Why some economists are worried about the fate of NREGA under PM Modi govt

What compelled a group of leading economists from India and abroad to shoot a letter to Prime Minister Narendra Modi regarding the government’s job scheme – the National Rural Employment Guarantee Act or NREGA? Is it to speak out against the government’s desperation to throttle the scheme or did the economists sense any ulterior motive behind the government’s move? A section of prominent Indian economists working out of the country or based abroad have expressed deep concern over the Centre’s decision to restrict the employment scheme to ‘the most backward districts’, that is 200 districts only, and reduce the labour-material ratio from 60:40 to 51:49. They see it as an agenda to throttle the scheme meant for the poorest of poor and gradually bring it to an end, allegedly under pressure from ‘lobbies with vested interests’. The group has reacted sharply to the government’s decision, and have stated that capping the job scheme to 200 districts, restricting state spend and revising the labour-material ratio would dilute the benefits of the scheme. “Restricting the scheme to just 200 districts goes against the basic premise of the Act,” the group has argued. [caption id=“attachment_1760613” align=“alignleft” width=“380”]  Labourers sit in front of a closed shop in Delhi. Reuters.[/caption] “The UPA-led government explicitly killed this scheme by reducing budgetary allocation in a cynical way, which also let to huge arrears in wage payments to workers. Now, the present NDA government has gone a step ahead and is on way to openly extinguish the scheme. By restricting the scheme to only 200 most backward districts, the universal right for all households to livelihood would get infringed,” Jayati Ghosh, professor of Economics, Jawaharlal Nehru University, told Firstpost. She is one of the signatories of the letter to the PM. “Despite numerous hurdles, the NREGA has achieved significant results. At a relatively small cost, which is only 0.3% of India’s GDP, about 50 million households are getting some employment at NREGA worksites every year. Moreover, a majority of NREGA workers are women, and close to half are Dalits or Adivasis. Despite the issue of corruption, a large body of research shows that the scheme has wide-ranging social benefits, including the creation of productive assets,” she said. Badal Saroj, Central Committee member of CPI (M), said: “It was basically an idea of the Left that went on to become UPA-I’s flagship programme. We stressed on employment generation in rural areas, and later the World Bank too praised this scheme. The justification of the most backward districts given by the Centre now is ridiculous. Even Gurgaon district that boasts of the Millennium City has immense poverty. Can there be only 200 poor districts out of 675 in India? It’s a conspiracy of the NDA government to end this scheme, so that corporate world can be benefitted.” “It’s a conspiracy to reduce the bargaining power of the workers,” quipped Ghosh. Even though NREGA too is plagued by corruption, the economists as well as the Left parties have smelt conspiracy in the government’s decision. The economists suggest that the corruption in NREGA could be checked with a proper monitoring mechanism. “Leakages alone can’t be the reason to restrict the scheme. The real agenda behind the decision is to reduce the size of the scheme, which is a bad signal. Instead, the government should improve the delivery mechanism of the system through bank transfer of wages, etc,” said Anirban Kar, associate professor, Delhi School of Economics, another signatory. Ghosh argues, “The scheme is bound to do much better if leakages can be plugged. Why there is no proper monitoring system and the government doesn’t focus on this, rather than restricting its size?” In response to the letter written to the PM, the Union Minister for Rural Development, Nitin Gadkari recently in Nagpur justified the Centre’s decision to restrict the job scheme to 200 districts and amend the labour-material ratio to 51:49 saying, “In many irrigated states like the Punjab and Haryana, lack of labourers for farming operations has become a major problem. They have to get labourers from Bihar. So, we have thought of implementing the scheme more intensively where people have no jobs available in the ‘most backward and needy’ districts”. “This is a clear conspiracy of the BJP, which is under the pressure from the rich farmers, who want to exploit labourers by paying less than the wages fixed by the government. NREGS has minimized exploitation of farm labourers, as they got job under the scheme. Increase in material component from 40% to 49% would lead to more corruption,” added Saroj. Economist Jean Dreze, who participated in policy-making when the UPA was in power, told a TV channel that the letter reflected the concerns of a wide spectrum of economists without any political bias. “There have been a series of dilutions of the Act even before this government came to power…the freezing of wages, the withdrawal of right to compensation, bringing back machines, proposal to restrict the scheme. The letter shows our concern.” “I personally feel that due to rise in agricultural wages in recent years, a section of rich and middle level farmers, who perceived the rise due to NREGA, have lobbied to curb the scheme, so that they can be benefitted. This is wrong, as no study has proved that due to this scheme farm wages have gone up,” added Kar. In July, Rajasthan Chief Minister Vasundhara Raje’s suggestion to the Centre to change NREGA came under heavy attack from social activists and NGOs. The group of economists includes Jean Dreze, who spearheaded the movement to get the scheme in place, Prof Pranab Bardhan of University of California, Berkley, Abhijit Sen, former member Planning Commission, Vijay Vyas, former member of Economic Advisory Council to the PM, and a host of academicians from London School of Economics, Ivy League universities, Delhi School of Economics, Indian Statistical Institute, IIT-D, and prestigious centres of economic studies in India. The National Rural Employment Guarantee Scheme bill was passed by the Parliament on August 23, 2005 and the law was enacted in February 2006. The Act promised guaranteed employment for 100 days to one member of a rural household and mandated a daily wage of Rs 100. Despite partial success, NREGA has received massive criticism due to the corruption in its implementation and operation. Some of the welfare economists and grassroots activists who championed NREGA openly criticised it. At one point of time, Dreze and social activist Aruna Roy mentioned that the UPA government, instead of ensuring NREGA’s proper implementation, had been watering down the social welfare elements by converging it with other government programmes. Several studies, including government’s own, acknowledged widespread corruption in NREGA, like diverging of funds. There is also caste-based discrimination and lack of political coordination between the Centre and state and local bodies.