Print edition : September 23, 2005

People's Action for Employment Guarantee members at a dharna in New Delhi on August 18, urging the government to pass the Employment Guarantee Bill. -

The National Rural Employment Guarantee Act differs from earlier schemes in that its starting point is the empowerment of rural people, rather than "providing" employment to the poor.

AFTER prolonged dithering, the United Progressive Alliance (UPA) government successfully piloted the Bill, that will soon become the National Rural Employment Guarantee Act (NREGA), in the recently concluded monsoon session of Parliament. The legislation "guarantees" employment to one person in every rural household for 100 days in a year. But, to start with, it will be implemented in 200 districts across the country. Although the programme is not expected to be launched before November, its potential for sparking a rural transformation has been recognised by every shade of political opinion.

But the passage of the Act was not easy. The travails of the Bill since it was first drafted in August 2004 by the National Advisory Council headed by Congress president Sonia Gandhi made a sorry tale of petty-minded bureaucrats and accountants trying to rob the legislation of its soul. Its proponents regarded it as a piece of legislation that would empower the poor, which would lay the basis for transforming the countryside. However, the draft Bill introduced by the government last December diluted the empowering provisions and curtailed the scope of the legislation. In effect, it negated the programme's efficacy, which rested on the simple but powerful logic of using the productive capacity of ordinary rural folk to build and nurture assets, while simultaneously alleviating the problem of chronic unemployment and poverty.

The watered down Bill faced stiff opposition in and outside Parliament. The Left parties protested vociferously, and so did non-governmental organisations (NGOs) and social activists, academics and other sections. Forced on the back foot, on December 23, 2004, the government referred the National Rural Employment Guarantee Bill to the Parliamentary Standing Committee on Rural Development. More than 100 representatives of various organisations, agricultural workers, NGOs and eminent economists and activists such as Jean Dreze, Prabhat Patnaik and Aruna Roy deposed before the Committee, which had representatives from every major political party.

The Committee observed that the proposed legislation was "path-breaking". It criticised the government for not having consulted the State governments and for its failure to take into account their apprehensions. The Standing Committee also observed that organisations and individuals who deposed before it were "almost unanimous" in objecting to several provisions of the Bill. The move to restrict the programme to those below the poverty line (BPL), the attempt to adopt a restrictive definition of what constitutes a "family", the provisions enabling the government to "switch off" the guarantee at its discretion, and the failure to give panchayati raj institutions a central role in the implementation of the legislation were some of the important issues that were raised in the depositions before the Committee.

The Committee rolled back virtually every major change effected by the government in the draft Bill. In effect, political India displayed its unwillingness to earn the wrath of the people by asking them to wait endlessly for deliverance.

THE argument in favour of productively harnessing the power of the unemployed has never been in doubt. In fact, India has a fairly long record of using the food-for-work principle. The long experience also means that the country is well equipped to design and implement a scheme that goes beyond food-for-work and evolves into something that guarantees employment to rural people. Indeed, the inspiration for the NREGA came from the three-decade-long track record of the Employment Guarantee Scheme (EGS) in Maharashtra, which originated as relief programmes in the wake of a severe drought in the early 1970s. The EGS inspired a number of programmes, starting with the National Rural Employment Programme in the 1980s and ending with the Sampoorna Grameen Rozgar Yojana, which, along with the National Food for Work Programme, is to be merged with the employment guarantee programme launched under the NREGA.

Evaluation studies of the Maharashtra EGS show that although it has not been an unqualified success, it has ameliorated extreme levels of deprivation among the poorest sections. Studies among those who participated in the scheme show that employment in the EGS accounts for between one-tenth and one-third of the number of days of employment of rural workers.

However, there is also evidence to show that the EGS did more than create jobs. Professor Mahendra Dev, Director of the Centre for Economic and Social Studies in Hyderabad, pointed out that apart from providing employment, the EGS also stemmed the tide of migration of rural workers in search of work. While it obviously supplemented the incomes of workers, it also acted as an "insurance mechanism by stabilising employment" in the off-peak season, said Mahendra Dev.

These are substantial benefits in themselves, but yet more important benefits arise out of such a programme. Mahendra Dev pointed out that the participation of women in the Maharashtra EGS was 30-40 per cent, compared to the Jawahar Rozgar Yojana, in which women's particpation was just 20 per cent. He added: "The Maharashtra experience has shown that the EGS results in the poor becoming a political force. The EGS is thus more than an employment programme. It has resulted in higher wages for labour. It is an empowering agency. In a country where we do not have any unemployment insurance, there is no better alternative to the EGS. Although it can only make a partial contribution to the objective of poverty reduction, it has a potential for unleashing rural transformation. The need for such a programme also reflects a failure of policies addressing the problems of rural society."

The extent of rural unemployment, captured in two sets of data - the Census and surveys conducted by the National Sample Survey Organisation (NSSO) - indicates that widespread unemployment exists in the countryside. The most recent survey indicates unemployment to the extent of more than 7 per cent. Mahendra Dev pointed out that NSSO data showed a decline in the growth of employment in the 1990s, when compared to the 1980s. Although the 2001 Census data do not show much of a decline in the growth of rural employment, they indicate that the ranks of "marginal workers" swelled faster in the 1990s, when compared to the 1980s. These are typically people with low wages, without full-time employment, and mostly in the non-formal sector. This indicates greater underemployment.

Mahendra Dev observed that the problem was not one of outright unemployment, but underemployment. "People are working for very low wages and they simply cannot afford to remain unemployed for too long," he said. Referring to field studies in Andhra Pradesh, he said that people in the drier tracts got employment for 30-40 days in a year. In irrigated areas the situation was better - 100-150 days of employment. This, he said, confirmed the need for something like an EGS.

