MacroScan (Printable Version) - Resist Dilution Of Employment Guarantee

Though the common minimum programme of the UPA government promised an immediate enactment of a legal employment guarantee of at least a hundred days per rural household in all parts of India, there has been a consistent dilution of the Act. This is now reduced to a mere formality and a farce.

Many non-party social activists came together and put up a draft act to the NAC. Though strong on people's entitlements, the financial structure that would realize rights envisaged by the act was problematic from the very beginning. Several economists argued for a fully centrally funded act along the lines of the food for work programme and clear demarcation of liability for payment of unemployment allowance between the center and the states in accordance with the cause for non-provision of work. Unfortunately, the Drafting Group did not agree with the characterization of the present condition of state finances as one of fiscal crisis brought on by central interest and devolution policy. The draft was put up before the NAC for consideration. The Act suffered further dilution at this stage, and subsequent to this the MoRD draft too carried forward the process of dilution.

But the main hindrances were put up by the Finance Ministry, who from the very beginning had opposed an Act and were happier with expansion of the food for work programme. The Chairperson of the Planning Commission too is alleged to have launched a campaign of sorts against the Act, saying that the CMP was unaffordable, offering 'packages' to state governments in exchange for an opposition to the Act, approaching MPs to vote against the Act and proposing ridiculous alternatives like a central enabling Act which is funded by state governments! The Prime Minister himself insisted on the political necessity of the Act, but was happy to go along with an Act with a flexible legal and wage framework; restricted to poor households only and uncommitted geographical coverage with a high degree of financial burden on the states.

It is now learnt from reliable sources that the Employment Guarantee Act has been seriously diluted and compromised. The indications had started coming in over a month ago. Now, the Act has taken final shape and the Finance Ministry and the Planning Commission is hoping to bulldoze this diluted anti-people, anti-woman and anti-State government Act through. They have played into the hands of Finance Capital by designing an act that is effectively a narrowly targeted scheme which can move from district to district at any wage, all at the whims and fancies of the central government run by this unholy trinity. The Left and other progressive allies in Parliament have a historic role to play, because the present conjuncture has produced a confrontation between two opposing tendencies: a leftward shift of the masses as they bear the burden of neo-liberalism on the one had and the ascendancy of neoliberal adherents in government on the other. The Left has to plan a strategy that pushes a pro-people EGA while fighting against this diluted draft.

The main revisions in the final draft, their implications and alternative formulation are summarized below. The government has created a targeted scheme dependent fully on the whims and fancies of the central government, which places an unnecessary and unaffordable burden on state governments.

Final revisions in the Act:

The Preamble has been reformulated to include the word poor before defining the households whose livelihoods are sought to be secured. ''An Act to enhance livelihood security of the poor households in rural areas of the country by providing at least one hundred days of guaranteed wage employment to every household whose adult member volunteer to do unskilled manual work.''

Targeting has many problems. The identification of the poor is far from satisfactory, both in terms of the criteria and procedure. The problem of wrong exclusion is rampant and has far more serious consequences than wrong inclusion. The livelihoods of vast sections of the near poor too are extremely precarious and fragile. Droughts and even minor disturbances can push huge sections into poverty, hunger and malnourishment. No matter what measure one uses of hunger or malnutrition, there is no doubt that Indian people suffer pervasive and persistent food insufficiency. According to Madhura Swaminathan, the National Family Health Survey 1998-99 shows that 47 per cent of children below the age of three are malnourished by the weight-for-age criterion; the National Nutrition Monitoring Bureau shows that 48.5 per cent of adults had a Body Mass Index below the norm in 1993-94. Utsa Patnaik finds that 75 per cent of the rural population and 50 per cent of the urban population consumes less than the norm of 2400 calories per day for rural and 2100 for urban persons.

