NREGA: An Unmixed Evil (?)

There has again been an upsurge of arguments against the NRGEA, calling it detrimental to production, inflationary and a sheer wastage of money. Of course, those tireless fighters against the NRGEA (National Rural Employment Guarantee Act) are silent whether tax concessions of the order of trillions of rupees to the corporape-lobby and the proliferation of Special Economic Zones (alternatively called Special Exploitative Zones or Slave Economic Zones), which has resulted in a remarkable rise in the number of billionaires (in terms of dollars) in India are beneficial to the economy in terms of the Human Development Index (HDI).

Do the crusaders against the NRGEA want to mean that there is no open (as distinguished from disguised) unemployment in rural India? If they do not, what is their alternative prescription for eliminating this unemployment? They have been arguing that implementation of the NRGEA has led to inflation only, as if there was no significant inflation in the Indian economy before the NRGEA was passed and began to be implemented, although the extent of this implementation varied significantly as between different states and regions. There are a number of reasons for the phenomenon of inflation in the Indian economy, oligopolistic and monopolistic control over the process of production and trade being an important one among them at the macroeconomic level.

There is an argument that the NRGEA has created reluctance among labourers to move from low-productivity areas to high-productivity ones. Then the question is if the productivity of these alleged low-productivity areas should be allowed to remain in the same state and the differences between high productivity and low productivity should be allowed to persist forever. If such differences are not desirable, then more labour should be put in to reduce them, and the NRGEA can be utilized for this purpose. There is no point in arguing that the implementation of the NRGEA has created only dsguised unemployment: a sincere visitor to the countryside may be able to find many places where sincere implementation of the NRGEA has created much durable rural assets that have been beneficial to the people at large. It, however, cannot be gainsaid that faulty planning and corrupt practices, along with serious underimplementation of the programme in many states, have prevented much of the potential gains from bring realized. There is an influential section among the rural people, mainly non-cultivating landowners, who say if the labourers work under the 100 days' programme, who will tend their cattle and goats? These people always blame increased labour costs as the obstacle to the realization of expected profits, but never blame increased costs of inputs like fertilizers, pesticides, power etc.

No doubt the work done under the NRGEA is highly labour intensive and this is a problem as far as the durability of the assets generated is concered. This question is important because although the limited implementation has increased, to however small an extent, the purchasing power of the rural work force and has thus expanded the domestic market, viability of an employment oriented approach to development also depends in the long run on whether there is an increase in supply to match the increase in demand. Increase in supply of improvement of the HDI over a five-to-ten year period may be ensured by some  public works other than those that are possible within the present operational frame of the NRGEA. These works may consist of projects relating to activities like rural communication, warehouses, local water management schemes, local forestry, health centres etc. Such projects, however, need some amount of capital and intermediate goods. But this does not mean that the NRGEA should be dispensed with; it only implies that the NRGEA should be made a more productive instrument of growth of the domestic market in terms of both demand and supply.

Frontier
Vol. 47, No. 25, Dec 28, 2014 -Jan 3, 2015