Promises to keep

The draft Employment Guarantee Act seeks to push policies that make a mockery of employment guarantee itself, furthering the neo-liberal agenda of privatisation of public services and the retreat of the state from all development activities that are not targeted.

THE stark visibility of rural distress compelled the Congress party to put the promise of a 100-day employment guarantee in its election manifesto and the United Progressive Alliance (UPA) government to make it part of the Common Minimum Programme (CMP). The CMP begins with the following promise: "The UPA government will immediately enact a National Employment Guarantee Act. This will provide a legal guarantee for at least 100 days of employment to begin with on asset-creating public works programmes every year at minimum wages for at least one able-bodied person in every rural, urban poor and lower middleclass household." To this end, the National Advisory Council (NAC) drafted a Rural Employment Guarantee Act and gave it to the government for consideration. However, there has been a consistent dilution of the provisions of the proposed Act. The draft as it stands today is neither national, nor a guarantee nor indeed at minimum wages, becoming a hoax that reduces the CMP and the NAC's legitimacy to a farce.

The Finance Ministry and the Planning Commission have drafted an Act that is effectively a narrowly targeted scheme, which can move from district to district at any wage for any duration, all at the whims and fancies of the Central government. Unlike the commitment in the CMP, the final draft places an unnecessary and unaffordable burden on the State governments. The Central government is hoping to bulldoze this diluted anti-people, anti-woman and anti-State government Act through. Although there are several problems in the draft, a few examples will illustrate the dangers and weaknesses in the Act.

The draft prepared by the NAC had envisaged a scheme with a 100-day guarantee for all rural households, which had a provision for the payment of an unemployment allowance in case the applicant was not provided work within 15 days of being unemployed. This entitlement was essential to create pressure on the government to provide work and to help the household tide over slack periods. In the absence of this, the guarantee becomes toothless. The Preamble to the Act has now been reformulated to include the word `poor' before defining the households whose livelihoods are sought to be secured. "An Act to enhance livelihood security of the poor households in rural areas of the country by providing at least one hundred days of guaranteed wage employment to every household whose adult members volunteer to do unskilled manual work." The `poor' are officially those identified as being below the poverty line (BPL) by the government.

This has allowed the government to restrict the eligibility for the payment of the unemployment allowance only to those who are identified as BPL. This effectively reduces the scheme to a targeted one, since there is no penalty for not generating work to those outside the BPL list. "If the applicant, who is from a poor rural household, is not provided with employment in the manner provided in sub-section (3), he or she shall be entitled to a daily unemployment allowance in accordance with provisions made in Section 11." This opens the door to targeting only BPL households.

Targeting has many problems. The identification of the poor is far from satisfactory, in terms of both the criteria and the procedure. The problem of wrong exclusion is rampant and has far more serious consequences than wrong inclusion. The livelihoods of vast sections of the near poor too are extremely precarious and fragile. No matter what measure one uses of hunger or malnutrition, there is no doubt that Indian people suffer pervasive and persistent food insufficiency. The employment guarantee and the payment of the unemployment allowance must remain universal and self-targeted, as per the CMP.

In Section 1(3), the Centre has been empowered to notify the areas as well as the period for which the Act will remain in force in different States. "The Act shall come into force in those districts in a State on such date for such period as may be notified by the Central government and different dates may be appointed for different districts of the States. Provided that it shall come into force immediately in such areas and for such periods as may be notified and shall be extended to cover all the rural areas of India after evaluating the implementation of the Act in the districts chosen." This effectively erodes its ability to act as a legal right or guarantee for all rural households. It is a contradiction to guarantee employment through an Act while retaining the privilege of withdrawing it, any time. Linking geographical coverage to an evaluation of the programme again does the same thing. The Act must clearly state a time period of, say at the most, five years within which all rural areas of India are notified and brought under its coverage.

Wages are no longer linked to any norms, either to the statutory minimum wages or to the Central advisory minimum wage. Section 8(3) iii states: "Notwithstanding anything contained in the Minimum Wages Act, 1948, the Central government may fix the rate at which wages shall be paid to the labourers employed under the programme. Provided that, different rates may be notified for different areas. Provided further that, until the Central government notifies wage rates for the purposes of this Act, labourers shall be paid the statutory minimum wages fixed by the respective State governments for agricultural labourers."

