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Tuesday, Feb 08, 2005

Opinion

Opinion - Leader Page Articles

For effective employment guarantee

By Anuradha Joshi

The proposed national employment guarantee scheme needs to adopt the progressive features of the existing programme in Maharashtra.

THE DRAFT Employment Guarantee Act, tabled in Parliament on December 21, 2004, has generated much debate in the newspapers. Two things about this debate are very striking. First, it has been dominated by economists who think of the proposed national Employment Guarantee Act mainly as one of a range of potential methods of transferring income to the poor, and pay little regard to the political implications. Secondly, while many commentators make some reference to the `success' (or otherwise) of the Maharashtra Employment Guarantee Scheme none look systematically for the potential lessons of the Maharashtra experience for the proposed national programme. Much could be gained by filling these two gaps.

The Draft Employment Guarantee Act (dEGA), to be discussed in the upcoming session of Parliament, embodies one of the key electoral promises of the ruling coalition under the Common Minimum Programme. Loosely based on the Maharashtra Employment Guarantee Act (MEGA), it is an effort to combine the dual goals of providing unskilled work and generating productive assets. The MEGA (and the associated Maharashtra State Tax on Professions, Trades, Callings and Employments Act of 1975 that underpins its financing) came into force in 1977 and has now been operational for close to three decades. What can we learn from comparing the two?

The differences between the dEGA and the MEGA are significant. Formally, and to a significant degree in practice, the Maharashtra Scheme guarantees unlimited employment to all rural adults, provided there is a recognised need in the locality and people are willing to appear for work regularly. By contrast, the dEGA limits employment to one member from each BPL (below the poverty line) family as identified by the gram panchayat for a maximum period of 100 days in each year. The MEGA applies to all rural areas in the State, whereas the dEGA will be implemented, at least initially, only in the poorest 150 districts in the country. In Maharashtra, wages under the MEGA are tied to the minimum wages in the relevant agricultural zone. By contrast, the dEGA makes no reference to minimum wages. The scheme that follows from the MEGA is funded through a set of hypothecated taxes imposed on the urban population, and a matching grant from the State Government. The funding sources for the dEGA are still under consideration.

What does the Maharashtra experience tell us about some of the criticisms levelled at the national legislation? One major criticism of the dEGA is that such public works will not have an impact on poverty. Most research on the poverty impacts of the experience from Maharashtra indicates that it has helped to provide income to the poorest during lean periods and to reduce seasonal migration, while the landed classes have benefited from the infrastructure created. MEGA's impacts on agricultural productivity seem to be more debated. There has been a concern that competition from the scheme for agricultural labour has increased wage rates and thus reduced the productivity of agriculture. Since the late1980s, demand for EGS works from Maharashtra's rural poor appears to have diminished. Some observers have argued that this has been the result of the success of the MEGA: the infrastructure created under the scheme has increased agricultural productivity. Others have suggested that the reduced demand was a result of the informal rationing of funding for the scheme by the State administration. Whatever the truth, it seems indisputable that the EGS has benefited the poorest by boosting their income and somewhat increasing their bargaining power vis-à-vis agricultural employers. Thus while it is not clear whether the dEGA will have a long-term impact on poverty, it is almost certain to have a short-term positive impact on the lives of the poorest — an important outcome in a country like ours where over 30 per cent of the population is poor.

A second criticism against enacting the dEGA is that the infrastructure generated will not be productive. `Digging holes and filling them,' is the common impression of public works programmes. In the case of Maharashtra there is no firm evidence for either side of this argument. Are the projects under MEGA less sustainable than mainstream projects constructed by regular line departments? Apart from conflicting anecdotal evidence, we cannot answer this question. However, one reason why this might not become a serious problem in the proposed national programme is that the planning of projects will be in the hands of the local panchayats. One might expect them to have an interest in constructing and maintaining infrastructure that is genuinely useful. Some critics have pursued this scepticism about public action to the extent of suggesting a cash transfer to poor families, leaving the line departments to build the quality infrastructure that is needed for the development of rural India. Can we really absolve ourselves of the responsibility for the situation of the poorest by making cash handouts? What about issues of effective targeting and corruption? Have we not come a long way from understanding poverty as income deficiency? Can money alone resolve the problems of poverty, without simultaneous securing of livelihoods, access to education and health, etc.? What about the ensuring of dignity and rights, and the creation of cultures of dependency; controversial subjects in themselves?