Recommendation: Both the employment guarantee and the payment of the unemployment allowance must remain universal and self-targetted, if not for all rural adults who are willing to work than at least for all rural households, as per the CMP. This backdoor targetting is a direct violation of the CMP.

The center has been empowered to notify the areas as well as the period for which the act will remain in force in different states. ''The Act shall come into force in those districts in a State on such date for such period as may by notified by the Central Government and different dates may be appointed for different districts of the States. Provided that it shall come into force immediately in such areas and for such periods as may be notified and shall be extended to cover all the rural areas of India after evaluating the implementation of Act in the districts chosen.''

This effectively erodes its ability to act as a legal right or guarantee for all rural households. It is a contradiction to guarantee employment through an Act while retaining the privilege of withdrawing it, any time! Linking geographical coverage to an evaluation of the programme again does the same thing.

Recommendation: The notification of areas to be covered under the Act must be irreversible. The Act must clearly state a time period of 5 years within which all rural areas of India will be notified and brought under coverage. The monitoring and evaluation is necessary to strengthen the provision of the employment guarantee, etc.

Only those who are identified as BPL are entitled to the payment of the unemployment allowance. This effectively reduces the scheme to a targeted one, since there is no penalty for not generating work to those outside the BPL list.

''If the applicant, who is from a poor rural household, is not provided with employment in the manner provided in sub-section (3), he or she shall be entitled to a daily unemployment allowance in accordance with provisions made in Section 11.''

Recommendation: The entitlement to the unemployment allowance is an important safeguard to ensure access to the employment guarantee. Thus, every person/household entitled to the employment guarantee must also be eligible for payment of the unemployment allowance, which must remain universal and self-targetted.

Wages are no longer linked either to the statutory minimum wages or the central advisory minimum wage.

''Notwithstanding anything contained in the Minimum Wages Act, 1948, the Central Government may fix the rate at which wages shall be paid to the labourers employed under the Programme. Provided that, different rates may be notified for different areas. Provided further that, until the Central Government notifies wage rates for the purposed of this Act, labourers shall be paid the statutory minimum wages fixed by the respective State Governments for the agricultural labourers''.

This puts in place a framework of completely flexible and arbitrary wages, without setting a lower bound linked to a minimal standard of living. At the moment, most centrally-sponsored programmes like the food for work, the SGRY, etc. support statutory minimum wages fixed by the respective State Governments for agricultural labourers without administrative or legal difficulty. The present Act proposes to introduce the concept of wage flexibility without a minimum linked to cost of living in government programmes, which is not acceptable.

Recommendation: The wage should be no less than the current level of the minimum national reference wage/national advisory wage of Rs 66/-, which should be indexed to the All India CPI-AL for future revision. Alternately, the center should support the statutory minimum wages fixed by the respective State Governments for agricultural labourers as in the case of the SGRY and the FFW programme.

The definition of works has been narrowed substantially and made even more stringent than before

''The focus of the Programme shall be on works relating to water conservation, creation of additional irrigation potential through micro and mini irrigation, drought-proofing (including afforestation and tree-plantation) and wasteland-development. Flood control and protection works (including drainage in water-logged areas), rural connectivity to provide all weather access and such other labour intensive activities, as may be notified by the Central Government from time to time, may also be included under the Programme. The State Council shall prepare a list of ''preferred works'' for different areas based on their potential to enhance water conservation, drought proofing, and their ability to create durable assets''.

While it is important that the scheme mobilizes surplus labour for social and economic development through the creation of durable assets and provision of useful public services, over-specification will severely erode the ability of the scheme to provide employment guarantee. Large sections may be pushed on to the unemployment allowance and many areas may be left out for this reason. The panchayats too may be severely constrained and unable to generate work if permissible works are defined too narrowly. The principal aim of the Act must remain employment guarantee.

Recommendation: All works undertaken under the Act should be productive in the broad sense that they contribute directly or indirectly to the provision of essential public services, the increase of production, the creation of durable assets, the preservation of the environment, or the improvement of the quality of life.

