Choking a lifeline

Print edition : April 12, 2019

Lake restoration work under the MGNREGS in Gangavathi taluk of Koppal district in Karnataka. Photo: DEEPA KURUP

At a worksite in Kushtagi taluk in Koppal district. Photo: Deepa Kurup

MGNREGS work in progress on a lakebed at Beerumanhalli in Kolar district. Photo: DEEPA KURUP

Underfunding, delayed payment of wages and arbitrary rationing of work have over the years systematically stymied the rural employment guarantee scheme.

Sujatha (42) has spent the better part of day for the past two months digging the hard, sun-baked earth to create recharge pits in what once used to be the largest lake in Beerumanahalli village in Kolar district of Karnataka. Every day, she and a group of 20 men and women widen pits, each measuring a metre in length, depth and width, as part of the work they have been assigned under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). As the summer progresses, they start their day early so that they can finish their task before the heat becomes unbearable. By noon they run out of drinking water, but another worker implores Sujatha to dig “a little more” so that the tractor-trawler they have hired to carry the mud away can be filled up.

These workers have not been paid wages for around seven weeks of work. Their coordinator or designated “mate”—popularly called “maty”—said the muster rolls had been submitted, but he was informed that the wages were held up by the Centre. To add to their misery, they were told that these works might be halted because there was a “State-wide lock” on generating fresh muster rolls. Further, the technical coordinator refused to do the mandatory mid-work geo-tagging as the citizen information board had been destroyed. The two elements have been newly made mandatory as part of the scheme’s enhanced transparency and accountability features.

“They keep finding new ways to deny us work. After much begging, when we’re given work, we aren’t paid for months,” says Sujatha, whose family of landless rural workers is surviving on her husband’s wages earned from construction work. Work is hard to come by in the village. Kolar district is witnessing another drought year, the ninth over the past decade. The availability of farm work has reduced from 180 to 240 days a year to 90. Like in most villages, over a third of the households are landless in Beerumanahalli, making the MGNREGS crucial to their sustenance. Yet, over the years, Sujatha’s group has shrunk from over a 100 to barely 20 scheme workers. The others have stopped coming as wages are delayed and work provisioning is erratic. The records show that almost all the MGNREGS work in the village is carried out by contractors, registered in the scheme as material vendors, using machines. The cardholders, or beneficiaries, are roped in and paid a small “rent” for the use of their card. Direct benefit transfer, another lauded anti-corruption measure, ensures that the money lands in the beneficiaries’ accounts. However, it is understood that most of it must be withdrawn and handed over to the vendor-contractor. This is how the flagship scheme has turned into another racket.

This snapshot from Kolar on what the world’s largest workforce programme looks like is mirrored in the author’s extensive field research in two other districts in Karnataka, Mandya and Koppal. These accounts, consistent with much that is reported on this scheme from across the country, present a narrative of neglect and systematic dismantling of an important lifeline of India’s vast rural working population. It is striking that such dismantling has proceeded despite the prolonged agrarian distress, at a time when a demand-driven scheme such as the MGNREGS ought to have been widely deployed to provide immediate relief to farmers and agricultural workers. Instead, a massive funds crunch has caused delays in wage payments. For instance, in drought-hit Karnataka, wage payments were frozen in December and January, a crisis that was temporarily solved by the State government by disbursing about Rs.400 crore for the Wage Bill. Yet, Karnataka’s current outstanding payments for the financial year ending March 2019 stands at Rs.1,299 crore. Under the scheme, labour costs are fully funded by the Central government, while the State contributes 25 per cent of the material costs.

Wages remain unpaid in several districts. In 156 drought-hit taluks, the Janata Dal (Secular)-Congress government’s announcement of increasing employment days from 100 to 150 per family has been rendered hollow by the freeze in payments.

Minister for Rural Development and Panchayati Raj Krishna Byre Gowda told Frontline that the Centre delaying on payments was a problem “that has seriously spiked over the last four years due to deliberate under-financing of the scheme by the Central government”. “We have been writing to them, from all levels at the State to all levels at the Centre,” he said.

According to the guidelines, the Centre is required to transfer funds once the State spends 60 per cent of the disbursed fund; this is integral to retaining its demand-driven character. A senior government official said this has been a recurring pattern for a few years now that wage payments were relatively streamlined between April and October, but the fund transfers begin to fall short by November, forcing States to borrow to pay the dues.

Once in this zone of payment freeze, officials begin to ration provisioning of works even as the pressure from beneficiaries and material vendors builds up. Uncertainties over the wage environment then start to deter employment seekers, which is the opposite of what the scheme is all about. This is particularly true for the vulnerable, who cannot afford the risk of not being paid for their work. When asked why Dalit families in Kushtagi taluk in Koppal district in north Karnataka were not availing themselves of MGNREGS, a landless rural worker, Doddappa (32), said: “It is not for us. We don’t have the capacity to work and wait for months to be paid, or to spend entire days protesting, first demanding work and then our rightful wage.”

