People's Democracy

National Rural Employment Guarantee

Bill 2004: UPA’s Failed Promise

  Smita Gupta

THE National Rural Employment Guarantee Bill 2004 was tabled in parliament on December 21, 2004, mired in controversy amidst charges of dilution by the Left in parliament. Mass organisations like the All India Democratic Women’s Association, All India Agricultural Worker’s Union, All India Kisan Sabha, Bharat Gyan Vigyan Samiti along with social activists, academics and National Advisory Council members staged protests outside against the severely diluted legislation. The Bill is neither national, nor a guarantee, nor one that assures minimum wages. It is even worse than an ordinary poverty alleviation programme where at least minimum wages are protected, in principle if not in fact.

The Common Minimum Programme states: “The UPA government will immediately enact a National Employment Guarantee Act. This will provide a legal guarantee for at least 100 days of employment to begin with on asset-creating public works programmes every year at minimum wages for at least one able-bodied person in every rural, urban poor and lower middle class household.” This was probably the single most significant promise made in the CMP, at least as far as most of the people in the country are concerned. However, if this promise is really to be kept in a meaningful way, it is necessary for the EGA to have some essential features: (1) the central government must fully fund the programme, (2) the guarantee must cover all rural areas within 5 years, (3) universal access to jobs and the unemployment allowance must be ensured, (4) no less than the minimum national advisory wage should be paid, (5) works must be defined in an inclusive manner, (6) the household must be defined as a nuclear unit and women’s entitlements should be protected through the nature of the work specified and by providing that 40 per cent of the jobs go to women, (7) control and accountability to elected panchayat representatives and gram sabhas should be institutionalised, (8) it should be an additional programme and not an extension of ongoing programmes, (9) urban areas must be brought under coverage through an appropriate Act. 

Unfortunately, the tabled Bill violates each one of these requirements.

The CMP is very clear in its promise to enact a fully centrally-funded job guarantee. Despite this, a whole range of people involved in drafting the Act – social activists, economists, bureaucrats – have tried to pass on a part of the financial obligations to the state governments. Quite apart from the fact that the CMP is a policy document of the central government and not the states, all the state governments are in any case in the grips of a severe fiscal crisis, experiencing bankruptcy on account of policies beyond their control.

CRUX OF THE MATTER

Thus, the financial structure of the Act has to be in line with the comprehensiveness and scope of the entitlement and guarantee for the people. If there is a mismatch between the financial feasibility of the Act and people’s rights, the first casualty will be the comprehensiveness of the guarantee itself. Restrictions in entitlements and dilutions in the definition of the guarantee flow directly from the financial structure of the Act itself and the desire to keep spending low. For example, if the unemployment allowance has to always be paid by the states, irrespective of the cause for delay, and the states are in the grips of severe fiscal crisis, clearly the entitlement to the unemployment allowance itself will become linked to the payment capacity of the state government.

According to the Financial Memorandum, “If the whole country is covered under the legislation, the total requirement of funds… is estimated to be approximately Rs 38,600 crore ...  It has been estimated that if the legislation is extended to 150 districts where the National Food for Work Programme is being implemented, the requirement of central funds will be approximately Rs 8,984 crore.” This is the crux of the matter.

The Bill expects the states to shoulder 25 per cent of the material costs (up to the ratio of labour:material of 60:40). They have to bear all expenses on administration, including regular monitoring and review, grievance redressal mechanisms, State Council’s expenses, appointment of Programme Officers in each block exclusively for this programme, welfare expenses, on site facilities, accidents, transportation of grain component of wages, etc. Even if the centre pays 3 per cent as admissible administrative costs as proposed in the Financial Memorundum of the Bill, this is unlikely to cover these expenses. The states have to bear the entire burden of the unemployment allowance, irrespective of who is responsible. If the PRIs fail to provide work from the money devolved to them, the state government is liable to pay the unemployment allowance.  If the centre fails to devolve funds to the states on time, nevertheless the states are expected to provide work or pay the unemployment allowance.

There are bound to be several causes for delay in providing work, but the two most important include the very narrow and rigid definition of permissible works that would constrain the panchayats’ ability to generate employment and the well-known delays and shortfalls in devolution of funds from the centre. Surprisingly, the Act does not have any mechanism that compels the centre to make funds available in a smooth and timely manner.  Without factoring in the payment of the unemployment allowance, the states are already required to meet something like 20 per cent of the total expenditure. It is anybody’s guess how much unemployment allowance will have to be paid, but it could increase the states’ share considerably.

