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Sunday, September 27, 2020

Time to act on MGNREGA

Covid-related crisis offers NDA government opportunity to increase work days, entitlements under the employment guarantee scheme.

Updated: July 12, 2020 10:41:19 pm
The initial five years of MGNREGA was a period of much progress. Expenditure and the scale of employment in the programme rose steadily till 2009-10.

Written by Ankita Aggarwal and Anmol Somanchi

In a recent article (‘Credit where it isn’t due’, IE, June 10), Union Minister for Rural Development Narendra Singh Tomar described the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) as a “failing scheme” before 2014. MGNREGA under the United Progressive Alliance (UPA) government was by no means perfect, but when the National Democratic Alliance (NDA) government came to power at the centre, it initially displayed hostility towards the programme, almost throwing it under the axe. In the recent past, the NDA has made some effort to increase the scale of MGNREGA employment and reduce delays in wage payments. But this has been the result of repeated censure by the Supreme Court and to mitigate the destitution caused by its ill-conceived policies such as demonetisation and the recent lockdown.

The initial five years of MGNREGA was a period of much progress. Expenditure and the scale of employment in the programme rose steadily till 2009-10. While corruption was a serious problem in the early years, introduction of bank payments in 2008 and the online management information system (MIS) in 2009 played an important role in increasing transparency in the implementation of the programme. Despite functioning with various irregularities, till 2014-15, MGNREGA exerted an upward pressure on rural agricultural wages, especially for women.

Tomar cites two studies, one by Paul Niehuas and Sandip Sukhtankar (NS) and another by Clément Imbert and John Papp (IP), to claim that corruption was rampant in MGNREGA under the UPA government. While the NS study indeed found significant leakages, what the minister did not clarify was that their data was only from Odisha, that too for 2008. Importantly, the minister misses (or ignores) the fact that the IP study, based on National Sample Survey data, estimated that leakages dropped from 50 per cent in 2007-08 to 20 per cent by 2011-12. Estimates based on the 2011-12 India Human Development Survey suggested even lower leakages — less than 5 per cent.

This is not to say that all was well under the UPA. The share of Gross Domestic Product (GDP) spent on MGNREGA began to fall from 2010-11 and the annual scale of employment plateaued out till 2013-14. In 2009, the central government delinked the programme from the Minimum Wages Act. Since then, MGNREGA workers of many states have been working at unremunerative wage rates that are much less than their state minimum wages. In the name of efficiency, UPA II introduced technocracy into the programme by increasing its dependence on Aadhaar and various other ill-suited technologies . These so-called reforms were also used for excessive centralisation of MGNREGA, which has prevented states from implementing the programme as per their needs and capabilities.

When the NDA came to power at the centre, it had an opportunity of reversing these trends. Instead, it sought to restrict MGNREGA to the country’s poorest 200 districts. It also wanted to reduce the labour-material ratio from 60:40 to 51:49, without any evidence that this would increase the quality of MGNREGA works. It was only because of strong opposition to these proposals that they were eventually dropped. Also, as the NDA government continued the UPA II era caps on MGNREGA’s expenditure, and exhibited deep disdain for the programme, the scale of employment crashed to an all-time low in 2014-15.

The annual budgetary allocation for MGNREGA as a percentage of India’s GDP has hovered around 0.3 per cent during NDA’s term, half of what it was at its peak in 2009-10. The share began to increase marginally from 2016-17, but only after a PIL filed by Swaraj Abhiyan highlighted the large-scale delays in wage payments caused due to the inadequate budget earmarked for the programme every year. The widespread disruptions to the informal sector economy caused due to demonetisation also forced the central government to increase the scale of MGNREGA employment to provide some fall-back employment.

Tomar lauds his government’s push to increase bank account seeding with Aadhaar, routing of wage payments through the electronic fund management system and the move towards universal payment through direct benefit transfer. There is little evidence that these complex technologies have streamlined the payments process. In contrast, there is widespread documentation of the hardships faced by workers due to diverted wages, frozen bank accounts due to lack of electronic Know Your Customer (eKYC), and failed payments. Further, Tomar’s claim that now 99 per cent payments are generated on time does not take into account the long and unpredictable delays that often take place in the second stage of the wage payment process.

As casual workers face unprecedented economic insecurity due to the national lockdown, the NDA government has once again resorted to MGNREGA (and the public distribution system) to stave off hunger in rural areas. An increase in this year’s budgetary allocation of MGNREGA by Rs 40,000 crores is a timely move by the central government. Yet, if all 140 million job card holders are to demand 100 days of work this year (a likely proposition given the economic distress), the total budget of the programme including the increased allocation, is still only about a third of what would be required to meet the demand. Moreover, the NDA government gave short shrift to MGNREGA workers in response to the coronavirus pandemic — neither the guaranteed number of days nor the wage rates under MGNREGA have been increased. The current crisis provides the central government with an unprecedented opportunity to expand workers’ entitlements under NREGA.

Aggarwal is a PhD scholar at CUNY and Somanchi is a researcher at IIMA

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