NREG, which has just completed four years in existence, was universally hailed as making a difference to the remnants of the ossified social structure of India?s villages. I saw for the first time in the chaupal the residents of Kabirwada speaking up. That role is still there, although it seems that the political system has caught up with the money involved and that the perennial struggle in public programmes between outcomes, transparency and leakages is becoming more serious. Yet, it would be unwise to ignore the larger context of rural employment trends. After near stagnation of employment until 2000, the following five years saw a return to the trend growth of rural employment of around 2% annually, a simultaneous increase in the casualisation of the workforce and a rise in real wages. These are processes that will continue with the fast growth of the economy and the diversification and commercialisation of agriculture. The real question is whether they will be of a benign nature, with labour being released from agriculture into productive employment elsewhere, or whether they will be of a cruel nature, with at best a slow improvement in wages and maybe immiseration. NREG, despite its inefficiencies, sets a floor to all this, and beyond it, policies will make a difference.

It is not being recognised that India is urbanising faster, that its agriculture is diversifying and that it has a widespread locus of markets and a distinct possibility of growth in a rural-urban continuum. If this is recognised, perspectives will be different and NREG?s role clearer.

IFPRI and other grain-oriented think tanks have projected huge grain demand in India of 278 to 370 million tonne, and with Chinese feed coefficients 375 to 616 million tonne. They do not capture the diversification of the food basket away from grains as incomes and food demand rise. I have shown that given the diversification away from grains, projections should be lower for cereals and foodgrains as compared to the IFPRI and other normative projections and that the non-foodgrain projections should be much higher.

Also, India is urbanising faster. The United Nations recently reproduced a version of the Krugman model of urbanisation as estimated for India, and it argues that the rural population share will go down to 58% in 2020 and 55% in 2025. This compares with the official projection of 68% in 2020 and 64% in 2025.

The rural population in 2020 is, therefore, projected to be 738 million out of the total population of 1.273 billion.

The Eleventh Plan has projected that the rural labour force will be 45.7% by 2016-17, the last year for which they have given projections. If we assume a participation rate of 46%, we get a figure of 340 million as the labour force. This is much lower than the figure of 404 million estimated by some scholars on account of a much lower estimate of urbanisation. The upshot of all this is that rural and agricultural employment will rise much more slowly, and in fact agricultural employment will fall and the big jobs will come in the larger villages and smaller towns. As labour moves away from agriculture wages, standards of living will rise faster. This must be our aim and NREG has to be a part of that goal, rather than some distorted vision wrongly parodying Gandhiji of the poor stuck in poverty clinging to NREG.

We must believe and work for the fact that in the next decade, Indian agriculture will meet the requirements of food security and rapidly diversify itself. It will function in a rural-urban continuum, with rapid developments of markets and shifting of working populations from villages to linked small towns and also from crop production to value-added activities. Employment growth will be high in these activities chasing a high rate of economic growth. All this will happen if the institutional structure gives the appropriate signals in terms of technology and organisational support and the necessary economic support in terms of pricing and infrastructure.

Otherwise there will be rising food prices chasing few goods and immiserisation.

In addition, there are two big question marks that relate to non-renewable resources, particularly land and water. In the nineties, arable area stopped growing, so the land constraint became far more severe. Growth was thus seen as needing to be sourced from double cropping and yields. The projections assume a vastly improved performance on the land and water management frontiers. It needs to be remembered that the balance ground water reserves is now more limited. A very dramatic effort will be needed to harvest and carefully use the available water. Land use planning is also very important. NREG has to be apart of this process of crossing the hump. We desperately need an employment strategy.

?The author is a former Union minister