 "The NAC of getting it wrong: Back to garibi hatao days?")
One by one, the National Advisory Council’s (NAC’s) efforts to craft an entitlement society is coming under increasing attack. Not from the BJP, but intellectuals and politicians who may have no particular axe to grind.
Whether it is the flagship National Rural Employment Guarantee Act (NREGA), the proposed Food Security Bill, or the Communal Violence Bill, the NAC’s vision and law drafting capabilities are coming under fire. In fact, many experts think NAC’s suggestions may do more harm than good.
NREGA, which is the only social security legislation that has already been implemented by the UPA, is now increasingly seen as a badly designed scheme that is not only exacerbating wage pressures in rural and urban areas, but also creating a permanent army of the unemployed.
A few weeks ago, Aditya Birla Group chief economist Ajit Ranade, writing in Business Standard , said that despite accounting for only 2 percent of work, NREGA had pushed up wages by 30-100 percent across sectors.
“Even though employment creation is only 2 percent, the number of NREGS job card-holders is 50 percent of the workforce. Even highly urbanised states like Maharashtra and Tamil Nadu have a high number of NREGS card-holders. The scheme was supposed to be an unemployment insurance proxy. But it has become an entitlement scheme, and is now manifesting as a distortionary labour market intervention,” says Ranade.
[caption id=“attachment_46795” align=“alignleft” width=“380” caption=“he NAC is basically going back to the old Congress populism of Indira Gandhi’s garibi hatao days - which was a failure and thoroughly discredited. Reuters”]
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Ila Patnaik, writing in The Indian Express , had an even more serious problem with NREGA. And it had little to do with how badly it was implemented. According to her, NREGA will make the problem of structural unemployment worse, where there are jobs available but the unemployed are still unemployable due to a lack of skills.
Says Patnaik: “NREGA has the potential of making India’s structural unemployment problem a persistent one by taking away the incentive to improve skills and to migrate. In the long-run, no country have been able to become advanced without large-scale skills upgrade, migration and urbanisation.” In short, the plan to buy votes with NREGA doles is actually going to do long-term damage.
On Friday, newspaper readers discovered a new critic of the NAC’s Food Security Bill in Agriculture Minister Sharad Pawar. According to reports, Pawar has told Prime Minister Manmohan Singh that the Bill would essentially be repeating the “blunders of the past.”
Pawar said: “I feel that procuring two-thirds of the marketable surplus (of grain) will take us to a situation akin to 1972-73 when the government had taken over the grain trade which had proven to be a grave mistake. We need to learn important lessons and not repeat the blunders of the past.”
While there may be some political posturing in this, what Pawar is saying is commonsense. If NAC wants to feed three-quarters of the population through the moribund public distribution system, it is tantamount to taking over the grain trade. This, Firstpost believes, will destroy and distort the grain market. Only jholawalas with no idea about how the market works would have suggested such an idea.
Putting the whole picture together, what emerges is this: the NAC is basically going back to the old Congress populism of Indira Gandhi’s garibi hatao days - which was a failure and thoroughly discredited.
The Congress under Manmohan Singh and Sonia Gandhi’s remote control appears to be undoing the entire legacy of the 1991-92 economic liberalisation which not only kickstarted growth but weaned Indians away from its mai-baap relationship with the state. Liberalisation’s 20th anniversary comes due next week, but the Congress is no mood to celebrate. Manmohan Singh (circa 2011) also seems a completely different man from the one who put India on the global economic map 20 years ago.
This leads columnist Pratap Bhanu Mehta to wonder what is wrong with the Congress: “The Congress party is doggedly determined to undo the major gains of economic reform…This government has empowered an intellectual climate where all those constricted psychological inhibitions (of the pre-liberalisation era) are coming back: a total lack of ambition, a distrust of the people, and overweening faith in the state.”
The other day, Finance Minister Pranab Mukherjee assured newspaper editors that he had not given up on reforms. And that there was no policy paralysis.
One hopes he is right. Or else, Manmohan Singh, when he completes his tenure, will leave the country in the same shape he found it in 20 years ago in 1991: bankrupt, both financially and in terms of fresh ideas.