Another criticism of the dEGA is that it will be too expensive — costing between 1 and 1.6 per cent of GDP. Again, a comparison with Maharashtra is illustrative. As of 2004, the Employment Guarantee Fund in Maharashtra held a surplus in excess of Rs.1,000 crore — well above any demands that might be made on the fund in a drought year. While the implementation of a hypothecated tax like the one in Maharashtra might not be politically feasible at the national level, raising the money needed does not seem impossible. As some have argued, if the dEGA is enacted in lieu of a whole array of government anti-poverty programmes, the extra costs are likely to be limited.

A final major criticism launched against the Employment Guarantee Act is that it will not reach the poor, but will disappear in fake muster rolls and ghost workers. This argument, however, is not as self-evident as its proponents suggest. Certainly corruption is present in all anti-poverty programmes in the country, and indeed in most public programmes. One has only to look at the Public Distribution System for food, or the fodder scam in Bihar. The question is whether operations under the dEGA are likely to be more corrupt than other public schemes. There are three reasons to think this is unlikely to be the case if the dEGA is amended along the lines of the MEGA. First, the beneficiaries will be self-targeted — everyone who is willing to carry out hard labour will be entitled to gain employment under the scheme. Undoubtedly corruption will occur: many non-poor will be included among the beneficiaries. Equally, and more importantly, the deserving poor cannot be entirely excluded, as happens in administratively targeted schemes. It is unlikely that the non-poor will be willing to accept a low wage for doing the hard labour required in public works. Secondly, the involvement of several line departments, the revenue administration, and politicians in the implementation would generate a degree of `institutionalised suspicion' that would reduce the worst corruption. Recent research comparing the Maharashtra Employment Guarantee Scheme with an alternative public works programme, the Sampoorna Grameen Rozgar Yojana, in Nashik district supports this view. Finally, the simultaneous enactment of the Right to Information would enable civil society organisations to monitor implementation and expose corruption. Such monitoring would thus not be limited to the accurate measurement of work and payment of wages as it was in the case of the Maharashtra scheme, but would extend to ensuring that the quality and quantity of work are in accordance with the budget and the blueprint. Indeed, a likely important outcome of having a strong and robust National Employment Guarantee Act would be the flourishing of activist organisations that would help mobilise the poor in their interests. As the experience of the MEGA in Maharashtra shows, having a right enshrined in law (that cannot be easily changed through the whims of successive governments) provides an incentive for activists to invest in mobilising the poor to access their rights as well as monitor the implementation of the programme. If we are expecting civil society and organisations of the poor to play the important role of advocacy and monitoring of government, these processes become vital.

The current dEGA has serious weaknesses. First, the provision that the beneficiaries will be chosen on BPL criteria will result in the loss of the benefits that come from the self-targeting nature of the scheme. In particular, there will be little incentive for activists to mobilise the poor to access their rights; and the scheme is vulnerable to exclusion of the deserving. Secondly, there is no reference in the dEGA to tying wages to the legal minimum wage; if very low rates are offered, the programme will have no takers. Thirdly, the `national' dEGA is to be implemented initially in only the poorest 150 of India's 593 districts, without a commitment to a timetable for extension to the whole country. Finally, the provision for unemployment allowance if work is not provided within the time period specified is likely to be meaningless if the experience of a similar allowance in Maharashtra is anything to go by. In more than 25 years since the MEGA's operation in Maharashtra, the unemployment allowance has not been paid even once!

Activists in Maharashtra voice concerns that if these deficiencies are not addressed, the National Act is going to be less progressive than the one it is supposed to be modelled on. For Maharashtra itself, enacting the national dEGA as it is will represent a backward step: the administration is likely to undermine the more progressive State Employment Guarantee Scheme and Act by choosing to give the national system preference in implementation. For the country and the poor, a weak national EGA will mean a major opportunity forgone.

(The writer is Fellow, Governance Group, Institute of Development Studies, University of Sussex, Brighton, U.K.)

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