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Resource centre on India's rural distress
 
 

Fear of Freedom by Ruchi Gupta

So why is the UPA hell-bent on killing its unique success story: the NREGA? Here's the inside narrative of the conspiracy.

It took 47 days of a protest sit-in at Jaipur to make the state budge(1). It's notable that the objective of this protracted protest was not to coerce the Rajasthan government for an extra share of the state's resources, but to hold the government accountable to the Constitution and its own laws. The protest, 'Mazdoor haq satyagraha' was staged by workers employed under the National Rural Employment Guarantee Act (NREGA) to demand enforcement of their constitutional right to earn minimum wages. Even now, after some initial encouraging signs, the matter seems to have been stalled.

NREGA is the first social policy legislation in the entitlements framework -- each worker gets ten entitlements and mechanisms to enforce implementation. For the first time, the government has been held accountable for non-performance (e.g., unemployment allowance, if work not given in 15 days). Turning the mai-baap State on its head, holding it accountable to its people, rights-based legislations have the ability to politicise the population for a truly functional democracy. Already, NREGA workers across the country are registering trade unions to mobilise and fight for their rights.

There is immense potential in these unions. Traditionally, mobilisation has taken place along divisive (and dead-end) issues like caste and religion - for political gain of vested interests but not for politicisation of the individual. Most trade unions are co-opted by political parties in their relentless power game. Mobilisation in response to immediate crises like displacement tends to be localised - however, NREGA unions can transcend these limitations, and these unions can be parlayed into building blocks of both broad-based politicisation and pressure centres for equitable political reforms.

NREGA is not just about future lofty goals. It has already generated employment for more than 50 million women and men in 2009-10, empowered rural women, decreased rural-urban migration, created numerous productive assets, and increased depressed wage rates earned by the poor. But it is early days yet. Despite built-in transparency mechanisms, NREGA suffers from uneven implementation and endemic corruption. Uncannily, the government, instead of doubling down to improve implementation, given the undoubted immediate benefits and future transformative potential, is systematically undermining the very act itself.

This seems a case of systematic sabotage. While the transformative potential of NREGA is in its framework, its attractiveness at the grassroots is in its two principal entitlements: first, 100 days of work; second, basic minimum wage. The two in conjunction ensure a minimum level of income enhancement for each rural family. NREGA wages can be fixed by the central government (Section 6.1), failing which the wage rates are seen to be defaulting to the states' minimum wage (Section 6.2). From August 2005 to January 2009, the central government did not notify any wage rate and states' minimum wages were paid across the country.

As a result of NREGA, market wages increased everywhere as employers had to raise labour rates to keep up with NREGA wages, leading to widespread criticism by farmer groups of the inability to find cost-effective labour. This actually indicates that State-mandated minimum wages were routinely flouted and in absence of law enforcement by the state government, intervention at the market level is required to raise wage rates. Since the Centre bears the complete cost of wages, it is suggested that some states opportunistically increased their minimum wages. Therefore, the central government capped the wage rate under NREGA at Rs 100 in January 2009 to ensure "budgetary predictability". Thus, despite the raging inflation of the past two years, the wage rate under NREGA remains frozen at Rs 100.(2)

Imagine digging hard soil for eight hours under the scorching 45 degrees sun to earn Rs 100, just enough to buy one kilo of arhar dal! To compound the frustration, even the Rs 100 can be arbitrarily reduced in case as per work measurements, you didn't work hard enough - in one shocking case, 99 workers in Tonk district (Rajasthan) were paid only Re 1 per day for 11 days of work. Payment of wages, too, is routinely delayed for months beyond the mandated 15 days. It is almost certain that worker enthusiasm for the NREGA will wane.

Indeed, the Centre's argument of budgetary predictability is untenable. The Centre could have base-lined wage rates as of December 31, 2008 and linked it to inflation. This would have eliminated politically motivated wage rate increases by states but also ensured that NREGA wages remained relevant in the face of inflation. Moreover, at the time of the notification, states (e.g., Goa, Kerala, Haryana and Punjab) with minimum wage above Rs 100, accounted for an insignificant 2 per cent of total expenditure under NREGA in 2008-09. UP, which is a large NREGA funds beneficiary, did raise its rates twice, but its wages were severely depressed at Rs 58, much below the 2007 national floor wage rate of Rs 80.

