NREGA: Bane or Boon

Varsha Mehta

Railway contractors in Chhatisgarh and elsewhere are demanding renegotiation of work

contracts to be able to continue their operations profitably. Reason: migrant labour is
scarce and local labour costs more. Pending acquiescence of their demands, major
projects of the ministry are being delayed.

In the far eastern region of the country, trade at the Tripura-Bangladesh border has
flourished for decades, irrespective of its legitimacy and political dealings between the
two nation states. But it was for the first time in the history of this trade that a
consignment of 20 truck loads of bricks crossed the Bangla border on August 20, 2009.
Brick kilns in Tripura are either closing down or functioning on a skeletal basis.
Reason: labourers from Bihar have not trodden the well-worn paths this year, being
content with the wages they were able to earn in their own towns and villages.

Up north in agrarian Punjab, where attempts at co-operative farming have failed

miserably in the past, farmers are uniting as one to agree on the maximum wage-rate that
they would pay to labourers. Reason: you guessed it right, same as above.

Zoom into a remote village in the semi-arid Rajasthan. The women are noticeably
relieved at not having to single-handedly tend to the fields, family, livestock and other
household responsibilities. Men have not had to migrate in search of work this year, and
children are going to the local school. Health, which usually takes a toll because of the
unhygienic living conditions and poor nutrition at migrants’ destinations, has not been an
issue of concern, and families have not had to borrow from the moneylender. This may
sound too good to be true, but the cycle of livelihood security and well-being has been set
rolling for the most deprived.

These and such are some of the outcomes of the much-talked about, oft-maligned
NREGS, flagship rural development programme of the government. I remember reading
a media report sometime ago, disparaging the budgetary allocations made by the central
government for wage employment programmes; the well-meaning author was making
some arguments against the Act (NREGA), which according to him lacked foresight; he
was trying to educate his readers about the implications of it and the burden it would
place on the state exchequer. That was before the NREGA was acknowledged as one of
the major forces contributing to the resounding victory of the party in power during the
last elections. The benefits of the programme for the masses and the electoral victory
notwithstanding, there is among the elite still a palpable outrage about the merit of
NREGA, and arguments challenging its necessity and worth continue to rule the roost,
albeit such discussions now generally only take place in private forums and behind closed
doors.

In 2008-09, the total budget for NREGA was Rs 16,000 crores (1 crore=10 million), a
small fraction of the nation’s defense budget pegged near the Rs 100,000 crores mark;
official statistics inform that the ‘beneficiary’ households in the same year were 4.47
crores. Against the guaranteed 100 days of employment per household, the actual
achievement was only about 48 days (on average), and the average annual earning per
household (assuming a wage rate of Rs 75) is Rs 3,600 only. The actual earnings are
likely to be lower still. If a sum like that is able to bring about such major shifts in the
country’s economic machinery, one needs to seriously re-evaluate how the ‘system’
functions. Even without getting a first-hand view of the deplorable living conditions in
rural areas, one can surmise from the above the standards at which the labour survives,
struggles and bears the burden of the nation’s ‘development’.

Modeled on the Maharashtra Employment Guarantee Act of 1977, the National Rural
Employment Guarantee Act (NREGA) was enacted by the parliament in 2005. The
National Rural Employment Guarantee Scheme (NREGS) was first introduced in 200
most backward districts of the country in the year 2006-07; another 130 districts were
added in 2007-08 and the entire country was brought under its ambit in the following
year. The primary objective of NREGA is to enhance livelihood security by augmenting
wage employment, and develop land-based and other natural resources to address causes
of chronic poverty in rural areas, viz., drought, deforestation and soil erosion. The Act
guarantees provision of 100 days’ wage employment, on demand, to each rural household
willing to undertake unskilled, manual labour. For the first time in the history of
independent India, we have placed employment within the rights framework and
established a mechanism that comes close to providing social security to the poorest of
poor.

Unique features of the Act include, time bound employment guarantee and wage payment
within 15 days, incentive-disincentive structure to the State Governments for providing
employment as 90 per cent of the cost for employment provided is borne by the Centre,
or payment of unemployment allowance at their own (state government’s) cost, and
emphasis on labour intensive works prohibiting the use of contractors and machinery.
The Act also mandates 33 percent participation for women. In practice, participation of
women is much higher as other employment options in rural areas do not pay equal
wages to women.

The Gram Panchayat has been assigned a pivotal role in implementation of the Act, being
responsible for almost every planning, management and supervisory function at the
village level. The nature of works that may be taken up under the Scheme can
significantly contribute to development of the natural resource base and increase the
productive asset holdings of communities and households in rural areas (the Act allows
for development works on private land holdings of SC and ST households). With proper
planning and implementation, the returns are expected to multiply manifold, and create
conditions conducive for practice of agriculture, agro-forestry and other land-based
activities. As with other natural resource management projects, more significant are the
long-term impacts at the macro-level – increased ground water recharge, arrested soil
erosion, increased biomass production, and so on – benefits which are not confined to the
inconsequential labourer or the rural community alone.
Over the last couple of years, several senior bureaucrats and field functionaries have been
heard rattling off the troubles they are confronting on account of NREGA, which they
believe is a hindrance to ‘real development’ of the nation and its people. During a recent
discussion, one officer of the forest department went on to suggest that if the government
really cared for development, there should be a direct transfer of funds to the BPL
households, without expectation of any work in return; he is not the only one who
believes that NREGA is breeding inefficiency in labour markets and corruption among
the Gram Panchayats; labourers are getting into the habit of shirking work, and more
important activities such as departmental tree plantations and watershed works are being
hampered. There may be some truth in his allegations, but one needs to take a step back
to assess the situation with a degree of objectivity and prudence.

