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Empty stomachs and the Union budget

Jean Drèze

The need of the hour is to increase expenditure under the National Rural Employment Guarantee Act.

FINANCE MINISTER P. Chidambaram's recent budget speech leaves no doubt about the priorities of economic policy in India today. The Minister endorses the 11th Plan's "declared goal" of "faster and more inclusive growth," but the fine print makes it clear that his main concern is with "faster." Human development is little more than a footnote, and is even invoked at the end of the speech to justify the single-minded focus on faster economic growth: "Our human and gender development indices are low not because of high growth but because growth is not high enough." This odd statement trivialises any possible dissent with the growth-centred strategy by equating such dissent with the foolish claim that India's human development indicators are low "because of high growth." The concluding sentence of the speech drives the last nail in the coffin of the critics by quoting Nobel Laureate Mohammad Yunus to the effect that there is "no other trick" than faster growth to achieve rapid poverty reduction.

A useful test of the government's commitment to "more inclusive growth" is the priority attached to the National Rural Employment Guarantee Act (NREGA), which came into force in February 2006 in the country's poorest 200 districts. Two years ago, the National Advisory Council (NAC) estimated that fair implementation of the Act in these 200 districts would require an annual expenditure of about Rs.20,000 crore, or Rs.100 crore per district on average. As it happens, expenditure levels in the better-performing districts are right on track. Rajasthan, for instance, has already spent Rs.600 crore in its six NREGA districts. But in the country as a whole, NREGA expenditure per district was barely Rs.30 crore by the end of January 2007 — about one third of the NAC benchmark.

The case of Dungarpur district in Rajasthan is particularly interesting because the findings of recent "social audits" conducted there give reasonable confidence that the money has reached the intended persons. For instance, large-scale verification of "muster rolls" uncovered little evidence of significant fudging. According to official data, NREGA expenditure in Dungarpur (a relatively small district) is already well over Rs.100 crore. Almost every rural household has a job card, and the average job cardholder had already worked for about 70 days under the NREGA by the end of January. This is an unprecedented achievement in the history of social security in India, which points to the enormous potential of the NREGA as a tool of "inclusive growth."

The positive experiences in Dungarpur and elsewhere also lend support to the hopes that have been placed in the potential achievements of the Act, whether it is in terms of enhancing food security, or reducing distress migration, or activating the Gram Sabhas, or empowering disadvantaged groups (notably women, Dalits, and Adivasis). The need of the hour is to extend these positive experiences across the country, and to raise NREGA expenditure levels much closer to the NAC projections.

Instead, the Finance Ministry continues its crusade against the Employment Guarantee Act. It is an open secret that the Ministry opposed the NREGA (the "expensive gravy train", in the words of a former Chief Economic Adviser) from the beginning. Indeed, it played a leading role in the attempted dilution of the NREGA draft prepared by the National Advisory Council. When this failed, the Finance Ministry insisted on the inclusion of a so-called "anti-corruption clause," which gives sweeping powers to the Central Government to discontinue NREGA funding on the flimsiest suspicion of "improper utilisation of funds." As the Act came into force, the Finance Ministry restricted the financial allocation for administrative expenses to two per cent of total costs, making it very hard to implement the NREGA in States that do not have readymade arrangements for implementing large-scale public works. And in the run-up to the Union budget 2007-08, the Finance Ministry opposed the Ministry of Rural Development's demand for extension of the NREGA to another 200 districts. As the Rural Development Minister, Raghuvansh Prasad Singh, politely said in a recent interview to Business Standard, "the Planning Commission and Finance Ministry are not showing interest in funding the programme." In more agitated moments he often castigates North Block as an "anti-rural, anti-poor lobby."

With a little help from the Prime Minister's Office, the Finance Ministry eventually agreed to extend the NREGA to an additional 130 districts. But there is a catch: the budget allocation is virtually unchanged (just over Rs.10,000 crore), on the grounds that last year's allocation was underspent. In effect, the Union budget 2007-08 takes last year's diminutive expenditure levels as a benchmark for this year, instead of waking up to the need for a drastic increase. And while the budget speech states that "the budget allocation [for the NREGA] would have to be supplemented according to need," it is a safe bet that nothing of the sort will actually happen. The sub-text is clear: The NREGA was successfully held up last year, and will be held up again this year.

Another useful test of the government's commitment to "inclusive growth" is the fate of the Integrated Child Development Services (ICDS) — the only major national programme for children under the age of six years. The universalisation of the ICDS is one of the core commitments of the Common Minimum Programme. It is also required for compliance with Supreme Court orders, including the landmark judgment of December 13, 2006. In concrete terms, universalisation involves ensuring that every settlement has a functional anganwadi (child care centre), and that all ICDS services are extended to all children under six as well as to all eligible women. As things stand, barely one third of all children under six are covered, and the quality of ICDS services is also far from adequate.

Detailed recommendations to achieve "universalisation with quality" have recently been formulated by the National Advisory Council, the Commissioners of the Supreme Court, Citizens' Initiative for the Rights of Children Under Six, the Ministry of Women and Child Development's Working Group on Child Development, the Planning Commission's Working Group on Food and Nutrition Security, and the Working Group on Integrating Nutrition with Health, among others. In spite of minor differences, there is a remarkable consistency between these different sets of recommendations. The government has rarely been presented with such a clear road map to implement its own promises.

This material was consolidated in the Focus On Children Under Six (FOCUS) report, released on December 19, 2006, by Amartya Sen on the occasion of "Bal Adhikar Samvad," a public gathering on the rights of children under six. Montek S. Ahluwalia, Deputy Chairman of the Planning Commission, publicly welcomed the report and assured the audience that the government was committed to the implementation of the Supreme Court judgment on the ICDS. Similar assurances were received from the Prime Minister, Manmohan Singh, on the same day, and from Sonia Gandhi, Chairperson of the United Progressive Alliance, the next day.

Against this background, it is startling to find that the budget allocation for the ICDS in 2007-08 is virtually the same as in 2006-07. In fact, it is the same, as a proportion of GDP. This year, the Government of India will be spending less than Rs.5,000 crore to protect the well-being and rights of 160 million children under six. This compares with Rs.96,000 crore to be spent on defence — the figures speak for themselves.

The status quo on the ICDS would be easier to accept if the government had an alternative plan to tackle the country's disgraceful levels of child undernutrition and ill health. According to the recently released findings of the third National Family Health Survey, 46 per cent of Indian children are underweight — virtually the same figure as eight years ago. This is a stark indictment of aimless economic growth as a strategy for rapid improvements in health and nutrition. Yet the fixation with "faster growth" continues and direct intervention is limited to token programmes. In effect, hungry children are being told, "be patient, it's just a matter of another twenty or thirty years and everything will be fine."

(The author is Visiting Professor at the University of Allahabad, and member of the Central Employment Guarantee Council.)

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