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Tag: Debt

  • Bonded Labour in India: Prevalent, Yet Overlooked

    Bonded Labour in India: Prevalent, Yet Overlooked

    In 1976, India stood out as the first country in South Asia to enact legislation prohibiting bonded labour. However, the system has not been uprooted owing to the different barriers posed by socio-cultural norms and administrative and legislative incompetency. The country’s most vulnerable and disadvantaged sections of society are at risk of being trapped into such a form of modern slavery. The prevalence of this system over the decades necessitates the need to understand the root causes of the emergence of such bonded labour situations and why it is still prevalent in the country.

    Bonded labour in India

    The Bonded Labour System Abolition Act (1976) defines a bonded labour system as a relationship evolved out of a debtor-creditor agreement. It is identified as a form of forced labour where the debtor comes into an agreement, oral or written, with the creditor and receives a loan amount in exchange for his labour or that of his family members. The obligation need not just be an economic consideration such as a loan or an advance amount received from the creditor. People also become bonded with social, customary, hereditary or caste obligations and often agree to enter service with no wages or for nominal wages. The labourer finds it difficult to settle the debt amount as the provided wages are too low even to meet their basic sustenance needs. Eventually, they end up in the same form of labour again and again. Thus their choice to join such a system is out of distress or coercion to some extent. They may also be restricted from switching to another job or to ask for the provision of minimum wages given the conditions of the contract and the lack of awareness of their rights.

    Indebtedness is identified as a major trigger for people to join as bonded labour, especially migrants from poor rural households. However, the need for money arises out of the existing disadvantages in society that these communities are subjected to. Caste, unequal distribution of resources, increased dependence on agriculture, low levels of education and food insecurity pushes them into such unfree labour choices.

    We can identify that this system was prevalent in the country from the pre-colonial era characterised by class hierarchies. Such class hierarchies and high caste exploitations are continuing to function even in this democratic era and consequently, has pushed certain groups of the society to be economically weaker; weak in terms of assets, income and bargaining power. Globalisation and industrialisation have only resulted in the further exclusion of such groups of labour from mainstream jobs.  Indebtedness is identified as a major trigger for people to join as bonded labour, especially migrants from poor rural households. However, the need for money arises out of the existing disadvantages in society that these communities are subjected to. Caste, unequal distribution of resources, increased dependence on agriculture, low levels of education and food insecurity pushes them into such unfree labour choices. Owing to these social and economic factors, marginalised communities in the lower strata of the society, especially the women and children, are trapped in such a system.

    Over the years, the system of bonded labour has existed and evolved under different names and forms across India. Bonded labour arising out of traditionally accustomed social relations is one of the oldest forms and is still prevalent in the country. For example, the system of “jajamani” wherein the workers receive food grains in exchange for working as barbers and washermen for the upper caste. Labourers in agriculture, seasonal inter and intrastate migrants and child labour in informal sectors of brick kiln, rice mills, quarries, domestic work etc. are the other areas where debt bondage is currently more persistent. There has been a considerable shift from traditional debt bondage relation to aneo-bondage labour system among migrant workers. The former was characterised by an element of patronage amongst the considerable amount of exploitation. However the latter is at a higher tone of exploitation and eliminates patronage relations. This has made employers deny the responsibility of employee’s welfare and the labourers have lost the minimum livelihood security which they had secured under the patronage system. The neo-bondage system is further manipulated by the role of intermediaries.

    Thus, with structural transformation in the economy, the system of bonded labour has evolved into a much worse form of exploitation in the country and specifically marginal and backward communities are the main victims of this system.

    Interventions to abolish bonded labour

    Upon identifying the prevalence and exploitation of bonded labour in the pre-independence era, constitutional provisions prohibiting forced labour were assigned under Article 23. Under the Directive Principle of State Policy, Article 42 and 43 ensured fair and humane working conditions and living wages to workers.

    Post-independence, legislation against bonded labour was enacted at a regional level.  Orissa, Rajasthan and Kerala were the first states to enact state legislation against bonded labour.  In 1954, India ratified the International labour organization (ILO) Convention on forced labour (C029). Despite the constitutional provisions, regional and international interventions in bonded labour, construction and implementation of a uniform law took time.

    In 1976, the Bonded Labour System (Abolition) Act was enacted to abolish any form of bonded labour system arising out of debt, customary or hierarchical obligations. In brief, the act has identified and defined bonded labour, provided for extinguishment of past or existing debt, established duties of district magistrate in implementing the provisions of the act, sanctioned the state governments to form a vigilance committee in each district to guide and ensure competent implementation of the act by the magistrate and stated the penal actions against those compelling people into bonded labour. The act was amended in 1985 to bring contract and migrant workers under its ambit.

