Tag Archives: Informal Waste Economy in India

What are Indian economists smoking these days? Gobar!


Two op-eds published in The Indian Express today are enough to boil your blood. One is by the member of recently constituted Economic Advisory Council, Mr. Surjit S Bhalla and the other one is by Mr. Sajjid Z. Chinoy. The op-eds force you to question what are our economists smoking these days? It must be gobar which is making them hallucinate about growth and ejaculate numbers.

Mr. Bhalla is telling us that poor benefitted the most with an increase in wages because of demonetization and introduction of Good and Services Tax.

Dear Bhalla Sahib, demonetization destroyed the backbone of poor. They didn’t have money to even enter the labor market. There are costs of mobility. One needs food to have energy. Demonetization ensured reduced mobility, access to food. People weren’t able to go to work because they had no money.

Many informal workers (garment workers) need thread and other stitching material. They had no cash to buy that material. The shopkeepers weren’t selling them on credit. This ensured that home-based workers like those engaged in stitching have no work.

Illustrations above are the tip of the iceberg.

They are enough to state that demonetization reduced the supply of labor and those who were working needed higher wages to survive and help others survive. Similarly, due to the cash crunch, they were to be paid later. The only reason as a worker you’ll wait for the wages for longer duration is the promise that you’ll be paid extra. Demand for labor was already there, but the government pursued to reduce the supply through artificial measures and here we are with so-called ‘higher wages’.
Further, you’ve not even accounted for the opportunity cost loss to those who stood in the queue to withdraw cash. Their numbers stand in thousands and millions. Leaving their work aside, they were standing in front of ATMs and banks.

Another example which is worth quoting here to demystify this higher wage narrative is the prices of recyclable plastic material. All over India, after the introduction of Goods and Services Tax (GST), scrap plastic material prices crashed. Reasons of price crash have been provided below. An interesting phenomenon emerged in Indore, the prices of recyclables rose in Indore. Prices of PET bottle went up from INR 20/kg to INR 25/kg, cardboard INR 03/kg to 05/kg. This was strange.  A well-versed economist will say, ‘O dear, poor waste-pickers are benefitting from GST in Indore’. Mr. Bhalla will say ‘higher prices’- good for poor. This will be replayed multiple times without finding the reasons of price rise.

Swachh Bharat Abhiyaan in Indore has brought in private players for the door to door collection of waste, it encouraged mechanization of collection and transfer. Waste-pickers aren’t able to access the waste anymore. Waste including recyclables is reaching the landfill or prospective incineration plant.  With reduced access to waste, waste-pickers can’t earn their livelihood. They have no money. An artificial scarcity of recyclable material has been created in the market resulting in rising prices as scrap dealers want material.  They are reducing their own margins to look for waste. If they don’t do that they will be out of business. Did the poor benefit from the price rise? Waste-pickers are out of business and scrap dealers are reducing their margins. This case is probably a hint to help us understand the ‘increased wages’, in addition to already mentioned factors.

The informal economy suffered the most because of the government’s misadventure.

You are celebrating Goods and Service Tax (GST). The government wants to formalize the economy with the introduction of taxation reforms, where every item is taxed. GST on recyclable plastic, which was a source of income and survival for wastepickers (who form the bottom of the informal economy) is now around 18 percent. Earlier, the tax on scrap plastic was 5.5 percent. Recyclable material is in competition with virgin material. Thus, its prices have to stay lower than the prices of virgin material. The taxation cost cannot be transferred to the consumers (who in this case are manufacturers). If the cost is transferred they will move towards the virgin material. To keep the consumer base together, the suppliers have transferred the increased tax to the people lower in the supply chain. This has taken a snowball effect in cities like Mumbai and Bengaluru, where prices of recyclable material have gone down sixty percent, reducing the income of waste-pickers. Now they have to do more work for less pay.

Mr. Chinoy termed this process as formalizing of the supply chain by disruption of informal supply chains.

Does he know what disruption means particularly in this case? Disruption here means that poor have nowhere to go. There is no food in their platter, no way to take care of themselves and their families, no way to enter the labor market. Disruption of the informal supply chains will not bring ‘fair prices’, ‘fair wages’ or social protection cushion. Disruption has reduced the prices, particularly of the material sourced from informal workers, due to increased taxation cost. The much hyped disruption has destroyed the livelihood of many. This disruption is not innovation. It is enforcement of an order which is destructive for economy. Disruption in this context is destruction. The taxation cost because of this destruction has not been passed to consumers, as that will increase the price of commodities and demand for it will go down, and there will not be an equilibrium. The cost has been passed down to the poor – waste-pickers and garment workers with reduced prices of their commodities and labor. In certain instances, it may look like that this destruction has increased the wages, while the number of those benefiting from increase became very small.

Formalization means a lot of many things, and disruption is not one of them. This our dear number-crunching economists will never understand.


