New Delhi: If the labour codes notified in November were the death warrant for the rights-based framework of Indian labour, chapter 12 of the Economic Survey 2025-26 is the cold, bureaucratic eulogy.Titled “Employment and Skill Development: Getting Skilling Right,” the chapter attempts a formidable sleight of hand. It seeks to retroactively justify the structural violence codified in the new draft labour rules by draping it in the sanitised language of “flexibility,” “formalisation,” and “skilling.” To read this document alongside the draft rules released on December 30 is to witness the Indian State performing a sophisticated act of gaslighting: it tells the worker that their insecurity is actually “entrepreneurship,” their surveillance is “safety,” and the loss of their hard-won tenure is merely a removal of “regulatory cholesterol”.The survey does not merely report on the economy; it provides the ideological lubricant for the friction the codes and rules are bound to generate. The decriminalisation of exploitationIn paragraph 12.30 and box XII.4, the survey celebrates the transition from the traditional “Labour Inspector” to the “Inspector-cum-Facilitator.” It argues that the old system led to a “multiplicity of authorities” and that the new regime will “emphasise guidance, awareness, and advisory roles”.One must pause to appreciate the cynicism inherent in this rebranding. The Labour Inspectorate, for all its corruption and inefficiencies, was structurally designed to be an adversary of the violator. It was based on the premise that the interests of capital and labour are antagonistic, and the State must intervene to protect the weaker party.By renaming the enforcer a “Facilitator,” the survey signals a philosophical shift. The State now assumes that wage theft, safety violations, and illegal retrenchments are not calculated acts of profit-maximisation, but innocent errors born of ignorance. The State proposes to “guide” the employer rather than prosecute them.This must be read in conjunction with the draft rules regarding the “compounding of offences”. The new regime allows employers to pay a fine to escape prosecution for safety violations. When the State turns a crime into a fee, it commodifies the law itself. It creates a market for violations where the rich can afford to break the law, while the worker pays the price with their limbs or life. The survey glosses over this moral hazard entirely, presenting it as “ease of doing business.”The statistical fraud of ‘formalisation’Perhaps the most dangerous claim appears in box XII.4, where the survey cites a State Bank of India (SBI) study projecting that the labour codes will increase formalisation in the economy from 60.4% to 75.5%.This is a statistical fiction achieved by redefining the word “formal.”Also read: Union Budget 2026 and the Test of India’s New Employment ‘Guarantee’Historically, a “formal” job in India implied a measure of tenure security – a permanence that allowed a worker to plan a life. The new codes, however, institutionalise “Fixed Term Employment” (FTE) for all sectors. The survey praises FTE for allowing MSMEs to hire for “seasonal or project-based needs without committing to long-term employment.”The survey essentially argues that the only way to solve informality is to lower the standards of formality to the floor. By classifying a worker on a three-month contract as “formal” simply because they have a written piece of paper, the government is inflating the data while degrading the life of the worker. The “overhead costs” the survey gleefully notes are being saved are, in reality, the social security and stability of the working family. To celebrate the mass conversion of permanent workers into disposable “fixed-term” inventory as a rise in formalisation is an act of intellectual dishonesty.Celebrating the exhaustion of the workerThe survey drops its mask of benevolence in paragraph 12.31. It lauds the Uttar Pradesh government for notifying rules that raise the quarterly overtime cap to 144 hours.Let us do the arithmetic. A 144-hour quarterly cap implies an additional 48 hours of work per month, or roughly two hours of overtime every single working day. When combined with the draft rules that leave the “spread-over” time (the total time a worker is at the employer’s disposal) to be defined by executive order, we are witnessing the legal death of the 8-hour workday.The survey frames this as “enhancing industry competitiveness”. This narrative resurrects the discredited 19th-century logic of absolute surplus value extraction – squeezing profit not from innovation, but from the sheer physical exhaustion of the human body. It argues in Box XII.4 that “inflexible labour laws led to slower growth.” This is a tacit admission that the “growth” the government envisions is predicated on the corporeal depletion of the Indian worker.Federalism as a ‘race to the bottom’The survey praises states like Uttar Pradesh, Karnataka, and Gujarat for being proactive in deregulation (Para 12.31), while implicitly chiding others for delay. It presents this as competitive federalism.However, the analysis reveals a more sinister dynamic: a “race to the bottom.” In a federal structure where capital is mobile but labour is largely trapped by linguistic and cultural barriers, states are being encouraged to compete by auctioning off their workers’ rights. When the survey states that regulatory measures are “as influential in resource allocation as the invisible hand,” it is essentially arguing that human rights are a market distortion. The objective, therefore, is to align the law with the market’s demand for unhindered exploitation.Surveillance disguised as safetyThe chapter makes much of increasing Female Labour Force