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Celebrating a “Failure”

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In a surprise U-turn, the Modi government is singing praises to UPA’s rural social security scheme. Is this prompted by assembly elections due in ten states over the next two years?
By Ajith Pillai


WheN the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) completed its 10th anniversary on February 2, it was the NDA government that celebrated it with much gusto and enthusiasm, declaring it a landmark event. For many, this came as a surprise U-turn since the ruling dispensation under Narendra Modi has all along been stridently critical of its predecessor government’s flagship social security scheme. It had even sent out signals that the time had come to write the epitaph of the “populist” scheme which was proving “a drain on fiscal resources”.

Populist Scheme: Former Prime Minister Manmohan Singh and Sonia Gandhi at the launch of the flagship social security scheme for rural poor, MGNREGA
Populist Scheme: Former Prime Minister Manmohan Singh and Sonia Gandhi at the launch of the flagship social security scheme for rural poor, MGNREGA

Remember, it was the prime minister who famously led the charge against MGNREGA. He said this in parliament on February 27, 2015: “Sometimes, we are told that we will or we are about to discontinue MGNREGA or have closed down MGNREGA. Most of you believe that I have very good political sense. And that political sense does not allow me to discontinue MGNREGA. I cannot make such a mistake because MGNREGA is a living monument of your (Congress’) failures. After 60 years of Independence, people had to dig pits because of you, therefore it is a biggest example of your failures and I am going to propagate this with all my might. I will tell the world that the pits you are digging point towards your wrongdoings of 60 years.”

OVERNIGHT U-TURN

JODHPUR, MAY 2 (UNI): - Police at the spot of an accident involving a dumper truck and a jeep near Kalyanpur region in Jodhpur on Saturday. UNI PHOTO-23U

So how did the “living monument” of the UPA government’s “failure” transform itself overnight into a cause for “national pride and celebration”?According to government sources, the change of heart was in the main triggered by an event that made the BJP-led NDA government sit up and recast several of its priorities—the Bihar election results on November 8 last year.

The rout in these assembly polls made the party do a rethink on not just its political strategy. There were several economic factors which also came into the reckoning after the electoral reverses. With elections coming up in ten states over the next two years, including the most critical one in Uttar Pradesh, it was felt that several of these concerns had to be addressed. Many pertained to rural India. These included:

Distress in the rural economy which was impacting rural demand.

Decline in purchasing power resulting in plummeting sales of tractors, motorcycles and FMCG goods. Corporate India had already begun sending out distress signals to the government.

Successive droughts and crop failure caused by unseasonal rains severely impacting agriculture.

Failure to implement MNREGA fully and effectively, squeezing rural spending. One expert view suggested the government provide money to people to spend in the market to generate demand.

If in 2014-2015, `34,000 crore was budgeted for MGNREGA, in 2015-16, Finance Minister Arun Jaitley upped budgetary grant by `699 crore to `34,699 crore with the promise that another `5,000 crore would be alloted. Of this, only `2,000 crore was later sanctioned.

The economy feeling pressured with rural people losing their purchasing power earlier enhanced by schemes like MNREGA.

The gloom in the agriculture sector coupled with growing food inflation, denting the “sabka saath sabka vikas” slogan of the government. 

Very clearly, the focus of the government shifted post-Bihar. A finance ministry official explained to India Legal: “When the BJP think-tank met after the Bihar results, much thought was given to the state of the rural economy.

Though many economists had dismissed MNREGA as a wasteful expenditure, it was felt that schemes like that must be leveraged to the government’s advantage. MNREGA was suddenly seen as something that could provide relief to a huge section of the people. It was for the government to claim ownership of the UPA’s scheme by implementing it effectively.”

BUDGETARY ALLOCATION
According to him, this thinking was being pushed for well over a year by farmer-friendly sections of the Sangh Parivar, although it had marginal effect on last year’s budget. If in 2014-2015, `34,000 crore was budgeted for MGNREGA, in 2015-16, Finance Minister Arun Jaitley loosened the purse strings ever so lightly and upped budgetary grant by `699 crore to `34, 699 crore with the promise that another `5,000 crore would be allocated subject to additional tax inflows. Of this, only `2,000 crore was later sanctioned.

Course Correction: Bihar Chief Minister Nitish Kumar’s victory last year forced the BJP to rethink its agenda.
Course Correction: Bihar Chief Minister Nitish Kumar’s victory last year forced the BJP to rethink its agenda.

Many expected the government to release the remaining `3,000 crore while celebrating 10 years of MGNREGA at Delhi’s Vigyan Bhawan. It is another matter that even that amount would have fallen short of the requirement given the spike in inflation and the extent of rural distress, further precipitated by the ongoing agrarian crisis. But no relief was forthcoming from the FM and the rural employment scheme continues to be cash-strapped.