Today, the minimum wage in 19 states is higher than the NREGA wage rate, rendering the Act irrelevant to its very purpose - of enhancing livelihood security of the rural people - as villagers are able to earn more or as much in a more predictable manner than under the NREGA. More importantly, by paying less than minimum wage, the State is breaking its own law, violating citizens' fundamental rights and calling into question the very legitimacy of the government.

This point was underscored in the letter to the prime minister by the chief minister of Andhra Pradesh (AP), "I write this letter requesting compliance to the orders of the Honourable High Court of AP... The order of the high court was that government being the agency for implementing minimum wages, cannot itself violate the minimum wages".(3)

The Supreme Court, in multiple rulings, has held that non-payment of minimum wages is tantamount to 'forced labour' prohibited under Article 23 of the Constitution, and  that 'forced labour' may arise in several ways, including "compulsion arising from hunger and poverty, want and destitution". In Sanjit Roy vs State of Rajasthan (1983), the apex court held that the Exemption Act in so far as it excluded the applicability of the Minimum Wages Act, 1948, to the workmen employed in famine relief work, is "clearly violative" of Article 23. Thus, even public works ostensibly initiated by the government for the sole purpose of providing employment are subject to the Minimum Wages Act. Further, with minimum wages set at bare survival, the employer is legally obligated to pay minimum wages regardless even of the capacity to pay.

Yet, for the first time in 30 years after these rulings, the State is asserting not just the legal right to flout its own legislation, but also to exclude workers of the largest public works programme in the world from the only protection unorganised workers have from exploitation. How is this happening?

Betraying its deeply anti-labour attitude, the Centre first sought to legally establish that "implementation of the NREGA is not restrained by provisions of the Minimum Wages Act". Thus, when the Central Employment Guarantee Council (CEGC), the statutory body to oversee the implementation of NREGA, made an emergency recommendation to rescind the notification and reconcile NREGA wage rates with the Minimum Wages Act, the Ministry of Rural Development responded, "This is not feasible. The wage rates fixed under Section 6(1) of the Act are distinct from the minimum wages. The provisions of the Act have to be respected."

Within six months of the notification, the AP High Court suspended the notification and decreed that AP's minimum wage must be paid under the NREGA. Citing a court order and flagging contempt in case of inaction, the AP government again asked the Centre to notify the prevailing minimum wage rate under NREGA. Faced with legal fait accompli, the Centre shifted its stand to assert that while minimum wages must be paid under the NREGA, the onus is on the state government (AP) as the employer, with the Centre obligated only to reimburse the amount notified by it!

State governments argue that this is a central scheme and as per Section 22(1)(a), the central government shall meet the cost required for payment of wages for unskilled manual work under the scheme. Therefore, they will only pay the wage rate set and paid by the central government, even if the prevailing minimum wage in the state is more.

As per documents obtained under the RTI, the Union labour ministry is unequivocal: "There cannot be a wage rate less than the minimum wage rate in any circumstances." The Union law ministry is similarly unambiguous: as per the provisions of the Act, the Centre must bear the full cost of wages paid under NREGA. There is no quandary - the Centre must bear the cost of the prevailing state minimum wages for work done under NREGA. Yet, the one-and-a half-year old stalemate and contempt of an existing high court order continues.

Meanwhile, with wages frozen at Rs 100 and falling nominal value, this game weighs heavy on daily wage workers on the edge of subsistence. If either the state or central governments were less callous, they would ensure that the workers were paid their just wages even while the dispute was being worked out. State governments should pay the prevailing minimum wage rate from the central funds released under NREGA since they have both the Constitution and Supreme Court on their side. The Centre could theoretically withhold funding, but is unlikely to, given the adverse political fallout and untenable legal position.
 
This callousness is starkly transparent. This year, MPs raised their own salaries threefold; dearness allowance for the bureaucracy was hiked from 35 to 45 per cent. In the 2009-10 budget, the corporate sector got direct subsidies of over Rs 500,000 crore (4), equivalent to almost 80 per cent of aggregate tax collection.

A legitimate question is why would the government sabotage its own showpiece legislation? NREGA epitomises an emerging class of rights-based social policy legislation that envisions a large redistributive State, grassroots political activism for State accountability and is firmly on the Far Left of the ideological divide.