    In 1978, a new centrally sponsored scheme for Rehabilitation of Bonded Labour was enacted to provide financial assistance to the state government for rehabilitating rescued bonded labourers, to conduct surveys, evaluation studies and awareness campaigns across districts. In 2016, the government restructured the scheme. The restructuring involved an increase in the provision of funds to bonded labour for rehabilitation and to states for conducting surveys. Under the restructured scheme, rescued bonded labour is only provided with the full amount of financial assistance after the conviction of the accused and a Bonded Labour Rehabilitation Fund corpus was to be created at every district.

    The interplay of caste-based exploitation and subsequent impoverishment in terms of resources and assets combined with underdeveloped rural areas devoid of standard education, health and employment opportunities push marginalised people into bonded labour.

    Why and how does the system still sustain?

    Many factors contributing to the prevalence of bonded labour continue to prevail despite after years of legislative action to abolish the same. The interplay of caste-based exploitation and subsequent impoverishment in terms of resources and assets combined with underdeveloped rural areas devoid of standard education, health and employment opportunities push marginalised people into bonded labour. Such an environment accompanied by the inept implementation of legislations and schemes further aids in sustaining bonded labour systems.

    BLS(A) act 1976 failed to be effectively implemented owing to apathy, corruption, lack of administrative and political will. The vigilance committees were often defunct and working for the employer. The act was criticised on the grounds that it stated only mediocre and minor punitive actions and the rates of prosecution were also low. Moreover, some states remain in denial of accepting the existence of bonded labour. This indifference results in the loss of comprehensive data on bonded labour hindering the further implementation of provisions of the act.

    The Central Sector Scheme for Rehabilitation of Bonded Labour also has its loopholes. After the restructuring of the scheme, financial aid is provided only after the accused is convicted and convictions are rare owing to poor implementation of the BLS(A) Act and the absence of a review of cases. Thus, in most cases the rescued labourers do not receive the full financial aid they are entitled to immediately after the rescue. Often, it takes years to receive the full amount or may not even receive any.

    The situation is even grave as the rescued labourers have asymmetric knowledge of the rights and entitlements they can avail themselves of. Even when they are fully aware, most of them lack the will to attain these entitlements due to the dismal behaviour of officials and delayed processes.

    Moving towards Abolishment

    First and foremost, recognition and acceptance of the prevalence of bonded labour should be ensured. Only then the bonded labourers could be identified, rescued and rehabilitated effectively. The collection of comprehensive data is essential for further implementation of the provisions of the legislation. Also apart from the vigilance committee, a new committee composed of the magistrate, members of the marginalised communities, NGO’s and other civil bodies working in the field would enable to get a more comprehensive view of the issues in the sector.

    From a long term perspective, there is a need to address the caste induced structural inequalities. One way through which this could be attained is through land redistribution.

    Mere financial aid is not sufficient for the rescued labourers to foster a livelihood plan. The Human rights law network suggests the same and recommends a comprehensive rehabilitation package providing for education and job security.

    From a long term perspective, there is a need to address the caste induced structural inequalities. One way through which this could be attained is through land redistribution. Apart from this, the government should also focus on skill development and training of rural poor, especially migrants caught up in bonded labour. Varied skills can enhance their employment opportunities and provide more freedom to move towards other areas of work.

     

     