As Aruna Roy, Nikhil Dey and Annie Raja of Peoples’ Action for Employment Guarantee pointed out in a joint statement on February 2: “There were positive signs that Shri Arun Jaitley would announce the release of at least `3,000 crores—the balance of the amount promised in his budget speech, and asked for in a letter by the Minister of Rural Development on 30th December 2015. However, this announcement was not made, and today the MGNREGA faces a negative balance of funds in 14 states, and demands from many others that the rural development ministry is not in a position to meet. This means that in 14 states including Chhattisgarh, Andhra Pradesh, Assam, Odisha, Sikkim and Uttar Pradesh, either work will not be given as per demand, or else wages will be inordinately delayed—both of which are basic violations of the law.”

WAIT AND WATCH
According to those monitoring MGNREGA, the demand for additional funds from state governments is understandable since budgetary allocations have not kept pace with inflation which has been growing in varying degrees over the last decade. In fact, the cash allocated has remained static at approximately the same level that it stood in 2010-11 —`39, 377 crore. If one were to factor in inflation, then to maintain budgetary grants at the same level would mean an input of `61, 445 crore in this year’s budget. It is unlikely that the government would be so generous with its funding, although Jaitley has promised that there will be no cutting of funds for MGNREGA this fiscal.

Course Correction: The rural sector continues to be forlorn despite the launch of ambitious schemes.
Course Correction: The rural sector continues to be forlorn despite the launch of ambitious schemes.

According to social scientist Jean Dreze who was among those who devised the MGREGA program, the scheme has not done as well as it should have because of flawed implementation and shortage of resources. “Sometimes the low scale of employment is due to a lack of funds, but there are other reasons also. Stagnant real wages and persistent delays in wage payments have sapped workers’ interest in MGNREGA. The guidelines have become very complicated. In many areas, the infrastructure required to implement MGNREGA’s internet-based processes is sorely lacking. Last but not the least, political commitment to MGNREGA has declined. This sends a very destructive message down the line,” he said in an interview.

KILLING THE SOUL?
P Chidambaram, who served as finance minister in the UPA government, says: “The government did try to cut back the program. They delayed releases of funds, and made it difficult for state governments to respond to the demand for work….Consequently, the number of households that completed 100 days of wage employment dropped from over 51 lakhs in 2012-13 to 25 lakhs in 2014-15.”

Course Correction: Social scientist Jean Dreze was among those who devised the MGREGA program
Course Correction: Social scientist Jean Dreze was among those who devised the MGREGA program.

Former prime minister Manmohan Singh echoed the same thought while speaking at a Congress event in Anantapur district, Andhra Pradesh, where the MGNREGA program was launched 10 years ago. “The Modi government is seeking to kill the soul and spirit of the Mahatma Gandhi National Rural Employment Guarantee Scheme by withholding payments to states for MGNREGA work. In 2014-15 alone, the government of India did not make payment of `6,000 crore to states for already executed MGNREGA works,” he said.

When it was introduced and passed by parliament in 2005 and implemented in 200 districts across the country in February 2006, MGNREGA was aimed at enhancing livelihood security in rural areas by providing at least 100 days of employment in a financial year to every household whose adult members volunteer to do unskilled manual work.

People looking at a damaged roadways bus

 

If work is not provided within 15 days of applying, applicants are entitled to an unemployment allowance under the Act. When it was first introduced, MGNREGA was hailed as a landmark labor law. In its World Development Report 2014, the World Bank termed it a “stellar example of rural development”. However, it soon came in for much criticism for its implementation and large-scale corruption which led to funds being siphoned.

There have been allegations that payments have been made to persons shown as doing work on paper or who have bee wrongly identified as poor. It was on account of such rampant corrupt practices that the Narendra Modi government ordered a re-evaluation of the scheme after coming to power.

But the real reason for such a move, according to sources in the finance ministry, was to eventually scrap the scheme.
But that is unlikely since the new thinking in the government is that rural India must also shine. Though many may see MGNREGA as a fund-guzzling sop, it has achieved much in the last decade.

Women workers constitute over 50 percent of those benefitting from the program, while 40 percent beneficiaries are SCs/STs. Today, MGNREGA wages contribute one-third of rural household income.

FISCAL RETHINK: Finance Minister Arun Jaitley is now loosening the purse strings for MGNREGA
FISCAL RETHINK: Finance Minister Arun Jaitley is now loosening the purse strings for MGNREGA

Needless to say, the social security scheme has its shortcomings and this needs to be corrected. But the scheme must not be junked but be made more meaningful. Chidambaram must perhaps be given the last word on this: “MGNREGA was never about ‘digging pits’; nor is it a ‘monument to failure’. As Mr Modi has made a meal of his words, the time has come to convert the program into one that will create “durable assets” and become a “monument to social justice”.

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