‘Waste to Energy’ is the Way Forward to Solve Garbage Menace- Union Government Representatives

The Narendra Modi led National Democratic Alliance government is slowly unfolding its urban agenda. The solutions presented to deal with the ‘menaces’ of urban India by the government are not just questionable, they are very scary. It is apparent that the cities will be scampered as ‘Multi-National Corporations’. This was stated by one of the government officials in a recently held ‘International Conference on Sustainable and Inclusive Urban Development in India’. The proceedings of the conference will be out in the coming days. I will not indulge in detailing the deliberations of it.

This post is about the urban solid waste management framework proposed by those in the corridors of power to clean our garbage ridden cities. Last year, on the birthday of Mahatma Gandhi, Union Government launched Swach Bharat Abhiyaan (Clean India Mission). Initially there wasn’t much clarity of what is it that government desires to do. Is it going to be the follow up of Nirmal Bharat Abhiyaan of previous Manmohan Singh led government where greater emphasis was laid on sanitation or is it going to be limited to keeping our streets of cities clean? Over the past many months, government machinery has achieved a greater degree of clarity on Swach Bharat Abhiyaan. As a part of the larger programme, new draft versions of Solid Waste Management Rules, plastic, e-waste, bio-medical and hazardous waste handling and management rules have been opened for public discussion. Government has also framed guidelines for Swach Bharat Abhiyaan. The mission emphasis is both on sanitation and solid waste management. Larger investments will be made on constructing toilets and supporting municipal governments to increase their capacities in the domain of waste management. The discourse on the given mission was held as a part of the international conference. The importance of the discussion can be realized from the fact that Chief Executive Officer (CEO) of National Institute for Transformation of India (NITI) Aayog, Sindhushree Khullar, chaired the session.

The presentations on sanitation were grounded. The recommendations and challenges highlighted how constructing toilets alone will not be able to solve the problem of open defecation. It’s the conversation on Solid Waste Management which became a little discomforting. V. Srinivas Chary, Professor and Director, Center for Energy, Environment, Urban Governance and Infrastructure Development, Administrative Staff College of India, who has been supported by Melinda and Bill Gates Foundation for various research projects on sanitation, opened the Pandora box by saying that government should  rigorously go after ‘waste to energy’- incineration plants for handling solid waste.  It is the technology of the day. Durga Shankar Mishra, Additional Secretary, Ministry of Urban Development, also spoke about solid waste management. He emphasized on the new developments for encouraging innovations in ‘waste to energy’ which included proposed amendments for existing Electricity Act and mandatory purchasing of electricity from waste to energy plants at deferentially higher price for encouraging innovation in the sector by state electricity boards. Considering that ‘waste to energy’ is merely tech-fix with very high environmental and economic costs, the government approach didn’t make sense at all.

They didn’t take the route of strengthening recycling sector and enforcing stringent extended producers’ responsibility norms. Phrases like recycling and extended producers’ responsibility were not used once in whole conversation. The guidelines of Atal Mission for Rejuvenation and Urban Transformation refer to recycling, but place it at the last and not first in the text. First place is accorded to waste to energy. The placement entitles the priorities of union government funding.  Without a doubt it can be said that the government is moving in the direction of incineration or in crude words complete burning of waste. Waste is a resource. Recycling has a huge potential to fuel the growth in manufacturing sector.  Manufacturing sector is being looked as the one holding immense prospective for the future of Indian urbanity. When Prime Minister of India is talking about ‘Make in India’, pushing for investments in manufacturing, it doesn’t make sense at all to hear thundering silence on recycling.

Going ‘waste to energy’ way is a flawed approach. It will throw many informal waste workers out of business and their numbers are not small.  25000- 30000 wastepickers, 20,000 sorters and other workers in informal waste stocking units, more than 5000-7000 scrap dealers all will go out of business in just one city i.e. Bangalore. Imagine how much loss of livelihood will happen at national level!

After stating these numbers to august gathering, when I asked about implications of incineration of waste on livelihood of poorest of the poor, no formal response came from either Srinivas Chary or Durga Shankar Mishra. Sheela Patel, founder of Society for Promotion of Area Resource Center, Mumbai, was the only sane voice on the issue. She too shied away from being very critical and didn’t pursue the case of contribution made by informal waste economy in waste management. Sindhushree Khullar, chair of the session, said that government is very bad in marketing its initiatives; the gap in information of initiatives creates misinformed public opinion. Livelihood is an important domain according to her, and will be focused on in skill development framework. Someone needs to tell the government that those who are engaged in informal waste economy for their livelihood are highly skilled. Waste sorting, aggregating and recycling are not lay man’s job. Informal waste workers very well know their work and have years of experience in recycling. They may not have gone to formal learning centers, but their experiential learning qualifies them to be waste managers. They need good infrastructure, credit and insurance facilities to conduct their business. Skills are not their current priorities. Sad indeed it is that people ask for infrastructure and conducive financial services to enhance their livelihood, government answers by focusing on merely skills.