PROBLEMS OF HAWKERS AND RICKSHAW PULLERS
By G Kishore Babu
Recently, there has been a spate of articles in
the media about the operation of the licensing regime for hawkers, tonga carts,
hand carts and rickshaw pullers in Delhi (e.g., article titled: "Poor Excuses"
by Tavleen Singh in India Today, 9 July 2001, "Regulate Street Hawkers" in The
Times of India, 16 July 2001). A study by an NGO, Manushi, titled: "How the
Licence Quota Raj impacts the Urban Poor" and the FCS study "A Feel Good Factor
For The Poor" were also released. N. Vittal, the previous Central Vigilance
Commissioner, had written to the Delhi Chief Minister, Sheila Dikshit, drawing
her attention to the problems. The Central Government should through legislation
introduce reforms in licensing for street hawkers and rickshaw pullers in the
whole country as this is the only way it can beat the resistance of the
bureaucracy.
The broad points made in these articles, the Manushi study, the FCS study and
Vittal's letter are as follows:
The policy of restrictive issue of licences for hawkers and rickshaw-pullers is
a perversion of the SC judgement in Saudam Singh vs. NDMC and others, 1987,
which ruled that hawking, etc, represented a fundamental right to livelihood,
and was subject only to reasonable regulations to avoid potential social costs
of these activities (e.g. street/pavement obstruction).
The restrictive licensing system enables rents to be collected by the officials
who process, issue, and enforce licences (Sweat and blood money collected from
the poorest of the poor). These rents are estimated in the Manushi study to be
approx. Rs 50 crores a month. Since the nexus between the system and black money
is so powerful implementing the second generation reforms (2GR) to benefit the
poor is really difficult and meets with stiff resistance from established
bureaucracy. Enforcement departments with the job of removing street hawkers and
rickshaw pullers should be wound up and the displaced staff should be reattached
to other departments. (While the study followed a rather informal
methodology/approach, the figure is not beyond credibility, coming to c. Rs 1000
per month per hawker. The number of unlicensed hawkers is estimated at 500,000,
while those licensed are just 20,000).
As per studies done by the FCS, in four different urban and semi-urban slum
areas by implementing 2 GR, the feel good factor from the poor upwards has a
great calming effect on the middle classes, society and the cynics at large feel
that something good is happening to the havenots.
Hawkers and rickshaw-pullers are also subjected to atrocities by these
functionaries, e.g., destruction or misappropriation of the hawkers wares or
impounding/destruction of rickshaw, by these functionaries.
That it is time that the licensing system is reformed so that the hawkers and
rickshaw-pullers, belonging to the poorest sections of urban society, are
enabled to pursue their modest livelihoods without extortion. This would convey
the message that policy reforms benefit the poor, and not only the middle class
or well-to-do.
The licensing system for hawkers was given legitimacy in a Supreme Court
decision in Saudam Singh and others vs NDMC, SLP O No. 15257/87. In this
judgement, the SC, while ruling that the fundamental right of livelihood under
Art. 19(1)(g) of the Constitution cannot be denied to street/pavement hawkers,
held that this right was subject to regulation by way of reasonable restrictions
under Art. 19(6) of the Constitution, by the State (as trustee of the public in
relation to streets). Specifically, in the relation to street hawkers, the SC
observed: "So far as right of a hawker to transact business while going from
place to place is concerned, it has been admittedly recognized for a long
period. Of course, that also is subject to proper regulation in the interest of
general convenience of the public, including health and security
considerations".
While no specific SC ruling is available for rickshaws, they may be interpreted
as street hawkers providing a transportation service, (rather than a tangible
commodity), and accordingly covered by the SC (Saudam Singh vs NDMC) decision
relating to the fundamental right to livelihood subject only to minimal
regulation). MCD licenses for (commodity) street hawkers are issued under
Section 420 of the MCD Act, and for cycle rickshaws under Section 489 of the MCD
Act. There are analogous provisions in the NDMC regulations.
The licensing system for both street hawkers and cycle-rickshaws seek to limit
the numbers of these tradespersons. Further, they impose a number of restrictive
conditions which do not seem to relate to "general convenience of the public,
including health and security considerations" or give wide discretion to
officials, which is potentially open to misuse.
