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LATEST NEWS UPDATES | Dangerous withdrawal -Prabhat Patnaik

Dangerous withdrawal -Prabhat Patnaik

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published Published on Oct 30, 2014   modified Modified on Oct 30, 2014
-The Telegraph

The National Democratic Alliance government is planning to scrap the Mahatma Gandhi National Rural Employment Guarantee Act. The chief minister of Rajasthan, Vasundhara Raje, had already asked for the employment programme of the MGNREGA under which the state was obliged to provide employment on demand (failing which an unemployment allowance of a specified amount had to be paid), to be downgraded to a mere "food-for-work" programme, where the state provides employment only when it pleases and is not obliged to do so on demand. Now, the Union rural development minister, Nitin Gadkari, is introducing changes in the MGNREGA that amount to its virtual scrapping.

Gadkari is reportedly planning three changes. The first is to restrict the scope of the act to one-third of the total number of blocks in the country that are supposed to be the most backward. The MGNREGA had set up a universal scheme that gave every household the right to a maximum of 100 days of employment on demand. The plea that it is not necessary in two-thirds of the blocks, and hence should be restricted only to one-third, is a specious one, since households not requiring employment under the universally-applicable MGNREGA could always opt out, and did so in any case; the need for an independent specification of where employment has to be provided simply does not arise. What restricting the scope of the MGNREGA to only one-third of the blocks would do is not only to ignore claims of the unemployed poor in the two thirds of the blocks that would cease to be covered by it, but also to abrogate a universal right.

The second change that Gadkari is mooting is not so much a formal change as the institutionalization of a de facto attenuation that had begun even under the United Progressive Alliance-II government. Employment under the MGNREGA being demand-driven, the funds required for it in any year should be determined by the demand for employment rather than by some prior allocation; even if an allocation is made for budgetary purposes, it should be seen only as provisional, subject to revision depending on the demand for employment. Now, the UPA-II government, while reiterating this principle, did not actually spend more than the budgetary provision, even when the demand for employment was larger. It simply defaulted on timely wage payments in such cases. Consequently, wage arrears, for work already done, got carried over from one year to the next. And since the next year's budget also did not provide for such wage arrears, a rationing of wage payment became a routine phenomenon. Workers had to wait for long periods for payment for work already done, which again not only violated their rights, but also served to discourage them from applying for work under the MGNREGA. It discouraged state governments, too, from registering them, for fear of either having to pay wage arrears out of their budgets, or having to confront angry unpaid workers.

Gadkari is now seeking to institutionalize such a de facto roll-back of the MGNREGA. On September 29, the rural development ministry has sent a circular to the state governments, specifying what the allocations for each state under the MGNREGA was for the current year, and how much of the funds remained to be spent. The question of funds "remaining to be spent" in a programme whose budget is supposed to be demand-driven makes no sense, unless the suggestion is that the Centre will not provide any funds in excess of what remains to be spent. The NDA is thus brazenly rolling back a scheme that the UPA was quietly undermining.

The third change planned by Gadkari is to be understood in the context of this financial strangulation of the programme. The ratio of material to wage costs on MGNREGA schemes is not supposed to exceed 40:60. Gadkari wants to increase it to 49:51. This may appear innocuous, but it has two important implications: first, within any given budgetary allocation this would mean a smaller amount for wage payments, and hence a smaller provision of employment; and second, the increase in material costs entails bringing in contractors, and entrusting the employment schemes to a bunch of contractors, before whom the workers in need of employment would have to appear as supplicants, and to whom they would have to pay cuts out of wages.

These changes, in short, will simply finish off the MGNREGA as a rights-based programme. A climate of opinion for such an end is being created by spreading all sorts of canards about the programme. It is claimed for instance that it is a mere dole that does not create any assets. This is, first of all, untrue: a Planning Commission study finds that compared to the preceding employment programmes such as "food for work", the value of assets created per unit of expenditure under the MGNREGA has been nine times as much. Second, the MGNREGA being a rights-based programme, whether assets are created or not is irrelevant for its continuance. To be sure, assets should be created, but that requires better project formulation; a right of the workers cannot be snatched away if projects are ill-formulated. Third, calling MGNREGA employment a mere dole, which implies payment without work, is an astounding untruth, which can be propagated only by those who have little knowledge of ground realities but much animosity towards the labouring poor.

I have personally seen on visits to MGNREGA work-sites in Kerala the incredibly difficult work undertaken by those employed, such as standing waist-deep in muddy waters for hours on end for cleaning community tanks, or carrying debris ( malba) for long hours and over long distances under a blazing sun for road construction projects. Since those doing such arduous work have included above all women and old people, I have been struck by the terrible conditions of life of the labouring poor in the country as a whole, if there is such desperation even in Kerala with its unmatched welfare schemes.

A second criticism that subtly invokes caste contradictions, between the intermediate and Dalit castes, laments that MGNREGA has hurt the peasantry by raising wage costs. This is a complete non-sequitur. Any improvement in the conditions of the rural workers must, if other things remain unchanged, hurt those who employ them. If this hurt is to be avoided, even as workers' conditions are improved, then other things must not remain unchanged. In the present case procurement prices must be raised for the peasantry, and its inflationary impact negated through a larger food subsidy, paid for either through deficit financing or taxes upon the rich (who have been handed huge tax concessions of late in the name of development). MGNREGA, in short, need not hurt the peasantry. If it does, then that is because of an act of complicity on the part of the government.

But this propaganda is being used to roll back one of the most significant initiatives in favour of the poor in post-Independence India, whose significance can be gauged from the fact that it provides 2.5 billion person-days of work each year.

This rolling back is extremely disturbing for several reasons. The first and the most obvious one is the assault on the poor that it constitutes. The second is the poverty of the economics underlying such a roll-back. At a time when there is persistent absolute stagnation in industry, when the need is to expand the home market by giving purchasing power to the people, scrapping MGNREGA has the very opposite effect.

Even if we ignore the ethical unsoundness of a policy of fiscally-engineered redistribution of purchasing power in an inegalitarian direction, by curtailing spending on MGNREGA projects and increasing transfers to the capitalists to boost their "animal spirits", it nonetheless constitutes simply bad economics: no investment will be forthcoming from the capitalists unless demand increases in the economy, and demand, instead of increasing, will actually contract through such inegalitarian measures.

There is a third and deeper reason for disquiet here. The MGNREGA enacted a right to employment that was in conformity with the directive principles of state policy contained in the Constitution. It gave the people, through a unanimous resolution of the Parliament, a basic right. This right, though not enshrined in the Constitution per se has nonetheless become a part of our Constitutional order. It is a moot point whether Parliament itself can, through a simple majority, take away that right in the future, for that would mean interfering with the Constitutional order. But, when the matter has not even come to Parliament, for the executive unilaterally to withdraw that right surely sets a dangerous precedent. It is analogous to the executive unilaterally ordering unlawful detention of persons, and should be resisted equally uncompromisingly.

The author is Professor Emeritus, Centre for Economic Studies, Jawaharlal Nehru University, New Delhi

The Telegraph, 30 October, 2014, http://www.telegraphindia.com/1141030/jsp/opinion/story_919.jsp#.VFJanXs_-BG


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