A VERY SIGNIFICANT LEGISLATION

Parliament Votes For Rural Employment Guarantee

Smita Gupta

THE passage of the historic National Rural Employment Guarantee Act by parliament is of immense significance, in itself and in the context in which it has been enacted. It is a fantastic challenge to the march of global finance. Given its dissonance with the neo-liberal expenditure cutback policies of deflation, its implications for the resistance to globalisation is huge. Its impact will definitely reverberate the world over, inspiring social activists, mass organisations and Left parties to form alliances and resist the anti-poor policies of reform. Employment guarantee as a part of a constitutional right to work has been a long-standing demand of the Left movement in India, comprising the working poor and their mass organisations and the present Act is an outcome of their struggles. Its genesis is rooted in the electoral upset in 2004 in which the people rejected NDA for its neo-liberal economic policies. Recognising the underlying rural distress and imperative to provide assured minimum days of wage-employment, the UPA promised in its National Common Minimum Programme (CMP) to immediately enact a National Employment Guarantee Act. All those who campaigned and fought for passage of this Bill deserve credit.

OVERCOMING OPPOSITION

The process has by no means been an easy one, with the original NAC draft facing severe dilutions, requiring the resistance of the Left parties to push for several key correctives for a full-fledged employment guarantee. No less significant was the role of mass organisations and activists who launched a nationwide campaign on the issue. The synergies that developed between NGOs, social activists and Left parties were unprecedented and extremely important in pushing for the EGA. The paradox is that despite its prominence in the CMP, the same underlying factors that provided the compelling reasons to enact such legislation also fuelled the opposition to the Act within and outside the government. These arise from the neo-liberal policies that serve the interests of finance capital and are pursued with equal vigour by the NDA and UPA governments. An EGA stands in direct conflict with the interests of finance capital, which is extremely wary of inflation. Any policy measure that increases expenditure in the economy and moves the terms of trade in favour of agriculture and rural areas is detrimental to their interests. Thus, their ideologues prescribe policies that worsen the relative position of the peasantry and agriculture in the Third World along with a slowdown in overall expenditure. While advocates fought for a substantive and effective legislation, the neo-liberals were willing to agree to cosmetic and superficial measures only.

The main official amendments on the NREG Bill arrived at after intense negotiations with the Left are a significant step in the right direction. These correctives remained elusive for a very long time. They include the following: universal eligibility (all households are entitled to apply for work without BPL criteria); irreversible guarantee, without "switch off"; time bound extension to all of rural India in five years; one third of the work to be given on priority to women applicants; principal role and 50 per cent cost of works to Panchayati Raj institutions; permissible works to be determined in consultation with states; more beneficiaries whose private land can be included for improvement under the scheme; rise in ex gratia from Rs 15,000 to Rs 25,000; provision of crèche if there are five or more children under the age of six at a work site. In addition, the minister has agreed in his speech that the Rules will include timely release of advance funds to states every quarter and compensation to states for unemployment allowance if funds are not devolved in time. Additionally, he committed on the floor of the House that the definition of household will be “nuclear” and the wage will be cost-indexed.

The NREG Bill that has been adopted is therefore closer to a full-fledged employment guarantee and a great improvement on what was tabled by the government in December or approved by the cabinet in August. Though better after the Left’s interventions, it continues to be problematic on some important aspects. The two biggest lacunae that remain are the absence of individual entitlements; and the non-acceptance of the minimum wages set by states. The government was completely unwilling to give in on these two fronts, and for some time it looked like the issue would remain unresolved. 

In the original Bill tabled by the government, the section on wages read as follows: “6. (1) Notwithstanding anything contained in the Minimum Wages Act, 1948, the central government may, by notification, specify the wage rate for the purposes of this Act: Provided that different rates may be notified for different areas. (2) Until such time as a wage rate is fixed by the central government in respect of any area in a state, the minimum wage fixed by the state government under section 3 of the Minimum Wages Act, 1948 for agricultural labourers, shall be considered as the wage rate applicable to that area.” Thus, there was no floor to the wages that could be set by the centre. This raised the fear that the neo-liberal argument may guide the fixation of very low wages. The standing committee had recommended statutory minimum wages or Rs 49, whichever is higher. The centre rejected this, and with a great deal of effort a floor is now set at Rs 60.  The final amendment arrived at after several rounds of discussions reads as follows: “6. (1) Notwithstanding anything contained in the Minimum Wages Act, 1948, the central government may, by notification, specify the wage rate for the purposes of this Act: Provided that different rates may be specified for different areas. Provided further that the wage rate specified from time to time under any such notification shall not be at a rate less than sixty rupees a day.” Clause 6(2) remains as it is. There is also contradiction between the minister’s speech and what the clause provides, because he said that minimum wages set by the states would be paid. If we look at the minimum wages fixed by the state governments under the SGRY which the ministry of rural development reported to the standing committee as relevant for the NREG Bill, roughly 70 per cent of the districts under the Food for Work Programme have wages below Rs 60, while 5.4 per cent have a wage rate of Rs 60. This notwithstanding, this clause overrides the Minimum Wages Act which is a compromise that has been accepted for the moment, which has to be fought against.

BJP’S CROCODILE TEARS

The BJP moved very radical amendments, which is ridiculous given their inconsistency with the policies pursued by their previous NDA government when in power. The rural distress is clearly an outcome of trade liberalisation, deflation and specific structural adjustment measures undertaken in the rural sector by their government. The government rural development expenditure declined as a percentage of GDP, from 14.5 per cent in the Seventh Plan to 6 per cent in the Ninth Plan period, implying a projected decline of Rs 50,000 crore in each year on this count alone. Rural banking by the Scheduled Commercial Banks (SCBs) worsened in all respects, and the very concept of priority sector lending was severely diluted. The government of India lowered tariffs and opened up trade well before requirement under WTO. This was at a time when world prices had begun to crash due to mounting subsidies given by the advanced capitalist countries to their agriculture. This exposed Indian farmers to unfair trade, global price volatility and recessionary international markets. Worse, under the structural adjustment programmes, the Indian government withdrew subsidies and extension services. User charges were raised substantially, and the government reduced subsidies on all agricultural inputs, including seeds, water and electricity charges, fertilisers, pesticides, and agricultural implements. As a result, growth of agricultural production fell from 3.5 in the 1980s to 2.0 per cent per annum in the 1990s, and real income growth fell from 4.5 to 2.5 per cent per annum over the same period. Employment growth fell from 2.04 per cent to 0.98 per cent. By 2001, per capita foodgrain availability had fallen to lower levels than that in the 1950s, and deceleration of growth in foodgrain output could have been offset by release of buffer stocks through the PDS, increase in food-for-work programmes, mid-day meal schemes, etc. However, per capita absorption in the 1990s declined on account of large additions to stocks and very high and cheap food exports. The existing rural crisis is thus an outcome of NDA’s neo-liberal policies.

MOBILISATION

The employment guarantee has the potential of turning around the agrarian distress and generating growth. It would mobilise surplus labour and unleash productive forces. Though by no means a complete victory as far as a full-fledged employment guarantee is concerned, it is indisputably a resounding defeat for neo-liberal policies. For this reason, we must remain vigilant and mobilise the rural poor to ensure effective implementation and to prevent global finance from engineering a fiscal crisis to defeat this endeavor.