Many workers admit that they have handed over their job cards (and wages) to corrupt work contractors and work longer hours for half the wage they would be entitled to under the scheme. In exchange, the contractors typically pay them a few hundred rupees for transactions worth thousands. However, in villages where the labour is more organised or wields relatively more power, such as in Koppal’s Gangavathi and Kushtagi taluks, scheme beneficiaries were able to bargain with wage contractors for a 50 per cent share of the wage money disbursed into their accounts. Although levels of such appropriation vary within taluks and indeed regionally, largely it is this nexus of contractors and local politicians that keeps political pressure on State governments to resolve wage and work paralysis in the scheme.

Death by a thousand cuts

Meanwhile, the Bharatiya Janata Party (BJP) government appears to nominally comply with Prime Minister Narendra Modi’s promise to keep alive the MGNREGS as a “living monument”, apparently a sarcastic reference to the previous United Progressive Alliance (UPA) government’s use of the scheme to keep “digging holes in the ground”. Over the years, however, the scheme has been stymied systematically, bled by a thousand cuts delivered directly in the form of reneging on legal obligations through budgetary under-provisioning and, indirectly, by maintaining a perpetual funds crunch as a means of keeping demand under control. The first and direct line of attack has been on budgetary outlays, as is testified by the accompanying charts. The Modi government’s claims of “record high outlay” for the MGNREGS are obviously misleading. In real terms (using the Consumer Price Index-Agricultural Labourers, or CPI-AL, as deflator) the budgetary allocation of Rs.55,000 crore for 2018-19 is less than the allocation of Rs.40,000 crore made in 2010-11.

In the very first year of its term, the Modi regime effected significant cuts that resulted in a 24 per cent decline in person-days generated. Business Standard had reported then that demand for the scheme was sought to be suppressed not just by freezing funds disbursal to States but also through informal channels such as the Ministry of Rural Development’s WhatsApp chat groups where unofficial and indeed illegal moratoriums on MGNREGS spending were conveyed. The Supreme Court in 2016 pulled up the Centre for not releasing funds, terming the delayed wage payments a “constitutional breach”. Although there was an uptick in person-days generated in 2015-16, increase in outlays and expenditure has been inadequate given the shock that rural labour households experienced after demonetisation in November 2016.

Although the Modi government came to power promising a doubling of farm incomes, it failed to extend this lifeline of support to an increasingly restive rural population. The outlay’s share of gross domestic product declined from 0.35 per cent in 2011-12 to 0.22 per cent in 2014-15; it stands at 0.31 per cent in the current year, well below the figures of the pre-Modi years (see Chart 1).

The second and more indirect means of attack on the MGNREGS was carried out by constricting the flow of funds to State governments, as happened in the case of Karnataka. Liabilities or pending payment obligations, which are carried over into the next financial year, have risen from single-digit percentages in the beginning of the decade to an average of nearly 22 per cent over the last four years. Obviously, the budgetary outlays in the Modi years were made in the full knowledge that nearly one-fifth of the allocation would go towards clearing the arrears. As of March 2019, the pending dues, according to current financial statements, stand at Rs.10,658.46 crore, nearly 16 per cent of the budget allocated to the scheme for 2019-20 (see Chart 2). Successive Budgets either have failed to account for this accrued burden or have been proposing significantly lower allocations even while proclaiming the scheme to be “a growth engine”. These trends in pending liabilities are further evidence of widespread delays in wage payments, which lead to a cumulative undermining of a cardinal feature of the scheme—its rights-based nature.

Local government officials, interviewed across Karnataka, admitted to delaying the provisioning of work, fearing pressure from scheme beneficiaries as well as material vendors. The pressure on account of the latter is often political in nature. While vendors may have the capacity to wait it out—given that their margins are high owing to the widely prevalent practice of using machinery and appropriating parts of the labour budget as mentioned earlier—beneficiaries tend to vote with their feet. These pressures have resulted in the arbitrary rationing of work under the scheme. Further, the dependence on Central funds has chipped away at the decentralised aspects of the scheme. Under the scheme, workers are entitled to unemployment allowance if work is not provided within 15 days and compensation for wage delays. While the former is suppressed by officials by simply not recording the “demand” for work, delayed compensation is systematically under-accounted by the system, which only captures the time taken by the gram/taluk panchayat to generate a funds transfer order and not the actual time taken for the worker to receive the wage.

