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Telling the right reform from the wrong

Moves to dilute labour-material ratio in MGNREGA and focus exclusively on select backward blocks will adversely impact rural poor.

The reduction in the labour share means the potential employment available will be reduced. The reduction in the labour share means the potential employment available will be reduced.

Moves to dilute labour-material ratio in MGNREGA and focus exclusively on select backward blocks will adversely impact rural poor.

Before the general elections, free-market fundamentalists had lobbied fiercely to reshape so-called wasteful social-sector expenditures. Primary among their targets was the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), which, according to them, should become an unconditional cash transfer scheme. Post-elections, the late Gopinath Munde’s espousal of the MGNREGA went some way to allay apprehensions of a fundamental rejig, but unfortunately he passed away soon after.

In June, the chief minister of Rajasthan wanted the MGNREGA changed into a scheme. Her proposal was categorically rejected by the Union minister for rural development, Nitin Gadkari. However, more recently, there have been proposals that are cause for immense concern. Among these is a dilution of the labour-material ratio to 51:49, as against 60:40 mandated in the act. Another official communiquè from the ministry capped budgetary allocations under the MGNREGA to states, so as to exclusively focus on 2,500 most backward blocks. Both moves are inimical to the interests of the rural, Adivasi poor and should be rolled back.

The decision to focus on 2,500 most backward blocks was taken to proactively target the most precarious geographies. In such blocks, a dedicated multi-disciplinary team of professionals is to be placed at custers of about 15 panchayats to mobilise work demand, plan and implement works. This cluster facilitation team (CFT) will plug the critical gap in the effective delivery of the MGNREGA — human resources. The selection of 2,500 blocks is on the basis of backwardness criteria and is a welcome move to build capacities of gram panchayats, which had been identified as a major bottleneck in the efficacy of the MGNREGA. The CFT has the merit of moving away from a target-driven, top-down approach to a bottom-up, demand-driven strategy. However, to restrict financial allocations to states in the guise of such focus is to violate the act. Those in need of work may exist anywhere in rural India and should get work on demand, which is the differentia specifica of the MGNREGA. It also negates the principle of federalism.

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It is also puzzling that there seems to be a move to increase the material component, when material costs have not been more than 27 per cent on average since 2011-12. More, the reduction in labour share means that, at current spending levels, potential employment available will be reduced by several crore person-days. Or, to maintain employment at the current low levels, the ministry will need to allocate more money. Estimates cited in reports peg this additional amount at around Rs 8,000 crore. We know that the demand for work expressed in the MGNREGA official data is a gross under-representation of actual demand. Thus, if employment demand were to increase, greater increases in overall expenditure would be necessitated with a higher material ratio. Given that the government is trying to lower the fiscal burden, this is inexplicable and indefensible.

An increase in the material component will also mean an entry of contractors and machinery, bringing corruption of a very high magnitude. The MGNREGA is a major step to strengthen grassroots democracy by giving unprecedented decision-making power to gram sabhas and panchayats. The proposal to lower the labour to material ratio stems partly from an ignorance of the MGNREGA’s many achievements and from ideological blinkers, chiefly the notion that earthen work under the scheme is kutcha (temporary) and unskilled or, worse, de-skilling. This itself leads to misconceptions that the scheme just provides doles rather than sustainably pulling the poor out of poverty. Ergo, a higher material intensity will allow for the creation of real assets that are “permanent”.

This view shows deep ignorance of the tradition of earthen water-harvesting — the johads and talabs of Rajasthan, the ahars and pokhars of eastern India, the keres of Karnataka or the zabo or cheo-ozihi of Nagaland, which have helped combat drought, provide irrigation and contain flood damage in India for centuries. As the experience of watershed development demonstrates, earthen water-harvesting and soil conservation require detailed planning and high execution skills. Most rural, especially tribal, migrant families own land and are “landed labourers”, that is, small and marginal farmers, forced to migrate because of unproductive land holdings. Leveraging the MGNREGA on a watershed approach, such farmers can and have been turned around to become productive contributors to growth.


Let us look at some examples: 43 of the153 households in Kathdungri village in Muribahal block of Bolangir district, a distress-migration hotspot of western Odisha, were migrants in 2011. Village wage-seeker organisations, civil society, PRIs and the administration planned and executed earthen water-harvesting structures and ensured wages were paid on time. No one migrates from Kathdungri now. Farmers cultivate their hitherto uncultivable land and earn higher incomes. Several Adivasi farmers in Madhya Pradesh returned to their village after a decade to till their land, once an earthen dam under the MGNREGA began irrigating their fields. Dugout farm ponds or hapas constructed in Bankura district of West Bengal and Raigarh district of Chhattisgarh have helped small farmers intensify crop cultivation and increase farm incomes.

Independent studies have concluded that despite the inevitable lacunae, the MGNREGA has managed to reach benefits to the neediest, and has targeted itself quite well. It has proved to be a boon to women workers, who get fair wages, work near their homes and are spared the ignominy of contractor-driven work in towns.

In his letter to the Rajasthan CM, Gadkari strongly defended the MGNREGA: “the act functions to fulfil the dual objectives of creating employment for the unskilled workers, thereby addressing the issue of under-employment in the lean agricultural season; and that of creating productive assets…”. He further argued that skill development is a key national objective but since there is already a programme for it, “we may not need to use the funds under [the] MGNREGA” for it.


The road forward for the government is simple, provided it has clarity of vision and commitment. It needs to acknowledge that the MGNREGA represents the beginning of the coming of age of governance as an idea and the imperative of state delivery as a foundation of development efforts. It then needs to get down to reforming central aspects of the MGNREGA’s implementation. This entails ensuring there are sufficient human resources to carry out planning, implementation and monitoring. Investing in such human resources and ironing out bureaucratic hurdles is are the“reforms” rural India needs.

The writer is convenor, National Consortium of Civil Society Organisations on MGNREGA

First published on: 16-10-2014 at 12:35:44 am
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