    References

    1. B.L.S., A. (2020, June 30). Telangana: Two Years After Rescue From Bonded Labour, 12 Tribals Receive Compensation. The Wire. https://thewire.in/rights/telangana-bonded-labour-rescue-tribals-compensation
    2. Breman, J. (2010). Neo-bondage: A fieldwork-based account. International Labor and Working-Class History, 78(1), 48-62. https://www.jstor.org/stable/40931303
    3. Gabra, L. (2021, March 21). Will Bonded Labor in India Ever Come To An End? BORGEN. https://www.borgenmagazine.com/bonded-labor-in-india/
    4. Human Rights Law Network. (n.d.). Release and Rehabilitation of Bonded Labour — HRLN. Human Rights Law Network (HRLN). Retrieved August 15, 2021, from https://hrln.org/initiative/release-and-rehabilitation-of-bonded-labour
    5. Human Rights Watch. (n.d.). Small Change. Human Rights Watch (HRW). Retrieved August 6, 2021, from https://www.hrw.org/reports/2003/india/India0103-05.htm
    6. J, S. (2019, September 15). Rescue of bonded labourers up, convictions rare. Times of India Blog. https://timesofindia.indiatimes.com/blogs/tracking-indian-communities/rescue-of-bonded-labourers-up-convictions-rare/
    7. Khan, J. A. (2019, April 30). How effective are the Policies for Rehabilitations of Bonded Labour in India? CBGA India. https://www.cbgaindia.org/blog/effective-policies-rehabilitations-bonded-labour-india/
    8. Mantri, G., & Suresh, H. (2020, January 31). The News Minute | Delve. The News Minute. https://www.thenewsminute.com/article/it-s-2020-bonded-labour-still-reality-india-here-s-why-116977.
    9. Molfenter, C. (2013). Overcoming bonded labour and slavery in South Asia: the implementation of anti-slavery laws in India since its abolition until today. Südasien-Chronik-South Asia Chronicle, 3, 358-82. https://edoc.hu-berlin.de/bitstream/handle/18452/9122/358.pdf?sequence=1&isAllowed=y
    10. Murugesan, D (2018). HANDBOOK ON BONDED LABOUR. NATIONAL HUMAN RIGHTS COMMISSION (NHRC), New Delhi. https://nhrc.nic.in/sites/default/files/Hand_Book_Bonded_Labour_08022019.pdf
    11. NCABL. (2016). Joint Stakeholders’ Report on Situation of Bonded Labour in India for Submission to United Nations Universal Periodic Review III. NATIONAL COALITION FOR ABOLITION OF BONDED LABOUR (NCABL), Bhubaneswar Odisha. https://www.upr-info.org/sites/default/files/document/india/session_27_-_may_2017/js34_upr27_ind_e_main.pdf
    12. Prasad, K. K. (2015). Use of the Term’Bonded Labour’ is a Must in the Context of India. Anti-Trafficking Review, (5), 162.
    13. Sabhapathi, V. (2020, June 11). An Analysis of Bonded Labour System in India. Legal Bites – Law And Beyond. https://www.legalbites.in/bonded-labour-system-in-india/
    14. S, B. (2016, April 2). Caught in a vicious cycle of bonded labour. The Hindu. https://www.thehindu.com/news/national/karnataka/caught-in-a-vicious-cycle-of-bonded-labour/article7720754.ece
    15. Sethia, S. The Changing Nature of Bonded Labour in India.
    16. Srivastava, R. S. (2005). Bonded labour in India: Its incidence and pattern.https://www.ilo.org/wcmsp5/groups/public/—ed_norm/—declaration/documents/publication/wcms_081967.pdf 

    17. THE BONDED LABOUR SYSTEM (ABOLITION) ACT, 1976. (ACT NO. 19 OF 1976). (India). https://labour.gov.in/sites/default/files/TheBondedLabourSystem(Abolition)Act1976.pdf

     

    Image Credits: starfishasia.com

  • Lebanon’s Economic Crisis and Political Unrest

    Lebanon’s Economic Crisis and Political Unrest

    The Lebanon crisis illustrates the outcome of an inefficiently regulated market economy, shaped by long-term instant gratification of economic policies. Economy is run by corrupt institutions with ingrained crony capitalism, bureaucratic regulations and over-reliance on foriegn exchange.

    Lebanon is a free market economy in West Asia, bordered by Syria and Israel and the Mediterranean Sea, and hence, was a frequent recipient of spillovers of unrest and refugee crisis from the neighbouring countries. It is a service-sector dominated (majorly, banks and tourism) economy with a GDP of $56.9 billion─ growth rate of 0.2%, compared to 0.6% the previous year and a workforce of 2.4 million out of which 30 percent include Syrian refugees. The country relies heavily on imports (consumer goods, machinery and equipment etc) with a low dependence on exports (vegetables, non-precious metals and textiles). For years, Lebanon used foreign remittances such as transfers from non-resident Lebanese, foreign deposits and high government loans to balance the trade deficit. Lebanon exchange rate had been kept fixed at 1500 pounds per dollar which was also a fiduciary currency in Lebanon. Thus the higher demand for dollars to fixate the exchange rate, and meet the domestic demand for dollars, is levelled using foreign deposits by offering high yield rates, which had to be further funded by more deposits at even higher interest rates. These faulty policies had sustained the economy until interest payments had snowballed into heavy burden.

    Figure 1: trend of GDP per capita in Lebanon

    Source: Trading Economics

    Lebanese economy is also characterized by high government debt, substantially from domestic banks, borrowed primarily for reconstruction of the economy post civil war (1975-90). Over the years, the government relied more heavily on deficit financing to meet government spending, while the weak governance and corrupt politicians moved along with unfulfilled reforms and poor economic development. There was an underprovision of basic necessities like hassle-free electricity supply, regular water and waste management. On the other hand, crony capitalism had built up, with favours laid out to private businesses which were ultimately owned by rich, exploitative politicians. The debt-to-GDP ratio peaked to 150% by 2019, with a budget deficit of 11.5% of GDP and 50% of the revenues are consumed in debt servicing. This led to an economic crisis, followed by a political crisis, and ultimately snowballed into a financial crisis, rendered vulnerable and  in desperate need of foreign aid to see the day.