Effects of the licensing system:
Hawking and cycle-rickshaws provide low cost, easily accessible retail and
transportation services to urban households. Because of low cost, most of the
users are low-income households. They are also highly labour intensive, and
because of their small scale of operations, involve low capital entry
requirements. They are among the easiest occupations to enter for the urban
poor. By providing employment and low cost services, they enhance societal
welfare, and accordingly should be encouraged as a matter of public policy.
Further, it has been pointed out by an expert like Prof. Dinesh Mohan, IIT
Delhi, that hawkers provide other indirect societal benefits, i.e., their
presence reduces the scope for eve-teasing, and by reducing transportation
requirements for shopping, to reduced pollution.
On the other hand, concerns have been expressed about possible social costs of
these occupations. These are centered on street congestion, hygiene, and
security (petty crime). These are discussed below:
Street congestion: A simple economic analysis of markets for these services
shows that the numbers of providers in inherently limited by market demand. If
the number of providers (supply of the goods or service) is limited by fiat (as
in a quantity based licensing system), two things will happen: first, the price
of the services will rise to above the (marginal) cost of supply giving rise to
a potential rent, and second, that officials who issue licenses will be
well-placed to collect (most of) this rent, so long as the slightest element of
discretion is involved in selection of licensees. Further, because of rise in
the price of the services, non-licensed providers would seek to enter the
market. This provides an opportunity to the enforcers to collect rents. The
result is that consumers pay higher prices, the number of service providers (and
hence employment) is reduced, and officials who dispense and enforce licences
collect rents. This is exactly the situation which prevailed in the regime of
industrial licensing.
In any large, heterogeneous city, the market demand for hawking (and
cycle-rickshaw) services varies by locality, time of day, day of week, and in
each of these, over time. Depending on the density of streets and built-up
areas, without licensing or other regulation, street congestion may not occur in
particular areas at all, in some areas almost all the time, and in others, at
particular times (of day, day of week, etc.). Accordingly, the problem of street
congestion by hawkers and cycle-rickshaws can be disaggregated into "green" (no
restriction), "red" (prohibited), and "amber" (regulated) areas.
In respect of regulation, as noted above, quantity based regulations (licences)
furnish scope for rent-seeking. The alternative of fee-based regulation for
"amber" areas, (i.e. no restriction on entry so long as one pays an entry fee to
the municipality), if properly designed, may eliminate the scope for
rent-seeking.
Hygiene: Hygiene is implicated in relation to street hawkers in two aspects.
One, in relation to foodstuffs peddled by them. Second, on the (external)
pollution caused by their garbage. On neither count is the concern categorically
different from that due to other service providers, e.g., restaurants. However,
the mobile nature of the hawkers may mean that regulatory measures (in
particular for food adulteration) may be difficult to enforce. The problem then
reduces to means of identification of particular vendors.
Security, law and order: The concern is that street hawking (and
cycle-rickshaws) may sometimes be a cover for illicit activities, e.g., peddling
narcotics, pimping, etc. Once again, the concern is not categorically different
from that due to other service providers. Similar to the issue of hygiene, the
problem reduces to means of ensuring identification of street hawkers (and
cycle-rickshaw pullers).
If one considers that street hawking and rickshaw-pulling are legitimate
occupations providing positive net societal benefits, one should also seek to
put in place mechanisms to facilitate technological upgrading of the activities,
and access to the institutions of the formal economy. These are discussed below:
Technology upgrading: Technology upgrading (Street hawking is a world wide
phenomenon, and technological transformation is apparent in both developing and
developed countries, but very little in India. Improved pedal-push rickshaws and
motorized rickshaws have also been developed in India, but are very rarely
employed.) would help ensure increased labour productivity in these activities.
They may also help reduce hygiene and pollution impacts, or street congestion
(by increasing mobility). However, technology upgrading requires investment, and
investment requires an absence (or reduction) of risk.
