Job scheme in decline

Print edition : April 01, 2016

Work under MGNREGA in progress at Honna Kiranagi village in Kalaburgi taluk, Karnataka. A file picture. Photo: Arun Kulkarni

The increase in the budgetary allocation for the MGNREGA is only marginal. The scheme helped lower the poverty level by 32 per cent between 2004-05 and 2011-12, but government support for it has been declining steadily.

In the beginning, economists belonging to the Right and the Left were of the view that the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) was merely a populist measure. While the former believed that the implementation of the scheme would burden the exchequer, Left economists thought the scheme—and the Act that replaced it—had very little scope for public spending and could be yet another way to deny a permanent income to a large section of the people. But, the scheme, which came into force in 2006, has given employment to at least 25 per cent of rural households, which according to some estimates roughly translates to more than 50 million people. It served as the best social security initiative in the worst days of market uncertainty, agrarian crisis and rural distress. The Act guarantees a minimum 150 days of employment in a year to every willing household within 15 days of making a request for work. As time passed, more and more economists started to appreciate the importance of such a scheme in mitigating rural distress. While Left economists have been demanding the strengthening of the Act, those on the Right side of the political spectrum have begun to see its significance in a gloomy investment climate. The World Bank, which in its 2009 World Development Report (WDR) called the MGNREGA “a barrier to development”, revised its opinion in its 2014 report and called it “a stellar example of rural development”.

The National Democratic Alliance (NDA) government, which was sending out mixed signals about its opinion of the MGNREGA throughout 2015, was forced to increase the allocation for the scheme from Rs.34,699 crore (Budget Estimates) in 2015-16 to Rs.38,500 crore. Although the increase can be seen as marginal, it has put to rest hostile opinion about the need for such a social security measure.

In the past two years, Bharatiya Janata Party (BJP) leaders proposed several times a dilution of the provisions of the Act. Nitin Gadkari, when he was the BJP president, proposed that the existing wage-material ratio of 60:40 be changed to 51:49 so that the MGNREGA could be used to build rural assets. Implicit in his argument was the assumption that work done under the MGNREGA did not contribute to infrastructure development. Various studies have found this argument baseless.

Similarly, the NDA had proposed restricting the Act to poor districts and limiting its scope, arguing that there were no unemployed people in well-off districts. Such proposals created a hostile environment for the MGNREGA. Prime Minister Narendra Modi, in fact, declared that the MGNREGA was “a living monument” of the previous Congress-led United Progressive Alliance (UPA) government. The increase in the budgetary allocation for the scheme, though marginal, is a clear indication that the NDA government is not in a position to generate alternative employment for rural households.

Presenting the Union Budget in the Lok Sabha on February 29, Finance Minister Arun Jaitley said: “Rs.38,500 crore have been allocated for MGNREGA 2016-17. If the total amount is spent, it will be the highest budget spend on the MGNREGA.” Activists have pointed out that the Finance Minister either lied or got the data wrong. “The current estimate for the MGNREGA is lower than the allocation of Rs.40,100 crore in the 2010-11 Budget,” said Nikhil Dey of the Mazdoor Kisan Shakti Sangathan (MKSS), a trade union based in Rajasthan.

He said the expenditure under the scheme was around Rs.36,967 crore in 2015-16, excluding about Rs.9,000 crore if pending wages and under-reported data were taken into account. Given the rate of inflation at approximately 8 per cent, another Rs.3,000 crore would be needed. Thus, insufficiency of funds can be explained from the expenses incurred in the current financial year. While the increase in Budget Estimates from last year is shown to be 11 per cent, the actual increase is only 4 per cent if one takes into account the Revised Estimates for the MGNREGA in 2015-16.

Advocates of the MGNREGA feel that Jaitley has been misleading the House. In his Budget speech in 2015, Jaitley announced that Rs.34,699 crore, with an additional Rs.5,000 crore to be garnered by tax buoyancy, was the highest ever allocation for the MGNREGA. He repeated this claim in his latest Budget speech. They suggest that inflationary trends must be taken into account before allocations are made. Aruna Roy of the MKSS said anything less than Rs.65,000 crore would be insufficient by the current standards of implementation. The implementation of the MGNREGA has been marred by various problems owing to a lack of political will.

The scheme faces four problems. Firstly, there is a huge delay in the payment of wages, which has discouraged workers from seeking jobs under it. The economist Jean Dreze said: “A critical provision enabling NREGA workers to claim compensation for delayed wages under the Payment of Wages Act has been removed.” He said in one of his articles: “According to the Central government’s NREGA website, delayed payments accounted for 70 per cent of all NREGA wage payments in 2014-15 (up from 50 per cent in 2013-14). Instead of the earlier provision whereby NREGA workers were entitled for compensation under the Payment of Wages Act in the event of delays, the new schedules provide for compensation at a measly rate of 0.05 per cent per day.”

Secondly, the wage rate of around Rs.125 a day on a “piece rate” basis is grossly inadequate today. “Market wages are steadily increasing. Unless you ask for an increase in real wage rates, people may feel the brunt of stagnating wages. The Act should be linked with the Minimum Wages Act in every State. Right now the Central government reserves the right to set wage rates. Adding to the problem, daily wage rates are not allowed. Piece rate payment has been made compulsory. The right to demand work has also been turned into a duty. No formal application, no work,” said Dreze.

Thirdly, centralisation of the scheme has led to inefficiency in its implementation, giving rise to problems such as corruption and bureaucratic delay. “In the last two years, the scheme has been unnecessarily centralised. According to the original provisions of the Act, every State could factor in local conditions to implement the Act. But centralisation of funds has resulted in more delay in payments,” said Dreze.

Lastly, a technocratic approach, meant to fast-track the implementation, has actually led to added paperwork because of a lack of trained staff. Reetika Khera, a faculty member in the Indian Institute of Technology Delhi and a visiting professor in King’s College, London, wrote in an article for NDTV: “…Electronic muster rolls [EMRs, or attendance sheets] were introduced [in the Act]. The names of those who applied for work were to be entered in NREGASoft, to generate these EMRs with pre-printed names. The rationale for the EMRs was that when labourers demanded work, they could have a dated receipt as proof to claim their unemployment allowance (as per the Act if work is not provided within 15 days). Further, the EMRs were meant to check corruption…. In practice, the EMRs have solved neither of the two problems. In many areas, work is provided to those who show up at the worksite, and their attendance is maintained in a kachha register. This register is used to generate post-dated work demand and EMRs. The tear-off receipt in the work demand form remains with NREGA functionaries… EMRs have been damaging: they have undermined the right to demand work at the worksite, added extra layers of paperwork (the kachha records and the work demand forms), and in some places brought back middlemen (because workers don’t know where and how to apply).”

Instead of addressing the real problems in implementation, the government has chosen to introduce cosmetic changes in the Act. For example, the NDA government increased the number of workdays under the MGNREGA from 100 to 150. Ground-level activists said this change would hardly make any difference as the number of average workdays was much lower than even the previous provision of 100 days.

Despite Jaitley’s claims, the fact remains that the budgetary allocations for the MGNREGA have been steadily declining. The implementation of the Act has suffered because of a lack of political will and the indecisive attitude of the government. This, despite the fact that the Act helped lower poverty by almost 32 per cent between 2004-05 and 2011-12 and prevented almost 14 million people from falling into the poverty trap, states a National Council of Applied Economic Research survey. Only Tripura and Tamil Nadu have understood the importance of the MGNREGA and have resisted the Central government’s efforts to dis-empower the scheme.