THE SIGNIFICANCE AND LIMITATIONS OF INDIA’S NATIONAL RURAL

EMPLOYMENT GUARANTEE ACT IN ADDRESSING RURAL POVERTY

Smita Gupta

The post-1990s are marked by the pursuit of neo-liberal policies:

Deflationary macroeconomic policies and falling public development expenditure as pc of GDP on public works, employment generation, rural infrastructure, social services, etc.

Trade liberalization with farmers loosing protection against international price fluctuations

Structural Adjustment Policies resulting in higher input costs and withdrawal of the state from credit, extension services, procurement, price support and infrastructure.

An unparalleled and comprehensive crisis took firm root in rural India, resulting in peasant suicides, starvation deaths, impoverishment, and hunger.

RURAL CRISISGrowing unemployment and underemploymentFalling purchasing powerDeclining per capita availability of foodgrainsReduced farm incomes and real wage growthIndebtedness and land alienation, esp. for small and marginal farmers. Deceleration in agricultural growth, productivity per worker and rural non-agricultural employment growthSlackening pace of poverty reduction and worsening poverty amongst marginalized social groups and ethnic minorities

The distress resulted in electoral defeat for the NDA Government at the Centre, and the UPA government promised to enact the National Rural Employment Guarantee Act, which has the potential of turning around the agrarian distress.

However, forces within the government itself opposed a full-fledged employment guarantee and produced various diluted and inadwquate versions of the Draft Act

Interventions by Left parties and pressure from mass organizations, social movements, and NGOs resulted in the successful enactment of an improved guarantee.

Broadly speaking, three different positions are taken on NREGS:

1. Left-Keynesian: it is both desirable and feasible for broad-based equitable growth to revive agriculture and the rural economy by the creation of productive assets and the multiplier effects of demand expansion in a situation of excess capacity, unemployment and idle resources.

2. Neo-liberal: It is neither desirable nor feasible on the grounds of non-affordability, corruption, and preference for human capital and infrastructure-led growth models.

3. Liberal: it is the ‘human face’ of globalization, a kind of ‘social safety net’ which is desirable but feasible only under very restricted conditions of fiscal discipline.

The Employment Guarantee Act is a step towards the right to work, as an aspect of the fundamental right to live with dignity

It is a recognition that the state cannot retreat from rural development and is responsible to ensure food and livelihood security for the masses

The neo-liberal state had begun to intervene more and more aggressively against the poor and rural India. The NREGA is a recognition that the state cannot retreat from pro-poor development and is responsible to ensure food and livelihood security

The National Rural Employment Guarantee Act 2005 is a law whereby any adult who is willing to do unskilled manual work at the minimum wage is entitled to being employed on local public works within 15 days of applying, with a guarantee of 100 days of unskilled manual work per household per yearCurrently it covers half of rural India, to be extended to the rest within 4 years

NREGS is a “demand driven” programme and employment is to be provided to eligible workers on demand, within 15 days.

Step 1 RegistrationStep 2 VerificationStep 3 Issuing Job CardsStep 4 Application

Unemployment allowances If Employment is not provided within 15 days of receipt of application, the worker shall be entitled to a daily

Unemployment allowance(7(1)) Rates (7(2))

For First 30 days

For the remaining period of the Financial year

Employment wage + Unemployment

allowance

One fourth of the wage rate.

Not less than one half of the wage rate

Equal to the wages for 100 days of work in a financial year (7(3d))

Minimum Wage

A person working for 7 hours would normally earn a wage equal to the wage rate(SchI(8))

Minimum wage fixed by the state Government under the minimum wage Act,1948;

Centre may fix wages, at not less than Sixty rupees per day (6(1))

The Act permits productivitylinked wages under piece rate, with due protection

Mandatory Worksite Facilities for laborers Safe drinking water

Shade for children and periods of rest

First-aid Box for emergency treatment and minor injuries

Depute one woman worker to look after five or more children below the age of six years of women laborers at the wage rate

Permissible works in order of priority(SchI(1)) water conservation; drought proofing ; irrigation canals including micro and minor irrigation

works; provision of irrigation facility to land owned by

households belonging to the SCs and STs or to land of land reforms and Indira Awas Yojana beneficiaries;

renovation of traditional water bodies; land development; flood control and protection works; rural connectivity to provide all-weather access; and any other work which may be notified by the Central

Government in consultation with the State Government.

OUTCOMES [field reports]

Reduction in distress out-migration due to availability of additional income and work

creation and repair of rural infrastructure like roads and water bodies

Retention of children in school and purchase of books for them

Greater interest in local area development due to flow of funds and village meetings

Changing local dynamics in many places with the recognition by workers that they are right holders

Expansion in membership and activities of workers’ and peasant organizations

NREGA and Poverty ReductionPotential: NREGA holds a huge promise for poverty reduction with a supplementary average annual household income of Rs 6000. for this, wages, work days and aggregate expenditure on the Scheme should be high if the Programme has to make any significant dent on poverty. Creation of social and economic infrastructure too would go a long way in reducing poverty.

Experience: The poverty reducing potential is severely undermined through:non-recognition of eligible persons as right holders; inability to make claims due to imposition of a host of arbitrary and discretionary eligibility conditions; non-fulfilment of entitlements guaranteed under the Act, in particular days of work and wages;restrictions on the nature of permissible works;absence of work in the most food-deficit rainy season due to focus on manual labour and earth works

CURTAILMENT OF ENTITLEMENTS

A. Definition of HouseholdOn the basis of common kitchen not nuclear family, number of eligible workers per household >3This reduces per capita entitlementsDisenfranchises female headed households and widowed/separated/estranged married daughters in natal and marital homes

B. Exclusion of Eligible PersonsElderlyMigrantsLack of documentary evidence not required by the lawDivorced/widowed/separated women in natal/marital homes as separate nuclear households

Percentage Rural Households Issued Job cards

0.00

10.00

20.00

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C. Non-payment Of Minimum Wages Workers are earning no more than 40 to 60 per cent of minimum wage, ranging from Rs 16 to Rs 40 per day

Due to unrealistically high work norms under productivity linked piece rates; Inadequate identification of the component tasks;

No differentiation for the elderly, women and ecology;

Administrative inadequacies in task specification, soil identification, lift and lead provision, measurement, both in terms of procedures and adequacy of staff

D. INADEQUATE WORK GENERATION DUE TO

RIGIDITIES IN PERMISSIBLE WORKS AND

ADMINISTRATIVE INADEQUACIES

Work Days Per Registered Household

0.00

10.00

20.00

30.00

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E. INADEQUATE WORKSITE FACILITIES

F. NON-PAYMENT OF UNEMPLOYMENT ALLOWANCE OR COMPENSATION

All these combine to result in

G. UNDERUTILIZATION OF FUNDS AND LOW EXPENDITURE

Financial Performance During 2006-07

0

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CONCLUSION

• Teething trouble apart, the same forces of fiscal conservatism that earlier tried to dilute the Act are now trying to curtail entitlements and minimize expenditure

• However, the NREGA offers an unprecedented opportunity to initiate broad-based growth through poverty reducing employment generation and consequent demand expansion

• Therefore, the recent reports of mobilization and struggles by rural workers for the full and proper implementation of the NREGA is good news!