Karnataka is mulling a differential levy on app-based services to fund social security for gig and platform workers—a move that could influence other states and the broader policy landscape around the gig economy in India.
The big picture:
Karnataka is planning to introduce differential fees on app-based platforms—like ride-hailing, food delivery, and ecommerce—to fund welfare schemes for gig workers.
The idea is to create a dedicated social security corpus with the revenue collected from these fees, amid rising concerns over the working conditions and lack of social benefits for gig workers.
Why it matters:
The backstory:
Between the lines:
What’s next:
The big picture:
Karnataka is planning to introduce differential fees on app-based platforms—like ride-hailing, food delivery, and ecommerce—to fund welfare schemes for gig workers.
The idea is to create a dedicated social security corpus with the revenue collected from these fees, amid rising concerns over the working conditions and lack of social benefits for gig workers.
Why it matters:
- Karnataka is home to major tech hubs like Bengaluru, where companies like Swiggy, Zomato, Uber, Ola, Amazon, and Flipkart rely heavily on gig workers.
- Any policy introduced here could have a domino effect, influencing national policy or prompting similar moves in other states.
- The labour department is finalising the framework, which may be presented before the cabinet soon.
- The fee structure will vary by category, meaning different rates for ride-hailing, food delivery, logistics, etc.
- Platforms will likely be mandated to contribute a percentage of each transaction towards the welfare fund.
The backstory:
- The Code on Social Security, 2020, passed by the Centre, allows for the creation of a social security fund for gig and unorganised workers—but actual implementation has been slow.
- Karnataka’s move could be the first major on-ground execution of that vision at the state level.
- Senior officials in the state labour department told ET that contributions from platforms will be crucial to build a sustainable welfare framework.
- While not confirmed, platforms may not be allowed to pass on the cost to consumers or gig workers, at least initially.
Between the lines:
- This initiative comes amid growing pushback against precarious gig work models, with labour rights groups demanding better protections and benefits.
- Platforms, however, may push back on added costs—arguing this could impact their unit economics in a price-sensitive market.
What’s next:
- The policy draft is expected to be finalised and presented to the cabinet soon.
- If approved, Karnataka could be the first Indian state to operationalise a gig worker welfare fund via platform levies.