This puts in place a framework of completely flexible and arbitrary wages, without setting a lower limit linked to a minimal cost of living. At the moment, most centrally sponsored programmes such as the Food for Work Programme, the Sampoorna Grameen Rozgar Yojana (SGRY) and so on, entail payment at the rate of the statutory minimum wages fixed by the respective State governments for agricultural labourers, without causing any administrative or legal difficulty. The wage issues can be resolved in one of two ways: either the wage should be no less than the current level of the minimum national reference wage of Rs.66, which should be indexed to the All India Consumer Price Index for Agricultural and Rural Labourers (CPI-AL) for future revision, or the Centre should support the statutory minimum wages fixed by the respective State governments for agricultural labourers as in the case of the SGRY and the Food for Work Programme.

The definition of works too has been narrowed substantially and made even more stringent than before. "The focus of the programme shall be on works relating to water conservation, creation of additional irrigation potential through micro and mini irrigation, drought-proofing (including afforestation and tree-plantation) and wasteland development. Flood control and protection works (including drainage in water-logged areas), rural connectivity to provide all weather access and such other labour-intensive activities, as may be notified by the Central government from time to time, may also be included under the programme." While it is important that the scheme mobilises surplus labour for social and economic development through the creation of durable assets and provision of useful public services, over-specification will severely erode its ability to provide employment guarantee. It might be more difficult for panchayats to generate work. All works undertaken under the Act should be productive in the broad sense that they contribute directly or indirectly to the provision of essential public services, the increase of production, the creation of durable assets, the preservation of the environment or the improvement of the quality of life. The design of works will also determine access, because women who face high malnourishment and older people will not be able to do the heavy earthwork envisaged under the present definition of permissible works.

The way the Act is at present structured, the nodal officer functions at the block level and is not accountable to the intermediate panchayat but to the District Collector. Panchayati raj institutions should be in control of the planning and monitoring of works taken up under the Employment Guarantee Programme. In particular, monitoring agencies should be accountable to elected bodies at all levels and regular social audits should be conducted by the gram sabhas.

Despite the persistent demand made by women's organisations that if individual entitlements are not provided the household should be defined as a nuclear family, the definition in the draft has been further diluted to cover much larger units with a larger number of working adults, on the basis of a common ration card or kitchen. There is an apprehension that women will be excluded from the scheme; that would be dangerous in the context of the abysmally low levels of employment of women in rural areas. Unfortunately, the Act does not provide adequate safeguards against the exclusion of women from the scheme and only brings grievances relating to discrimination and harassment of women under the purview of the redress mechanisms, which will be prescribed by the State government under the rules. The Act should safeguard the interests of women and give full attention to their concerns with regard to availability, location, type and organisation of work. It should be ensured that at least 40 per cent of workers employed in a particular block are women, so that women are not pushed disproportionately on to the unemployment allowance scheme or out of the job guarantee scheme.

ALTHOUGH the CMP promises a centrally-funded scheme, the Planning Commission and the Finance Ministry have repeatedly tried to pass on the burden to the State governments. Even the early versions of the draft Act that were strong on people's entitlements had a highly problematic financial structure that would realise these rights.

Several economists argued for a fully centrally-funded Act along the lines of the Food for Work Programme and clear demarcation of liability for payment of unemployment allowance between the Centre and the States in accordance with the cause for non-provision of work. This was because the State governments are in the grip of a fiscal crisis owing to factors beyond their control, which are an outcome of the policies of reform. Under the guise of imposing `fiscal discipline' on the State governments, the Centre shows a growing tendency to centralise finances and reduce taxation efforts and keep more and more finances outside the exercise of the Gadgil formula and route them through `discretionary' or `conditional' schemes that do not come under its purview. The much-maligned increase in revenue expenditure is primarily on two counts: higher salaries to fewer government employees after the implementation of the Fifth Pay Commission recommendations and high interest payments against debt. As far as the hike in salaries is concerned, the State governments have no say and have to give the same scales as those received by the Central government employees who work in the States. This imprudent generosity could only be balanced by freezing dearness allowance payments.