It is claimed that for years, nay decades, when government departments and agencies
were in-charge of developmental activities, the labourer was very efficient – s/he
delivered (at least) 8 hours of work, and was often paid on a piece-meal or productivity
basis, not for hours of work put in, despite laws which stipulate minimum wages for
unskilled labour on a time-basis. In the current scenario, however, officers are of the
opinion that workers are getting paid without putting in a full day’s work; the
supervisors, Gram Rozgar Sahayaks (GRS) and ‘mates’ (responsible for keeping muster
rolls and measurement of works, appointed at GP level) work hand-in-glove, charging
more wage days than the quantum of work actually completed. There are leakages, and
some individuals wielding power at the GP level are being paid without any work.
Expectedly then, less work is getting done and at a higher cost. However, these are
systemic deficiencies that can more readily be addressed at lower rather than higher
levels; appropriate corrective measures can and should be put in place to plug the
leakages. If ‘labour efficiency’ were the only yardstick for measurement, perhaps the
NREGA should be scrapped. But innumerable development projects and officers later,
the numbers of the poor (those living below the poverty line) in the country have
continued to rise. Natural resources have depleted and/or degraded, local institutions for
resource management have been rendered ineffective, and the chasm between the haves
and the have-nots is ever widening. The humble labourer is but only a recipient at the
lowest rung – how could s/he be charged with the travails of inefficiency?

Contentions of corruption in governance, however, have begun to emerge only after the
delegation of powers to the lower levels of government. Not surprisingly, the loudest
voices belong to those who have had to relinquish their hold on labour, and the purse
strings. At the root of the decentralisation of power argument is the irrefutable fact that
effective governance in a democracy can only be exercised by an informed and
empowered electorate. For so long as the service providers and managers are not
accountable to the recipients of their services, there is bound to be a mismatch in the
quality and cost of services delivered; there will be exploitation, and there will be
corruption. With transfer of power to the lowest unit of local self-governance, the scope
for such a mismatch is reduced; at the very least, the inconsistencies and resultant profits,
if any, are more equitably spread out. “Corruption” and “inefficiency” have been the
hallmarks of the Babudom in rural areas, and it will take more than a few years to
minimize discrepancies in costs and services through actions of an empowered electorate.
It will require strengthening of the Gram Sabhas through education and empowerment in
matters pertaining to management of funds and functionaries. It also calls for
implementation of the Act in letter and spirit at all levels, establishment of grievance
redressal mechanisms and flow of information about the Act’s provisions down to the
lowest level.

The other major indictment of the Act is that it prevents people from striving for
improvement, innovation and entrepreneurship; therefore, it is counter-productive to
development. This argument begs a question: can innovation and entrepreneurship
provide employment to the 50 million plus households that are living below the poverty
line? Prior to the enactment of NREGA, these households had to devise their own
mechanisms to stave off starvation, illness and death. Now they can seek employment as
a matter of right, even if it is only for a 100 days in a year. Innovation and
entrepreneurship have never been prisoners of government policy and programmes, so it
is very unlikely that a minimum support mechanism will hamper them in any way. On the
contrary, assurance of employment for a fixed number of days every year could actually
(theoretically speaking) encourage one to innovate and take calculated business risks. All
the anti-poverty programmes of the previous decades put together have not had the kind
of impact that the NREGA seems to be generating.

Among the greatest beneficiaries of NREGA are women labourers, who have perpetually
been paid lower wages than men. An unintended impact of the Act has been its
significant contribution to correction of the inequities in wage payments between men
and women. While in the absence of the scheme women agricultural labourers could
demand no more than Rs 40 per day’s work (wage rate for women in North Tripura
district), today they are assured of Rs 100 per day under NREGA works; as a result, wage
rates in the ‘private’ labour market have gone up. A confident women’s labour force
claims that the Act has given them more than mere wages – it has added value to their
work and enabled them to bargain in the market for better remuneration. In the same
village, a farmer contends that they are the losers, not being able to flog workers
anymore.

In March this year, the World Bank published a report describing the much-acclaimed
NREGA as a policy barrier hurting economic development and poverty alleviation, by
reducing ‘internal mobility’; the erudite authors of the report believe that migration
should be encouraged for economic development to happen. This observation is guided
by the Bank philosophy wherein urbanization, mobility of people and increasingly
specialised products are integral to ‘development’ as envisaged by the Bank. Add to that
increased consumerism, unsustainable use of resources, and extraordinary energy
consumption that sets off the planet hurtling on its way to disaster. No, thank you, we
would rather have NREGA, which in the long run, in fact, attempts to correct even if only
marginally, the skewed distribution of wealth that has been the product of the rapid
economic development witnessed by India over the last decade or so. The Act is by no
means perfect, and its implementation leaves plenty of room for improvement, but it is
right in its approach. The results are beginning to show.