However, there are clear signs that the government wants to retreat for greater privatisation in all spheres of the economy. Union Finance Minister Pranab Mukherjee, in his 2010-11 budget speech, said, "With development and economic reforms, the focus of economic activity has shifted towards the non-governmental actors, bringing into sharper focus the role of government as an enabler. An enabling government does not try to deliver directly to the citizens everything that they need."

Thus, in keeping with the expressed ideology, the government is actively pushing citizens towards becoming a consumer in a market economy as opposed to citizens in a political framework - as denoted by subsidy cash transfers in lieu of the State itself providing affordable services to the citizen. This is most obvious in the current struggle between the Right to Food Campaign and the Planning Commission, with the latter advocating the dismantling of the Public Distribution System (PDS) in favour of direct cash transfers to use for purchase of grain in the market.

Official efforts in this direction are impeded by the immense grassroots popularity of the NREGA, evident not just in UPA's electoral triumph in its second consecutive term, but also by the groundswell of mobilisation for the proper implementation of the Act. Even the most neoliberal of its critics attribute the relatively moderate effects of the global financial meltdown on India on the resilient rural economy, attributable in part to the NREGA wage transfers. In the face of such popularity, the government of the day has little choice but to steadily undermine the programme itself as opposed to scrapping it outright.

Privatisation of community resources and delivery of essential services is antithetical to the growing rights-based movement in the country. In the ongoing discussion on the food security bill, the Planning Commission is advocating cash transfer of the subsidy amount, around Rs 80 per month for one individual. With cash transfers set at or below subsistence level and privatisation of service delivery, large sections of the populace will be systematically denied the opportunity to participate in the country's economy - except as low-end consumers.

Democracy, the right to participate in the country's functioning, cannot be degraded into mere consumption, especially not in a poor country that claims to be the world's largest democracy. Conversely, rights-based movements are fundamental to democracy - they provide a platform for people to engage with the State and thus participate in their own governance.

There is another serious implication. By moving citizens from entitlement to a cash dole, the government is creating grounds for the ultimate pruning of the programme itself. Soon, some lobbies can be up in arms about the rising fiscal deficit and the need to 'rationalise' government spending. Cash transfers will be deemed a fiscal drain, and will be subject to erroneous targeting, delinked from inflation, made conditional, essentially, inverting the State-citizen relationship. Ironically, it will hold the citizen accountable to the State instead of the other way round as is imperative in a democracy.

The situation has come to a head. Almost 77 per cent (836 million) of India's population lives on less than Rs 20 per day and we are home to the largest number of hungry people in the world. At the same time, the number of billionaires in India has gone up from 27 in 2008 to 69 in 2010; the combined wealth of the richest 40 accounts for almost a quarter of our GDP.

No society can sustain these levels of inequality without starting to fragment. It is the duty of the State to ensure a minimal level of human dignity for its populace. Instead, by throwing our poorest to the ravages of a market economy, we have commoditised them. People's groups across the country are resisting peacefully and democratically in an effort to defend their legitimate right to sovereignty, participation and due process. Yet, the State has remained callously indifferent. It is obvious that some of this peaceful dissent might erupt in violence in an effort to amplify its voice and engage with the State. We see this already in the growing Maoist influence, now covering one-third of the country. If we hold the ideals of a democratic State dear, we must learn to ensure that the State represents our collective good intentions, instead of the narrow interests of a few.    

The writer is associated with Mazdoor Kisan Shakti Sanghthan (MKSS), Rajasthan, and National Campaign for People's Right to Information (NCPRI)

References

1. The dharna was lifted after the Rajasthan state government acceded to the worker's demands on five issues, principal among which was linking the state's minimum wage with inflation. On the demand from the Centre regarding the payment of minimum wage under NREGA, the dharna was lifted on assurance of action derived from a letter by Sonia Gandhi to the prime minister. In its last press release, the workers noted, "With the endorsement of our stand by Mrs Gandhi, Chairperson, NAC and UPA, we are assured that the rights of the workers will be respected, and the central government will urgently issue necessary orders in line with suggestions made by Mrs Gandhi." However, Centre's action on this demand is still pending

2. For states already paying more than Rs 100, the central government capped wages at the wage rate as of Dec 31, 2008.

3. A week later (November 11, 2010) in the absence of any favourable response by the executive, the chairperson of UPA wrote to  the prime minister quoting the same paragraph from the chief minister's letter to highlight the urgency of the matter.

4. Budget 2009-2010, Table 12 (Revenue Foregone in financial years 2008-09 and 2009-10)