There is mounting evidence that the agricultural sector's capacity to absorb labour has worsened substantially in the last two decades. Three sets of factors have been pointed out by academics. First, as Professor Utsa Patnaik has stressed repeatedly, there has been a steep decline in per capita availability of foodgrains. This is not just a matter of less food available for the poor, as is commonly understood. Foodgrain production is labour-intensive, which implies that a decline in availability means that the agricultural sector's ability to absorb labour is seriously impaired.

Secondly, there has been a sharp reduction in public investment in government expenditure relative to the national income. This means a contraction in the capital investment in rural infrastructure, for instance, in irrigation. But the contraction of expenditure on rural development schemes, relative to the national income, also means that there are fewer opportunities for jobs.

The third set of issues arise out of policies that have been part of the liberal framework since the 1990s, which have resulted in the state playing a lesser role as an agent of stabilising the market. This is best highlighted by the wave of suicides reported from virtually every corner of the country. There is no doubt that agricultural policies have caused greater immiseration among the peasantry, particularly among small and marginal peasants. These sections, operating small and low-productivity holdings, are increasingly being pushed into the market for labour.

Such a situation cries out for a scheme that would not only "provide" employment but also enhance productivity in rural communities. It can provide immediate relief. But more importantly, enhanced productivity improves the rural economy's ability to absorb labour. Moreover, the increasing demand for labour would lead to better wages in the countryside. The advantage of self-targeting (which means that those who seek work under such a scheme for a minimum wage will opt for it any way), is that only those in dire need will benefit. Speaking to this correspondent, Mahendra Dev said, "You and I would not want to work for eight hours in the sun. Targeting often results in the exclusion of those who are really poor and the inclusion of those for whom the scheme was not intended. It can also lead to corruption in the selection of beneficiaries."

Indeed, the NREGA gives the government an opportunity to reverse the prolonged neglect of productive rural infrastructure. Watershed development, restoration of water bodies such as tanks and canals, activities aimed at forestry, land development, and soil erosion and flood control, and construction of roads and institutional facilities can realise the potential of the programme in diverse conditions. The Act, by permitting activities on private land up to a point, significantly increases the scope of the programme. The NREGA differs substantially from earlier schemes in that its starting point is the empowerment of rural folk rather than "providing" employment to the poor. Guarantee, says Mahenrda Dev, is the key word. For the first time, it makes it possible for the rural people to demand that they be given a job, even if it is only at the floor rate of wages.

THE passage of the NREGA reflects only a partial compliance of the UPA government's Common Minimum Programme, which promised to provide a minimum of 100 days of employment to "at least one able-bodied person in every rural, urban poor and lower-middle class household". The Centre will fund the programme to the extent of 90 per cent - the remaining funds will come from the State governments. However, it will be implemented by elected panchayats.

The original Bill sought to restrict the scope of the programme on several counts. However, under sustained attack from all sections, and especially after the parliamentary Standing Committee endorsed the objections, the government was forced to address them. The original Bill sought to curtail the scope of the guarantee by providing it to only those areas notified by it from time to time. This meant substantial powers of discretion at the hands of the government, instead of a wider guarantee applicable to all rural households. The initial draft also aimed to give greater authority to the bureaucracy rather than the elected representatives. This has also been rectified in the Act.

Obviously under pressure from the Finance Ministry, which holds the purse strings of the nation, the government insisted on restricting the scheme to BPL families. The outrage this provoked in and outside Parliament forced the government to adopt the principle of self-selection. As for wages to be paid for those working under the programme, the draft Bill left this to the government to "notify", even if it meant that the government itself contravened the Minimum Wages Act.

The Standing Committee recommended a minimum wage of Rs. 49 for a seven-hour working day on the project. However, the Left parties mounted a sustained attack on the issue, forcing the government to agree to a minimum wage of Rs. 60 in States where the minimum wage is below Rs. 60. It is not clear whether the wage rates in the other States will comply with the statutory minimum wages for agricultural labour. The Act has also addressed the lack of adequate protection for women in the draft Bill - women will constitute one-third of the workers employed under the scheme. The Act also provides for an unemployment allowance if eligible individuals are not given work.

Critics of the NREGA have focussed on two sets of issues: one, that it is too expensive and, two, that corruption will prevent its success (see box). There have been demands that the government integrate the employment guarantee programme into the Bharat Nirman Project, which is aimed at building rural infrastructure. World Bank President Paul Wolfowitz announced during his recent visit to India that the Bank would lend $1 billion for the Rs.174,000-crore project.

However, Mahendra Dev thinks that dovetailing of the employment guarantee scheme to the Bharat Nirman project "will result in a dilution of the guarantee". Bharat Nirman aims to improve rural infrastructure - roads, irrigation, telecom, electricity, water supply, housing and so on.

But the kind of assets planned under the employment guarantee scheme relate to soil and water conservation and watershed development, apart from road building. The key word in the EGS is the guarantee of employment that it offers. "Of course, some kind of coordination between the two projects at the grassroots can be useful. But funding should be separate," Mahendra Dev said.

The guarantee is a small step towards the goal of empowering the rural power. It will depend crucially on the way rural society engages with political authority when it is implemented. The increased transparency norms that have resulted from the campaign by citizens' groups means that muster rolls will be available to people where projects are implemented. Mahendra Dev believes that the participatory model will serve to make the employment guarantee a success. "Public awareness, agitations by local people and checking of muster rolls can check abuses."

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