An independent analysis of wage transactions in 10 States over six months in 2017-18 found that only 32 per cent of the payments were credited in time, as against the government’s claim of 85 per cent. The lead researcher of the study (published as a Working Paper), Rajendran Narayanan, an assistant professor at Azim Premji University, said that the BJP’s push for Aadhaar-based payments aggravated the problems of a highly centralised system. Narayanan observed: “Rural banks were given stiff targets to link workers’ Aadhaar numbers with their bank accounts. There were a lot of mistakes where one person’s Aadhaar number got linked to somebody else’s account numbers. Moreover, the mapping exercise that the banks did with the NPCI [National Payments Corporation of India] mapper through the Aadhaar Payment Bridge System led to errors such as rejected payments and accounts getting closed. All this was done without the consent of the workers, flouting NPCI guidelines.”

While delayed payments and arbitrary rationing of works have dealt a severe blow to the scheme, the suppression of the MGNREGS wage threatens to drive away the rural worker in whose name the scheme was instituted. Thus, what was once seen as a potentially transformative scheme is now in tatters. When introduced, the MGNREGS wage was aligned with the minimum agricultural wages prevailing in the States. Moreover, since the wages under the scheme were significantly higher than farm and non-farm wages in most regions, they increased the bargaining power of all rural workers—even those who were not beneficiaries of the scheme—by acting as the floor wage rates in the countryside. This is also the reason why the scheme was opposed by rich farmers. Buoyant rural wages were particularly important for women, who continue to face a gender pay gap in farm work, sometimes to the tune of 50 per cent or more. However, over the years, the potential for bargaining has reduced drastically, not in the least because the rise in the MGNREGS wage has been tardy.

In Karnataka, for instance, between 2010 and 2013, wages grew annually by about 20-25 per cent but only in single-digit percentages in the Modi years. In the last two years, the wage has increased by approximately 5.5 per cent, falling well below the stipulated minimum wage for agricultural workers in the State and the prevailing wages for unskilled agricultural work reported by the Wage Rates in Rural India (WRRI) data (see Chart 3). On the ground, it is observed that the scheme wage is comparable to or lower than the wages for men in farm jobs, and markedly lower than non-farm wages across most rural occupations in Karnataka—the gap is significantly larger in coastal and south Karnataka. Wages for women remain lower than the MGNREGS wage by 40-60 per cent; however, potential bargaining power is dulled by the arbitrary nature of the scheme’s implementation.

The suppression of MGNREGS wages may be read as an attempt by the BJP government to hold down the rural wage or as its appeasement of the rural elites. Indeed, the Karnataka example is not unique: since 2011, the gap between the minimum agricultural wage rate and the MGNREGS wage has widened across the country. As of 2018-19, the MGNREGS wage rate in every Indian State lags the stipulated minimum wages in agricultural operations, with the exception of Tamil Nadu and Nagaland, where the State wage has not been revised since 2015 and 2012 respectively (see Chart 4). The government’s reluctance to reconcile scheme wages with State minimum wages dates to UPA II, which sought to give statutory validation to the MGNREGS wage rate. The BJP government, which succeeded it, rejected a report by a committee headed by Prof. S. Mahendra Dev, which recommended that there should be parity between MNREGS wages and minimum wages, and that MGNREGS wage revision should be linked to the CPI-Rural Labour instead of the CPI-AL, widening the scope to include consumption patterns of a wider rural population. In 2016, a second panel constituted by the Ministry of Rural Development recommended delinking the scheme wages from minimum wages; it suggested that the MGNREGS wages be revised by indexing them to the CPI-Rural. The Finance Ministry rejected this citing increased fiscal burden.

Shifting priorities

For the better part of this decade, governments have shown an inclination—the UPA-II in its final years, and carried forward by the BJP—to dismantle what has been lauded the world over as a programme unparalleled in scale and promise. These attempts undo its most formidable features, namely its demand-driven and rights-based principles. It is evident that powerful vested interests see the scheme as yet another avenue for the appropriation of public wealth. The shift in the scheme’s priorities, from enhancing livelihood security to generating durable assets for the community to, now, the creation of individual assets, has implied the foregrounding of works that can be snapped, geo-tagged, and counted to meet bureaucratic targets in a governance discourse that is dominated by “technology-enabled” solutions.

For the scheme worker, this means that every year there are fresh impediments. When the MGNREGS technical assistant tells Sujatha’s group in Kolar that they cannot continue to work as worker attendance rolls cannot be generated without “geo-tagging” the citizen information board, which is lying destroyed on the lakebed they are digging, they merely see it as yet another obstacle in their claim for entitlements. She points to the pile of bricks they bought with money pooled in by workers to rebuild the board. “If they had paid us wages, we would have bought even the paint needed for the board,” she said.

Deepa Kurup is a DPhil/PhD candidate at the Oxford Department of International Development, University of Oxford. She is an Indira Gandhi Scholar at Somerville College, Oxford.

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