on the pillars of Accelerating Platformization by Simplification and Handholding, Funding Support and Incentives, Skill Development, and Social Financial Inclusion may be started, like the immensely successful Startup India initiative.”

Further, it asks that easy loan and funding facilities should also be provided to platform businesses. This it says can be through collateral-free working capital funding and grants provided by State and Central government institutions like Small Industries Development Bank of India (SIDBI), Entrepreneurship Development Cells, academic institutions’ Entrepreneurship Development Cells, etc.

“The financial support offered by such institutions would allow early-stage platforms to prove their business model, gradually become sustainable, and also attract private investments.”

Key statistics related to gig and platform work in India

1. Total Number of workers in the gig economy: There were an estimated 77 lakh (7.7 million) gig workers in India as of 2020-21, according to the report.

It says that constituted 2.6% of the non-agricultural workforce or 1.5% of the total workforce in India.

2. Projections till 2030 on gig workers: “The gig workforce is expected to expand to 2.35 crore (23.5 million) workers by 2029-30. The gig workers are expected to form 6.7% of the non-agricultural workforce or 4.1% of the total livelihood in India by 2029-30,” the report says.

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3. Industry where most gig workers are occupied: 38.95% of gig workers were occupied in ‘Retail trade, except of motor vehicles and motorcycles’ as of 2019-2020. This was followed by the ‘Transportation and Storage’, where 19% gig workers are engaged.

The report conducted industry classification according to the National Industrial Classification (2008). The NIC defines ‘Retail trade, except of motor vehicles and motorcycles’ as involving ‘resale (sale without transformation) of new and used goods mainly to the general public for personal or household consumption or utilization, by shops, department stores, stalls, mail-order houses, hawkers and peddlers, consumer cooperatives etc.’

Meanwhile, the transportation and storage sector signifies businesses involved in ‘provision of passenger or freight transport, whether scheduled or not, by rail, pipeline, road, water or air and associated activities such as terminal and parking facilities, cargo handling, storage etc. Included in this section is the renting of transport equipment with driver or operator. Also included are postal and courier activities’, as per the NIC.

4. Roles fulfilled by gig workers: 33.53% of workers were working as ‘Shop Salespersons and Demonstrators & Stall and Market Salespersons’, the report said. This was followed by 19.06% being engaged as ‘Motor Vehicle Drivers’.

This post is released under a CC-BY-SA 4.0 license. Please feel free to republish on your site, with attribution and a link. Adaptation and rewriting, though allowed, should be true to the original.

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Written By

I cover health technology for MediaNama but, really, love all things tech policy. Always willing to chat with a reader! Reach me at anushka@medianama.com

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