    Evidently, though Lebanon crisis started in late 2019, it is the result of long term economic policies mismanaged by corrupt political elite; when the government proposed to tax ‘free-calls in Whatsapp’ to meet the mounting budget deficit in October 2019, protests erupted across the country, catapulting into political unrest and ousting the prime minister. Investors and citizens lost confidence in the system, and led to reducing capital inflows.

    Their sovereign bonds were rated as highly risky assets (probable default),  leading to interest rates as high as 15%. The political uncertainty and the liquidity crunch, led to freezing of external deposits, while the steady domestic and foreign demand for dollars persisted, leading to a shortage of USD. The banks levied restrictions (weekly quotas) on dollar withdrawals, the dollar rate spiked, depreciating the pound, and reducing the purchasing power of the pound. This had squeezed the middle and low income strata the most, draining their last pounds of savings, since their debts substantially constituted dollar repayments. Businesses relying on dollars for most part were affected as the price of imports sky-rocketed, and the oil crunch tightened until the central government stepped in to ease the situation. The condition degraded further by the onset of Coronavirus and the lockdown, which led to widespread unemployment and inflation. The World Bank estimated that 50% of Lebanese population could be pushed below the poverty line by 2020 if immediate action is not taken.

    The debt of Lebanon has built up to 124464 billion LBP, i.e nearly $82 billion and the country has become the 3rd most indebted country in the world. In March 2020, Lebanon government, as a decisive step to prioritize the domestic concerns of the country and retain sustainable foreign exchange reserves in the economy, had defaulted on the Eurobond debt of $1.2 billion for the first time. The ailing economy seeks to restructure the other outstanding debts amounting to $31 billion and has been seeking advice, especially from the IMF on debt restructuring measures. There is a need for an ‘economic rescue plan’ to protect the depositors from this worst economic crisis Lebanon has faced.

    Figure 2: trend of Lebanon government’s debt

    Source: Trading Economics

    Foreign aid from the institutions is a big responsibility, as it would demand austerity measures from the economy that had dwelled in capitalistic pleasures for so long. Though, CEDRE and foreign countries like France and UK have promised ‘soft’ loans to the Lebanese government, economists believe that external aid would be unproductive, and will become an additional debt burden on the already bleeding financial system unless government inculcates greater transparency and accountability to the public, ousting corruption and following through on long-term economic policies with commitment.  Lebanon government is also seeking aid from the IMF. But  this would certainly entail strict reform targets linked to the outflow of credit and hence, is very unlikely.

    For the immediate future, Lebanon’s economic policies should be directed towards increasing  self-reliance in the economy, with higher focus on manufacturing sectors to create employment. Financial policies to stabilize the economy are of primary concern. It is time to make up for the blunders of non-performing investments in the electricity industry. Investments on infrastructural development should be realized and substantial attention should be given to improving  socio-economic conditions of the people. Construction and manufacturing industries should be supported. Actions should be taken to handle the refugee situation, and check the drain of human capital out of the country.   It could be said that Lebanon’s government has a long way to go before it can regain the confidence of its people and the foreign investors in order to stabilize the economy.

    Current Scenario

          Covid 19 has a destructive and deleveraging impact on all the economies, and Lebanon is no exception. The economy is heavily dependent on the service sector, especially tourism, and foreign remittances. The impact of the coronavirus pandemic has been devastating on the money the expats send home, which makes up nearly 12.7% of the GDP, making Lebanon the second-most remittances dependent middle-eastern country, only behind Palestine. Amid the collapsing economy and the disruption triggered by the Covid-19 pandemic, the only certainty is the gathering pace of Lebanon’s political unrest.

     

    REFERENCES

    https://www.nytimes.com/2019/11/15/world/middleeast/lebanon-protests-economy.html?action=click&module=RelatedLinks&pgtype=Article

    https://www.nytimes.com/2020/05/10/world/middleeast/lebanon-economic-crisis.html

    https://www.trtworld.com/magazine/what-s-behind-lebanon-s-economic-crisis-35874

    https://www.nytimes.com/2020/03/07/world/middleeast/lebanon-debt-financial-crisis.html

    https://www.nytimes.com/2019/12/03/world/middleeast/lebanon-protests-corruption.html?action=click&module=RelatedLinks&pgtype=Article

    https://www.theguardian.com/world/2020/mar/07/lebanon-to-default-on-debt-for-first-time-amid-financial-crisis

    https://www.nytimes.com/2020/03/07/world/middleeast/lebanon-debt-financial-crisis.html

    https://www.nytimes.com/2019/10/23/world/middleeast/lebanon-protests.html

    DATA- https://data.worldbank.org/country/lebanon

    https://www.britannica.com/place/Lebanon/Trade

    https://tradingeconomics.com/lebanon/government-debt

     

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