Leading economists have urged Prime Minister Narendra Modi to not dilute the Mahatma Gandhi National Rural Employment Guarantee Act (NREGA) as the scheme provides economic security to millions of poor and helps create productive assets.
“We are writing to express our deep concern about the future of India’s NREGA,” said the letter to the Prime Minister that was written by 28 leading economists Jean Dreze, a member of the erstwhile National Advisory Council and Abhijit Sen, former member of the Planning Commission.
The letter, which was written in the backdrop of the NDA government’s plans to re-work the UPA’s flagship scheme, argues that capping it to 200 districts, restricting state spend and revising the labour-material ratio would dilute its benefits.
Pointing out that the scheme, which was started in 2005 with cross-party support has achieved significant results, the economists have said, “At a relatively small cost (currently 0.3 per cent of India’s GDP), about 50 million households are getting some employment at NREGA worksites every year. A majority of NREGA workers are women, and close to half are Dalits or Adivasis. A large body of research shows that the NREGA has wide-ranging social benefits, including the creation of productive assets.”
The economists have also raised concerns over the NDA government’s plans to restrict the ambit of the scheme to just the country’s 200 poorest districts, arguing that it goes against the basic premise of the Act.
The economists have also argued that wages under the scheme have been frozen in real terms while delays in payments have further depleted their real value. “The Act’s initial provisions for compensation in the event of delayed payments have been removed. The labour-material ratio is sought to be reduced from 60:40 to 51:49 without any evidence that this would raise the productivity of NREGA works,” the letter has stated.
Further, they have noted that by imposing caps on NREGA expenditure on state governments the Centre is undermining the principle of work on demand.
The signatories to the letter include Dilip Abreu, professor of economics, Princeton University, Pranab Bardhan, emeritus professor of economics, University of California Berkeley, Anirban Kar , associate professor, Delhi School of Economics and Jayati Ghosh, professor of economics, Jawaharlal Nehru University.