Formal Economy Institutions: Such institutions would comprise institutional
finance (including micro-finance), franchised retail marketing, etc. However,
access to such institutions, which is also conducive to technological
upgradation, is risky so long as the majority of hawkers/cycle-rickshaws are
"unlicensed" and, therefore, have no legal standing (in fact are "illegal"), and
subject to removal. Formal economy institutions would also perceive less risk if
the clients (hawkers and rickshaw pullers) were properly identified.
An Alternative Regulator System: Based on the foregoing analysis, an alternative
regulatory regime for street hawkers and cycle rickshaws is outlined as follows:
(i) The existing licensing system with quantitative limits must be scrapped
forthwith.
(ii) The metropolis may be divided into "green", "amber", and "red" zones,
signifying free-access, fee-based access, and prohibited access, respectively.
The division into "green", "amber", and "red" categories may vary with time of
day, day of week, and day of month, and may be revised periodically. The
division may be made separately for street hawkers and cycle rickshaws. Such
zoning must be both formally notified, and prominent street signs put up to
indicate their boundaries and timings. The division may be made by the MCD/NDMC
in their jurisdictions, but invariably with the formal consultation of
residents' associations and the area elected representatives.
Other general (i.e. applicable to all) restrictions on street
hawking/cycle-rickshaws may be specified in minimal terms and strictly
consistent with the Saudam Singh vs NDMC judgement, i.e., in the interest of
general convenience of the public, including health and security considerations,
e.g., avoidance between midnight and 5 am, no overnight squatting/parking on the
pavements, no stopping on carriageway, all garbage to be removed and properly
disposed of, no obstructions at traffic lights or bus stops. (Restrictions on
adulterated food, narcotics, etc. must flow from the respective legislations,
not as further restrictions specific to these occupations). Conversely, there
must be an absolute prohibition on municipal and police authorities from
impounding, or destruction, or seizure, of goods and equipment, except when
permitted under other laws (e.g., excise laws).
(iii) Any person who wishes to be a street hawker or cycle rickshaw-puller may
do so by a simple act of registration involving two steps: (a) reliable
identification by any means (e.g., voters ID, ration card, passport, driving
licence, letter from an elected representative or citizen in good standing), and
(b) payment of a nominal fee to cover costs of issue of a photo identification
card. Upon registration, which should be done on the spot, the person would have
unrestricted access to all "green" areas. Penalties for non-registration must be
restricted to a surcharge on the fee, but impounding, destruction, or seizure of
the goods and equipment by any authority must be absolutely prohibited.
The registrations may be renewed (say, once a year) by payment of a modest
renewal fee, and affixing the current period's sticker on the registration id.
The sole purpose of the registration is to provide reliable identification for
the purposes noted above. It is not a permit to ply the trade. No such permit is
needed, being a fundamental right (as established in Saudam Singh & others vs.
NDMC). Accordingly, there must be no numerical limits on registrations.
(iv) A registered street hawker/cycle rickshaw puller who wishes to ply in an
"amber" zone, may do so by paying a fee, upon which a sticker to the effect may
be affixed on the registration ID.
Once again, there must not be any quantity or numerical restrictions on issue of
such stickers. Numbers of street hawkers/cycle rickshaws in the "amber" zones
may instead be regulated by adjustment of the amount of fee periodically (this
fee need not be nominal, but may serve to limit numbers to a level at which
significant congestion does not occur).
Once again, penalties for plying in an "amber" zone without payment of fee may
involve a financial penalty, in addition to the fee, but in any case there must
be an absolute prohibition on municipal and police authorities from impounding,
or destruction, or seizure, of goods and equipment. The fee may be scaled to
different categories of street hawkers, e.g., peddlers on foot; or using
pedalled vehicles; or using animal drawn vehicles; or using motorized vehicles
of below 800 cc engine capacity; or using motorized vehicles of above 800 cc;
etc.
(v) Non-government organizations with a record of working for the welfare of
street hawkers and rickshaw pullers may be authorized to interface between them
and the concerned MCD/NDMC authorities in respect of registration and renewals,
issuance of "amber zone" stickers, and enforcement measures. Such interfacing by
NGOs may provide employment to unemployed urban youth. - CNF
(The writer is Director, Foundation for Contemporary