A jobs scheme that steadied India

It is now a decade since the Mahatma Gandhi National Rural Employment Guarantee Scheme was launched, and it can be said with reasonable assurance that the programme has been largely successful in living up to what it set out to do: provide employment to India’s rural poor and improve their livelihoods. Sceptics of the spending programme, launched in 2006, had raised concerns that it would be yet another opportunity for middlemen to pocket funds. They had dismissed the argument that the design of MGNREGS as a demand-driven scheme would make it more targeted and less prone to leakage. Ten years on, the sceptics have been largely proved wrong. Yes, the efficiency of implementation of the scheme varies across States, there is a degree of wastage of resources, there is an issue with delayed payments, works undertaken have not held up in some States, and there remains some information asymmetry leading to uneven implementation. Yet, by and large, study after study has found that MGNREGS has served as a source of employment for the poor in distress situations such as drought, crop failures and lean rural employment days. It has helped raise rural wages steadily over time, and in places where it has been implemented well, built rural assets such as irrigation canals and roads have augmented local infrastructure.

Yet, it is also evident now that over the last five years there has been sluggishness in MGNREGS’s implementation. There have been ups and downs in the Central outlay for the scheme, in terms of allocations as a percentage of overall budget spending and, most importantly, delays in releasing funds to States for wage payments. This has led to a relative slack in demand and consequently a drop in the work hours and even a decline in the average rural wage rate increases in these years. This is primarily because both the Congress-led UPA in its second term in government and the current BJP-led regime have been less than enthusiastic about the need for the scheme. Indeed, data show that only in the past year has the BJP government come around to realising its utility, even if grudgingly. Prime Minister Narendra Modi had remarked last year that his government saw MGNREGS as a symbol of the failures of the Congress governments, and that after 60 years, it was a travesty that we were “still making people dig holes”. These remarks symbolised, at one level, a flawed understanding of the scheme, and at another, a negative mindset about demand-driven welfarism. It took a distressed agrarian situation with the failure of the rabi crop and less-than-optimal rains for the MGNREGS to get its due, and the proportion of delayed payments was reduced in the first three quarters of 2015-16 from what it was in 2014-15. Even so, the implementation of the scheme has continued to be better in some States as opposed to even drought-hit States. It is clear that there needs to be a better political understanding of the need for and the efficacy of welfarism.

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