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Funds for social schemes seem to be vanishing

In his general budget for 2011-12, finance minister Pranab Mukherjee has announced an increase in allocation for the Mahatama Gandhi National Rural Employment Guarantee Act (NREGA) of Rs10,000 crore to Rs58,000 crore.

The finance minister has proposed an identical hike for the Bharat Nirman scheme, and also proposed to give Rs3000 core to the national agricultural development board, NABARD.

Mukherjee also said the government has decided to index the wage rates notified under the NREGA for agricultural labour to the consumer price index. He said that this comes in pursuance of earlier budget announcement to provide a real wage of Rs100 per day.

The enhanced wage rates have been notified by the ministry of rural development in January this year. The finance minister claims that this step has resulted in significant enhancement of wages for the beneficiaries across the country.

While the finance minister has tried to put a positive spin on these allocations and enhanced delivery schemes, they are sure to disappoint watchers of the social sector.

In his last budget for 2010-11, Mukherjee had announced a Rs1,000 crore increase in the allocation for the NREGA, at Rs40,100 crore against Rs39,100 crore allocated in the previous budget, Even then, he had said that as rural infrastructure development is a top priority for the government, as it banks on the perceived success of the NREGA.

But this hike was disappointing enough; a much larger increase was expected.

In the previous year (2009-10), the scheme had received a tremendous hike of 144 per cent over 2008-2009, from Rs16,000 crore to Rs39,100 crore. Last year's hike of just 2.5 per cent was blamed on the global downturn.

But how will Mukherjee answer his critics this time, when the Indian economy is booming, with unprecedented tax collections?

Leaky and ineffective

Last week, a parliamentary committee expressed concern over the quality of assets created under the NREGA, saying they were by and large sub-standard, non-durable and non-productive.

The observations tabled in the Lok Sabha by the PAC, headed by senior BJP leader Murli Manohar Joshi, formed to look into the implementation of NREGA.

The rural development ministry replied to this in its action taken report that it was working on convergence of various projects/assets under NREGA but this activity was yet to fructify, making it premature to assess the impact of the initiatives in creating durable and tangible assets.

The PAC report said it was "utterly dissatisfied" to note that the action taken reply of the ministry was "conspicuously silent" with regards to the steps taken for provision of facilities like drinking water, medical aid, etc at work sites in 14 states.

On the issue of payment of wages through banks and post offices, the PAC report pulled up the ministry for "being silent" with regard to action taken on its recommendation that no minimum account balances be stipulated by banks and post offices in respect of NREGA schemes.

Intra-government tussles

There are signs that even the executive arm of the government is at odds with the political arm on NREGA. Early this year, Prime Minister Manmohan Singh had shot down the Sonia Gandhi-headed National Advisory Council's recommendation that NREGA workers be paid the minimum wages set by various states.

The prime minister, in his 31 December letter to the UPA chairperson, clarified that the wage rate fixed by the central government would be indexed to inflation but not linked to the Minimum Wage Act.

Gandhi, as NACouncil chairperson, had written to Singh saying that the wages of labourers should be linked to the consumer price index to ensure that they are protected against the inflation. She had said that the payment of minimum wages by the states as prescribed under the Minimum Wages Act should be ensured under the NREGA.

In his response, Manmohan Singh explained that the minimum Wages Act and NREGA were two separate dispensations, providing for different wages. Under the NREGA, a labourer is entitled to Rs100 a day, while under the Minimum Wages Act, the minimum wages are fixed by the states and these vary.

While explaining the situation, the prime minister attempted to note that proper indexing was being done for various categories of labour, like industrial and agriculture labourers, as their consumption baskets are different.

Some officials pointed out that the minimum wage under NREGA was fixed as Rs100 as on 1 January 2009, irrespective of what the states were paying under Minimum Wages Act. This was more than what was then being paid by states, they said.

Subsequently some states increased the wages beyond Rs100, leading to a new situation which was discussed by the NAC, prompting Sonia Gandhi to write to Manmohan Singh.

It seems clear that while the government is making some moves towards making its social schemes more effective, the Gandhi-led NAC is bent on continuing with discredited systems for the delivery of social benefits. The loser, of course, is the much-touted though nameless and faceless 'aam admi'.