Participation Rate (FLFPR). Paragraph 12.32 highlights the permission for women to work night shifts in “all 29 hazardous sectors” in Uttar Pradesh, provided there are safeguards like CCTV and police beats.This frames the factory floor as a neutral space, erasing the deep-seated feudal and caste hierarchies that govern Indian workplaces. To argue that “consent” for night shifts can be freely given by a marginalised woman worker to a dominant-caste male supervisor in a hazardous industry is to ignore the coercive nature of poverty. The “safeguards” are technological (CCTV), not structural (unions).Moreover, the survey’s solution to the “dual burden” of care work (Box XII.1) is “flexible work”. This is not a solution; it is a trap. It signifies the “housewifisation” of labour. By promoting home-based work or flexible hours without state-funded care infrastructure, the survey facilitates capital’s penetration into the domestic sphere. It allows capital to extract value while the woman continues to bear the full burden of unpaid domestic chores, absolving the State of its duty to provide public creches.The return of the ‘Poor Law’The survey addresses the gig economy (para 12.38) with a mixture of optimism and denial. It admits that 40% of gig workers earn below Rs 15,000 per month and face “algorithmic biases.” Yet, it refuses to take the logical legal step: classifying them as employees.Instead, Box XII.5 champions the Code on Social Security for creating a welfare fund based on a 1-2% turnover cess. This is a regression to the pre-modern “poor law” mentality. It treats social security not as a right extracted from the specific surplus value generated by the worker, but as a charitable dole funded by a general cess.The survey categorises gig workers using McKinsey’s labels (free agents versus financially strapped), urging policy to move workers to the “free agent” category. This is magical thinking. A delivery partner is “strapped” not because they lack “financial literacy” (as suggested in Para 12.39), but because the algorithm is designed to keep wages at subsistence levels. By refusing to pierce the corporate veil, the survey ensures that the algorithm remains an unaccountable feudal lord.The caste-class stratification of educationA critical, under-examined aspect of chapter 12 is its heavy emphasis on “vocationalisation of school education” (para 12.47, box XII.7). The survey argues for integrating vocational training from class 6 onwards. While this sounds pragmatic, in the Indian context, it risks institutionalising a caste-based division of labour.Representative image of a teacher interacting with students in a school classroom. Photo: Flickr CC BY-NC-ND 2.0.By pushing the children of the poor – who invariably attend the government schools where these programmes will be most aggressively implemented – into vocational tracks at an early age, the State is essentially deciding who is destined for the factory floor and who is destined for the university. It is a “tracking system” that calcifies class mobility. The “degree upgrade” for ITIs (box XII.9) is cosmetic; it does not address the fundamental inequality of opportunity. It ensures a steady supply of cheap, semi-skilled labour for industry while preserving higher education as an elite preserve.The financialisation of social dutyParagraph 12.59 and box XII.10 introduce “Skill Impact Bonds” (SIB) and “Skill Vouchers”. This is the most blatant importation of neoliberal ideology. The SIB allows private investors to fund skilling programmes, earning a return if “outcomes” are met.Also read: India’s Unique Crises: From Taper Tantrums to Trump TantrumsThis financialises a sovereign function. Education and skilling are public goods. To turn them into an investment vehicle where private capital speculates on the employability of the poor is morally repugnant. It incentivises training providers to “cherry-pick” the most employable candidates to ensure returns for investors, leaving the most marginalised – Dalits, Adivasis, the disabled – further behind. The “Voucher” system (Box XII.10) shifts the burden of choice onto the student, assuming a “free market” of information that simply does not exist for a rural youth.The myth of the ‘Silver Economy’Finally, paragraph 12.3 speaks of the “longevity dividend” and the need for “age-friendly work arrangements.” For a country that provides virtually no non-contributory old-age pension (the central contribution to the NSAP pension has stagnated at Rs 200 for nearly two decades), this is a cruel joke.The “silver economy” the survey envisions is not one of retired leisure, but of forced labor for the elderly who cannot afford to stop working. By framing the continued employment of the elderly as a “dividend,” the State is washing its hands of the responsibility to provide a dignified retirement. It is telling the citizen: you must work until you die.A blueprint for a corporate StateChapter 12 of the Economic Survey 2025-26 is not a roadmap for employment; it is an obituary for the rights-based welfare State.It operates on a supply-side fallacy: that if we simply “skill” the youth and “deregulate” the market, jobs will appear. It studiously avoids the demand-side crisis – that the very nature of this capital-intensive, automated growth excludes the vast majority of India’s labour force.Ultimately, the survey asks the Indian worker to accept a new social contract: give up your right to tenure, your limit on working hours, and your access to the courts. In exchange, the State will give you a “Facilitator,” a “Skill Voucher,” and the freedom to be exploited “flexibly.” This is not the vision of a Viksit Bharat; it is a blueprint for a corporate State built on the debris of human dignity.