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LATEST NEWS UPDATES | A Notional Advisory Council? by Jean Drèze

A Notional Advisory Council? by Jean Drèze

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published Published on Jan 9, 2011   modified Modified on Jan 9, 2011

The National Advisory Council's recommendations on the National Food Security Bill are in danger of being brushed aside.

It is the fate of most advisory committees that the government accepts whatever advice suits its purposes and ignores the rest. The first version of the National Advisory Council (NAC-1) managed to avoid that fate to some extent, due to favourable circumstances. NAC-1 was able to persuade the government to enact the Right to Information Act, the National Rural Employment Guarantee Act, and the Forest Rights Act, aside from other initiatives. None of these proposals were accepted without change by the government — for instance, the NREGA draft prepared by NAC-1 was severely diluted before being tabled in Parliament (it was “repaired” later on, with some help from the Parliament's Standing Committee on Rural Development and the Left Parties). Nevertheless, NAC-1 was instrumental in ushering constructive legislations and policies that would, in all likelihood, never have seen the light of day through normal government channels. This lent it some credibility, in spite of all the ambiguities attached to this unconventional body.

The second version of the National Advisory Council (NAC-2), however, has been convened in very different circumstances, and does not seem to have the ear of the government. A few weeks ago, NAC-2 drew the government's attention to its fundamental duty to pay minimum wages to NREGA workers. This issue required some resolve and application of mind, because framing a sustainable wage policy for NREGA that respects the Minimum Wages Act is not a simple matter. Instead of tackling this issue, the government stuck to the inadmissible claim that NREGA has been “delinked from minimum wages”, and tried to make up for it by indexing the wages of NREGA workers (with a provision for revising the base wages every five years).

Under the guise of meeting the NAC half-way, the government has made matters worse, by reaffirming its commitment to non-payment of minimum wages to NREGA workers. Even the indexation of wages is little more than damage control. In a fast-growing economy, the least one would expect from a government committed to “inclusive growth” is that it enables the poorest of the poor to maintain their share of the pie. That would mean indexing the wages of NREGA workers not only on the price level, but also on something like the growth rate of per-capita GDP. When per-capita incomes in the economy are growing at more than five per cent per year in real terms, why should those of NREGA workers be kept constant for as long as five years, without any guarantee of upward revision at the end of that tunnel? Yet far from being taken to task for its stinginess, the government managed to get credit for raising the wages of NREGA workers in line with inflation, that too after two years of incessant public pressure. This is like agreeing to stop trampling on the hands of someone who is hanging from the roof of a high-rise building by his fingernails, and getting a prize for it.

The NAC recommendations on the National Food Security Bill (NFSB) are in danger of going the same way if not worse. These recommendations are very mild, coming as they did at the end of a long process of consultation with various Ministries, when the government went out of its way to ensure that the NAC did not hatch any “unreasonable” proposal. But even the residue appears to be too much for the government's tiny stomach. Even before the NAC recommendations were adequately fleshed out, they were referred to an “expert committee” consisting entirely of government officials. This committee, headed by Dr. C. Rangarajan, must be commended for its timely deliberations and sharp report. But the conclusions make one wonder why the government wasted the NAC's time: the Rangarajan committee recommendations are almost exactly the same as the Planning Commission's NFSB proposal, formulated before the NAC started its work. If anything, they are more conservative: the Rangarajan committee suggests selling PDS foodgrain to non-BPL households at the Minimum Support Price (MSP), instead of 75 per cent of MSP as the Planning Commission had suggested.

The committee report

The Rangarajan Committee rejected the NAC proposals on the grounds that further raising of procurement levels would “lead to a lower availability of foodgrain for the open market, pushing up prices”. This argument is incorrect: higher procurement would also mean higher distribution, and the two would, in principle, approximately “cancel out” as far as the effect on market prices are concerned. Coming from a committee that includes at least two world-class economists, this failure of A-level economics is a little embarrassing. Could it be that the committee's judgment was clouded by a fundamental resistance to the idea that the ambit of the Public Distribution System should be expanded?

There is another glitch in the Rangarajan Committee report. The report recommends sweeping PDS reforms, whereby the food subsidy would be transferred directly to the beneficiaries through a Smart Card, usable in “any store”. The committee's faith in this entirely untested system is touching. But suppose it works. Most of the subsidised food would then find its way “through the normal market channels”, as the report happily notes. But in that case, where is the question of a procurement constraint?

For good measure, the Rangarajan Committee focuses exclusively on the PDS component of the NAC proposals, and ignores the non-PDS entitlements such as child nutrition programmes, maternity entitlements and destitute feeding. This jars with the committee's recognition of India's massive “nutritional deficiencies”, and also with its well-taken observation that better nutrition is “a necessary prerequisite for economic development”. A historic opportunity is being missed to do justice to these fundamental concerns.

(The author is Visiting Professor at the Department of Economics, University of Allahabad and Member of the National Advisory Council.)

The Hindu, 10 January, 2011, http://www.hindu.com/2011/01/10/stories/2011011051231100.htm

Tagged with: NREGS



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