RESTRICTIVE & NARROW

The Bill is restrictive and narrow in every possible sense. Urban areas are completely excluded. Sections 1(3) and 3(1) in combination imply that there is no commitment to extend coverage to the entire country in a time bound manner, and it could remain limited to the existing 150 districts that come under the Food For Work Programme, withdrawn from anywhere at anytime. While it is possible to make a case for fixing a time limit of say 3 to 5 years within which the Act can become applicable to the entire country, the centre is empowered to alter at will the period for which the Act will remain in force in different districts. This escape clause bestows overriding authority to the executive to even withdraw the Programme from the entire country without requiring the Act to be repealed. The parliament would thus have created an Act that erodes its own authority.

Even within the rural areas of these few districts, not all households are covered.  Only those identified as officially poor can avail of the job guarantee. “Poor household means a household living, during the relevant financial year, below the poverty line and includes the households of all primitive tribal groups…” [2(k)]. This is in complete violation of the CMP, which promises a process of self-selection. Similarly, the unemployment allowance, which is to be paid by the state government, and is meant to safeguard the guarantee, has been seriously compromised. It now depends on the economic capacity of the state government, and there is nothing binding in its payment. Without this commitment to pay the unemployment allowance, the government can without cost deny jobs. [7(2) and 8(1)] All that the Programme Officer needs to do is to report the non-payment to his seniors and display the information prominently!

WRONG DEFINITION OF HOUSEHOLD

While access to the guarantee has been narrowed considerably, the definition of the household is very wide and one household could include several nuclear families (even hamlets in hilly tribal areas). “Household means the members of a family related to each other by blood, marriage or adoption and normally residing together and sharing meals or holding a common ration card.”[2(f)]. This implies that in a context of fixed household entitlements, the number of days of employment per adult worker will remain meagre, and the quantum of employment that the government would need to generate would be far lower. This also has adverse implications for women’s access to the guarantee. Women comprise a bulk of the rural poor and malnourished, and are increasingly pushed out of the workforce, or onto arduous and underpaid work. The restriction of the entitlement to households (instead of individuals) with a 100-day annual cap implies that women may tend to be excluded from the Programme. The definition of the household on the basis of a shared kitchen rather than a nuclear family will have a similar impact since many adults may share kitchens on account of poverty.

A statutory minimum wage linked to a certain standard of living is an important component of labour laws in India. Although in practice this has been observed more in its violation, nevertheless the judiciary and parliament have always upheld the legal guarantee. Now, the government proposes to do away with the principle itself. Wages are no longer linked to the statutory minimum wages fixed by the state governments [6. (1)]. It also proposes to delink the state’s schedule of rates for unskilled labourers from the statutory minimum wages, linking it instead to the wages specified for this Act [Schedule I(8)]. Therefore, wages in all programmes will be affected.

An important argument in favour of a rural employment guarantee is that public works can generate purchasing power and create productive assets, leading to broad-based economic growth in rural areas. Thus, works must be productive in the broad sense, which includes the provision of public services and improvement in the quality of life. However, the Bill is too rigid, limiting productive works to the usual earth works, only adding land and water management. There is an additional provision permitting the construction of irrigation facilities on land by Scheduled Castes and Tribes. A more inclusive and flexible definition is required, which would cover a range of productive services and thereby also allow more women to be employed.

Obviously, the success of this programme will lie in the establishment of a decentralised, accountable and democratic institutional structure. The present Bill has adopted the failed line department approach, and the Officer-in-charge who is positioned at the block level is accountable to his/her superior at the district level rather than the intermediate block panchayat in the three-tier structure [15(5)]. This will by-pass elected panchayat representatives and create a parallel administrative structure, compromising people’s control. Section 16(5) leaves the devolution of half the spending under the scheme to the discretion of the Programme Officer. Furthermore, provisions for transparency and access to information are cumbersome and expensive.

Thus, the Act has a highly centralised administrative and decision-making structure with concentration of power in the centre. The Bill contravenes the federal spirit that must guide Bills pertaining to matters on the concurrent list. In most matters, the power to override states rests with the centre. However, this degree of centralisation in powers is not backed up by centralised funding. This Bill is far worse than anything that was anticipated, and its provisions make one thing very clear: the enactment of a democratic and comprehensive employment guarantee is a part of the much larger fight against neo-liberal macro-economic policies.  The approach that conceived of it as the ‘human face of globalisation’ has proved to be wrong. The seriousness with which the UPA government takes up this Act will be the touchstone on which the people of this country will ultimately judge this government. Is it really serious about the CMP or are the rural poor to be fobbed off with superficial and toothless measures?