One percent of the GDP* for 40% of the people. That's how National Advisory Council (NAC) member Aruna Roy put it, when asked if the Employment Guarantee Scheme was affordable. So, why is it that under the cover of 'unaffordability', the UPA government diluted this important legislation? The draft tabled in Parliament has killed the provision that pegged wages to be paid under the Act at the level of the national minimum wage. It has also made large-scale deployment of the scheme conditional on its success in a few chosen districts first, in effect eliminating the need to search for funds. This, despite the fact that years of experience from Maharashtra's EGA scheme did inform drafters at the NAC.
The money is certainly available. Supporting Roy's assertion, others have pointed out that the current subsidies for agriculture, which are largely swallowed up by fertiliser makers and large farmers, could simply be redirected to the EGA, in effect costing the Centre nothing. Moreover, this straightforward swap in method of subsidisation would probably deliver the benefits better to the intended population - the rural poor.
The NAC's EGA proposals were also structurally advanced. They tied the creation of public works (assets) to the availability of unemployment in rural areas through a limited employment guarantee. Clearly, roads, drains, and water supply systems are necessary nationwide, and if the country can otherwise borrow money to pay contractors for these projects, why not for the EGA programme? In fact, if the guarantee forces the government to fork out unemployment allowances rather than work contracts, that could be added pressure on administrations to take up long-pending public works diligently.
Why then was this legislation introduced in Parliament with - as one insider put it - a pre-meditated effort to weaken its objectives?
The cynical among us will assume the usual answers - the Centre doesn't really want to help the rural poor, and is quite happy to simply make a show of doing so. Politicians whose power - and wealth - have derived so much from exploiting various government schemes do not want alternatives that would reduce their ability to pick the Treasury for their favourite to-dos. The Left too is busy getting into bed with the same institutions it has railed against for as long as anyone can remember, and is happy to do just enough to milk what it sees as a more assertive electorate. And so on.
Such cynicism is borne of long experience with reality, and is probably understandable at some level. But there is more.
• EGA sabotaged?
During the last decade or so, we have witnessed that political parties of all
stripes have become harder to distinguish in their attitudes towards the large
economic trends of our times. Some, especially in the NDA, are self-appointed
cheerleaders for this course, and others on the Left are busy embracing
corporate style liberalisation for their backyards, notwithstanding their
hypocritical admonition of the Congress for doing much the same thing in New
Delhi. The Congress itself is apparently leaning to the economic right, but its
public pronouncements are customary cliches of the left - 'pro-poor', 'reforms with
a human face', etc. On balance, support for the rhetoric of free markets has
found its way into the policies of every political party, and the differences
have more to do with method. This, despite the sharper pro-rural positions taken
by our commerce ministers at the WTO.
One might argue that the widening common ground is indicative of the general merit of liberalisation - after all, if parties of all economic leanings can identify with it, surely there must be something good in it? Maybe. Still, it is noteworthy that the strongest proponents of free markets are Western nations who developed their relatively greater social equity and economic potential gradually, and having later warmed to liberalisation, don't practice much of it themselves. India and other developing nations, on the other hand, are being forced to adapt to diluted roles for government in the delivery of public goods far more quickly, and with far less preparation to manage the enormous implications.
In earlier stages of the discourse, the left-right divide over the nation's affordability for guarantees also missed the point. It is one thing for developed nations with substantive per capita incomes and public investments in infrastructure to debate on the future of social security, employment security and health care costs for their relatively better off citizens. It is even natural that some of those debates are likely to attract a left vs right partisanship. But for a developing nation like India, governments must find ways to meet human development goals because it is the democratic thing to do, not because the left or the right says so. Our substantially lower tax/GDP ratio only indicates the need to find more resources at precisely the time when the best advocacy is being made available, not shrivel and adapt to developing with less.
In toeing the line from developed nations, we may be acquiring in fast-forward mode the same kind of economic leadership in the political class that some countries in the West have been perfecting for decades. Our mammoth interest in equitable development is being reduced to little more than the sum of the interests of its big businesses, with other considerations subjugated to this formulation. In effect, we are hearing that what's good for Premji, Ambani, Tata take your pick from a number of other brand names - must be good for India; and what may be good for 40 million rural workers isn't. Consumed by this mantra, the states are in virtually unending competition to dole out subsidies of land and tax relief to the already wealthy, in the name of progress.
It is also noteworthy that the bill is being received quite differently from another recently-funded entitlement. When the 2% national cess was introduced to fund expenditure on primary education, it was by and large welcomed in a non-partisan fashion by taxpayers - from capitalists in Mumbai to communists in Kolkota, despite legitimate concerns everywhere that a corrupt delivery system might derail the plan. The EGA, on the other hand, isn't similarly welcome. Some reforms in India attract more ideological and systematic opposition, and hence diffused popular support than others. Education entitlements are viewed more non-partisanly in the nation than are labour entitlements, when in fact pro-development measures are needed in both these and other sectors.
Last, look at 'unaffordability' itself. The word is a misleading characterisation. It gives the impression that someone has crunched the numbers and drawn this conclusion, when in fact any number-crunching would prove the opposite! These same fears of unaffordability do not arise when the Pay Commission makes its recommendations on substantial salary increases to the very administrations that have run scores of earlier schemes into the ground. Such selective characterisation gives the game away - the EGA is unaffordable not to the nation, but to the vested interests who have routinely siphoned government revenue for their own prosperity.
The bottom line is this. Even a 100 days per year of guaranteed minimum wage level employment is unaffordable to a prevailing economic ideology that treats entitlements as mere expenditures, and tax waivers to businesses as incentives. Likewise, the Left ideologues can talk themselves into believing that the scheme is unimplementable and needs trial first. After all, for decades in the name of jobs, left-leaning governments colluded with, corrupted, and filled our bureaucracies with incompetent officials ranging from perky second division clerks to Secretaries, many of whom have little faith in their own professionalism, let alone as deliverers of public goods. And now when it comes to real work for the really poor, there's no money.
All of this reduces to one assessment - reforms are good, but those that are tweaked to be especially free to favoured institutions and lobbies are even better! The rural poor, despite plenty of colourful choices for their political representation, lack an identifiable and powerful constituency in the organised sector to present their needs in terms of the prevailing modus operandi in economic policy-making. The nature of debate and the shackles within the system would perhaps matter less, if the poor themselves mattered more. The irony is that an EGA might help them get there, but in its absence they are forced to live with empty choices.