The popular perception that all is not well with the finances of State governments is true. What is disturbing is the near-universal appeal of certain myths that are propagated to undermine the fiscal credibility of the State governments. Strange as it may seem, these half-truths find believers in both grassroots organisations and the urban elite alike. Amongst these myths, the most popular ones are the following: too many State government employees are in service and on pension (an inflated size can only lead to bankruptcy); profligacy and overspending in the past has created the severe debt situation (living beyond ones means comes with a price); it was the sops to farmers that bled these governments dry (sops that were based on political and not sound economic considerations); over-dependence on the Centre for funds has resulted in State governments that lack accountability and fail to generate their own resources; delivery of public services will remain poor in quality so long as the State governments remain mere implementing agencies instead of stakeholders (costs need to be shared with the Centre); State governments do not really suffer from a shortage of resources (when they want to spend, they find funds); and corruption and leakage plague rural development (resources hardly ever reach the target groups). These myths have assumed the stature of gospel truth. In reality, these only cloud the truth.

The World Bank and its ideologues propounded many of these myths. These attacks on the mismanagement of State finances came at a time when these agencies were gearing towards establishing an environment conducive to advancing the policies of liberalisation, privatisation and globalisation. In India, State governments are entrusted with most of the social and economic development activities and establishment of infrastructure. The Constitution empowers them with financial and legal rights under a framework of fiscal federalism and decentralised development. This implies that the privatisation project cannot come to fruition without bringing State governments to heel. The charges made against the States in the form of these myths were intended to weaken the case for fiscal federalism and advocate a model of decentralisation in which the state retreats from the provision of public services and becomes an agency to facilitate private sector profits. By weakening the financial health and administrative autonomy of the States, they could be coerced to borrow from the Asian Development Bank or the multilateral agency that had `adopted' the State in question and accept their conditionalities. The myths propagated by them facilitated in making all this acceptable to the elite and civil society organisations.

From time to time, the Central government exploits the myths about the self-created fiscal bankruptcy and distress of States to erode the autonomy of State governments. These are currently being used to buttress the argument that State governments do not lack the resources to fulfil the promises made in the Central Budget and the CMP, which include the restoration of public expenditure on rural development, employment and agriculture.

In the final draft Employment Guarantee Act, the Centre proposes to "meet the wage component of the cost of the programme, while material component of the costs of the programme shall be shared by the Central and State governments in the ratio of 3:1... .Unemployment allowance payable under the provisions of the Act shall be the liability of the State governments". The programme, however, should be fully funded by the Centre. The wage contribution of the Centre must extend at least to a national norm initially fixed at no less than Rs.66 a day, and indexed to the All India CPI-AL for future revision. Additionally, the Centre should finance material costs in the ratio of 70:30 labour is to material. When there is a delay in the devolution of funds to the State government from the Central Fund, the Central government must reimburse the State government for the associated unemployment allowance payments. In order to meet the administrative costs of the programme, the funds devolved by the Centre to each State should include an additional component amounting to 5 per cent of the total spending on wages and materials.

However, the larger ramifications of the Act are in a sense far more serious than the Act itself. This is because the conditions of employment under this Act will determine working conditions in all government employment in rural areas, since work provided under all other ongoing Central and State schemes is likely to merge into the employment guarantee programme. The Act as it stands today will convert a bulk of the universally accessible rural employment programmes into targeted ones and supersede the very notion of a statutory minimum wage. This will institutionalise a regime of targeted wage flexibility in most government employment programmes, something which has not yet succeeded in India despite the best efforts of the World Bank and the IMF.

The Employment Guarantee Act must not become a smokescreen to push policies that make a mockery of employment guarantee itself while furthering the neoliberal agenda of privatisation of public services through the erosion of State finances; wage flexibility; retreat of the state from all development activities that are not targeted; and so on. There are powerful forces at work that want an early passage of this farcical legislation in the hope that populist rhetoric will provide the fig leaf to their intent. The fight for an effective Act must continue within and outside Parliament.

Smita Gupta is a Fellow at the Institute for Human Development, New Delhi.