MGNREGA put jholawala economists and suit-boot economists—thanks to Rahul Gandhi for the expression—in a bitter confrontation for long. The former called it a potential game-changer in rural economy while the latter pooh-poohed it as a colossal waste of public money. Prime Minister Narendra Modi appeared to hate it so much that in February last year he ridiculed it as the living example of Congress’s failure over six decades. The debate is over finally and the jholawalas have won.
How? On the conclusion of a decade of the scheme, the government called its achievements a cause of national pride and celebration. The fact that it has been consistently allotting additional funds for the implementation of MGNREGA – in 2015-16 it was above Rs 40,000 crore – is testimony to the tacit acknowledgment that the scheme is neither bad politics nor bad economics. It has promised to strengthen it with better targeting and better plugging of leakages.
The problem with suit-boot types is their economics entirely misreads concerns of people and ground level realities. They are obsessed with wealth creation and totally dismissive of the need for its equitable distribution without which there could be social disruptions with heavy political consequences. They would keep crying foul over social sector spending for the poor (about two percent) while choosing to ignore that the subsidy for the rich accounts for nearly seven percent of the GDP. The only difference is subsidy goes by another name, incentive. The prime minister hinted at the hypocrisy recently when he said incentives to corporate tax-payers amounted to Rs 62,000 but it was never called subsidy.
Governments have to balance economics and politics – it cannot be one at the cost of the other like the suit-boot economists would prefer. If the one led by Modi is following the UPA, it’s only being pragmatic. MGNREGA was the victim of the same hypocrisy. Its critics failed to appreciate that it was meant to be a safety net for the rural poor, not dole or handout as they would love to describe it. It was aimed at providing income and livelihood to the rural poor during the lean seasons and stopping them from migrating to urban centres, thus putting pressure on the latter, besides helping build rural infrastructure.
As an interventionist programme it has been a success despite the complaint of leakages, fraud beneficiaries, lop-sided implementation, poor targeting and the allegation that it has distorted the wage structure in rural areas and made agriculture expensive. The critics would like to ignore the fact that it has improved the purchasing power in rural households and this impacted their quality of life. The best aspect of it is it has been an effective bulwark against the general mood of hopelessness among the poor in times of economic distress.
It is imperative now that the government expands it to urban areas, if not in the exact form maybe in some other. As it goes ahead with encouraging businesses of all sizes and tries to be business-friendly through drastic changes in labour laws, we are going to see a lot of job instability. There will be more jobs but all disposable. Employees will be at the mercy of the employer and given that only 10 percent of new ventures become a success chances are there will be a lot of temporary, insecure jobs. There will be too many job-seekers in the market with no bargaining power with their prospective employers. The older and the higher paid you are, the great are the chances of you staying unemployed for a longer time.
Where does the new scenario land you if you are 35 plus with the responsibility of a family and otherwise? Who takes care of you in the period you are jobless? The cheer-leaders of start-ups rarely and labour law changes hardly see things from the employees’ perspective. They also discount the fact that courts are not really an option for them. It’s always an unequal fight.
A safety net for the period is what the government can come up with. It is possible only when the employees’ perspective is built into policy. The jholawala ideology works better here, not the suit-boot ideology. Why cannot the government apply itself to something akin to NREGA for the jobless youth? Of course, it would require a lot of money but it’s always politically wise to not have too many ready-to-revolt young people around.