1. Fattening MGNREGA is a national shame, not pride

Fattening MGNREGA is a national shame, not pride

Prime Minister Narendra Modi must remember that he has promised growth and more jobs to the people, not unemployment allowance and subsidies

By: | New Delhi | Published: February 5, 2016 7:37 PM

Prime Minister Narendra Modi must remember that he has promised growth and more jobs to the people, not unemployment allowance and subsidies (PTI)

It is completely out of place for a country – which is the fastest growing economy in the world and is targeting a growth rate of 8-10% – to spend Rs 40,000 crore a year on a scheme whose primary objective is providing unemployment allowance to people

The unemployment allowance scheme of the Congress-led UPA-1 government, started on February 2, 2006, the Mahatma Gandhi National Rural Employment Guarantee scheme, and which is recognised more by the name of the Act under which it has been brought, MGNREGA, has suddenly turned into “nation’s pride”, from being one of the symbols of the UPA’s corrupt dole politics.

On the completion of ten years of the scheme, the NDA government is now showering all kinds of praise on this one of the UPA’s so-called game-changer schemes, inviting criticism from the Congress for a change in perception to reap political benefits. The Congress party, obviously, has reasons to point fingers at the NDA for this, as Prime Minister Narendra Modi himself had earlier called MGNREGA a living monument of the Congress party’s failure.

Of course, the ruling NDA dispensation can claim that the scheme today has been transformed and is now efficiently run to be called “nation’s pride”, but the fact remains that MGNREGA, mainly, is a scheme for those not having any employment.

So, what does the BJP-led NDA government wants to tell people by giving MGNREGA such an exalted status? That it is not sure of generating proper employment for people, which it has promised? Or, is it that the government wants to keep this window open in the coming years also, to infuse money into rural areas to tackle rural distress due to monsoon failures like the ones in the last two years instead of tough agricultural reforms? Or, with one-third of its current tenure already ending, the NDA government is realising that it is good to launch Make-in-India, Start-up India, Digital India, etc, but it is equally important to keep the subsidy and dole politics alive, which it rejected in the 2014 Lok Sabha elections and promised a growth-led model?

Whatever be the reason, Finance Minister Arun Jaitley has said that the government is committed to strengthen MGNREGA, to which he has allocated Rs 37,000 crore in the current financial year—the highest-ever budgetary support to the scheme. In the coming years, he has also promised more funds to the scheme, as it is a demand-driven one. The argument is that, in the wake of the slowdown in the global economy, India has to boost public spending in rural areas to boost growth prospects, and a “transformed” MGNREGA is the first choice of the government to do this because of the steps taken to revive the scheme—timely release of funds to states to provide work on demand, an electronic fund management system, consistent coordination between banks and post offices, besides monitoring of pendency of payments. From April 1, all wage payments to MGNREGA workers will be done through Direct Benefits Transfer. Currently, 94% of wage payments are directly deposited in the accounts of beneficiaries. An additional 50 days of employment in nine drought-affected states through MGNREGA is also on the list of the revival claims.

Tracing the 10-year journey of MGNREGA, the rural development ministry in its report has interestingly said: “It is remarkable that, as the implementation of the MGNREG Act enters the 10th year, independent research evaluations equivocally report that, despite implementation gaps, the Mahatma Gandhi NREGA has continued to achieve several milestones in the collective Indian journey towards grounding the values of equality and social justice as enshrined in the Constitution of India.” Since the start of the scheme, Rs 3,13,844.55 crore has been spent on it, and of this, 71% has been spent on wage payments to workers.

Just for the record here, the mandate of the scheme has been to enhance livelihood security of rural households “by providing at least 100 days of guaranteed wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work.” In case employment is not provided within 15 days from the date of registration of the demand for work or the date from which work has been demanded in case of advance applications—whichever is later—the worker is legally entitled to a daily unemployment allowance. The central government bears the entire cost of wages of manual unskilled workers, and 75% of the cost of material and wages of skilled and semi-skilled workers; the remaining part is borne by the states, including the unemployment allowance.

At present, 13 crore households have MGNREGA job cards with about 28 crore workers—over the past 10 years, 5 crore households have been provided employment every year—and the average wage earned per beneficiary has gone up from Rs 65 per person-day in 2006 to more than Rs 150 in different states now. However, India’s big problem has been that of not enough jobs being created, and though it is not a good idea to rely on MGNREGA for job creation, even at its peak it created just 1.2 crore full-time jobs, based on 250 days of work per person per year—just 2-3% of total employment in the country.

The real issue here is that the industry is not able to create the required number of jobs. According to Crisil, the employment elasticity of industry has fallen from 0.78 in 1999-2004 to 0.57 in 2004-11. This means government policy has to focus on stimulating employment-intensive sectors. If the situation remains the way it is today, more people will have to rely on farm jobs. Now, should the government try to address this problem through MGNREGA instead of relying on generating more employment in manufacturing and services sectors? Even if this might appear attractive politically, it is a bad policy.

Going ahead, however, MGNREGA is all set to be made the core of all centrally-sponsored schemes (CSS). The chief minster’s panel of the NITI Aayog on restructuring of the CSS has suggested that social schemes in the National Development Agenda should be classified as “Core” and “Optional”. The core schemes would have compulsory participation by states, whereas amongst the optional schemes, states will be allowed to choose some or all of them.

The core schemes will include MGNREGA as well as schemes for social inclusion. “Among the Core schemes, MGNREGA + Scheme for Social Inclusion would be ‘the Core of the Core’ and shall be the first charge on funds available for the National Development Agenda,” the panel has recommended and the upcoming Budget on February 29 is likely to announce this model.

Though there is no doubt that PM Modi has done a good job by adopting UPA’s other game-changer, Aadhaar, to curb leakages and targeted delivery of the government’s subsidy and entitlements delivery, but he should be extremely cautious in handling the other two, MGNREGA and Food Security Act. It will be sad to see the NDA policies turning into a carbon copy of the UPA in doling out money from the government exchequer in the name of helping the poor.

MGNREGA is an unemployment allowance scheme and its use should be restricted to as minimum as possible. The Food Security Act, too, needs to be applied judiciously. The government’s job should be to focus on providing employment, not unemployment allowances (direct or indirect) through subsidies and entitlements.

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