State governments have to meet 25% of the material cost as well as the entire unemployment allowance. This strains already overburdened and crisis ridden state finances. It gives the state governments a motive to support the targeted unemployment allowance entitlement.

''The wage component of the cost of the Programme shall be met by the Government of India. The material component of the costs of the programme upto the percentage specified in clause (v) of sub-section (3) of Section 8, shall be shared by the Central and State Governments in the ratio of 3:1. Any material cost in excess of the percentage prescribed shall, however, be paid by the State Government. Unemployment allowance payable under the provisions of the Act shall be liability of the State Governments.''

The finances of state governments too are under severe strain largely on account of policies beyond their control, including lower transfers from the center than recommended by the Finance Commission, salaries and pensions of government employees, interest rate policy, access to borrowings, etc. At the same time, most social and economic development activities and the provision of infrastructure is the responsibility of the states. Additionally, it is constitutionally not correct for the central government to impose a financial burden on the states without conformity Acts being passed in each state assembly, a procedure likely to cause long delays.

Recommendation: Financial structure to be designed along the lines of the food for work programme with 100 % funding by the center The wage contribution of the centre must extend at least to a national norm initially fixed at no less than Rs 66 per day, and indexed to the All India CPI-AL for future revision. Additionally, the Centre should finance material costs in the ratio of 70:30 labour : material. When there is a delay in the devolution of funds to the state government from the Central Fund, the Central government must reimburse the state government for the associated unemployment allowance payments. To meet the administrative costs of the Programme, the funds devolved by the Centre to each state should include an additional component amounting to 5% of the total spending on wages and materials.''

There is an apprehension that women would be excluded from the scheme, which was dangerous in the context of abysmally low levels of poorly paid employment of women in rural areas reported by all surveys. Unfortunately, the Act does not provide adequate safeguards against the exclusion of women from the scheme, which becomes relevant in the context of an Act that does not provide individual guarantee. The Act merely brings grievances relating to discrimination of and harassment of women under the purview of the redressal mechanisms which will be prescribed by the State Government under the rules.

Recommendation: The Act should safeguard the interests of women and give full attention to their concerns with regard to availability, location, type and organization of work. In the unfortunate event where the employment guarantee is restricted to a specified number of days per household (as proposed in the Common Minimum Programme), it should be ensured that at least 40 per cent of workers employed in a particular Block are women, so that women are not pushed disproportionately on to the unemployment allowance or out of the scheme.



Themes > Features	06.12.2004


Resist Dilution Of Employment Guarantee


Though the common minimum programme of the UPA government promised an immediate enactment of a legal employment guarantee of at least a hundred days per rural household in all parts of India, there has been a consistent dilution of the Act. This is now reduced to a mere formality and a farce. Many non-party social activists came together and put up a draft act to the NAC. Though strong on people's entitlements, the financial structure that would realize rights envisaged by the act was problematic from the very beginning. Several economists argued for a fully centrally funded act along the lines of the food for work programme and clear demarcation of liability for payment of unemployment allowance between the center and the states in accordance with the cause for non-provision of work. Unfortunately, the Drafting Group did not agree with the characterization of the present condition of state finances as one of fiscal crisis brought on by central interest and devolution policy. The draft was put up before the NAC for consideration. The Act suffered further dilution at this stage, and subsequent to this the MoRD draft too carried forward the process of dilution. But the main hindrances were put up by the Finance Ministry, who from the very beginning had opposed an Act and were happier with expansion of the food for work programme. The Chairperson of the Planning Commission too is alleged to have launched a campaign of sorts against the Act, saying that the CMP was unaffordable, offering 'packages' to state governments in exchange for an opposition to the Act, approaching MPs to vote against the Act and proposing ridiculous alternatives like a central enabling Act which is funded by state governments! The Prime Minister himself insisted on the political necessity of the Act, but was happy to go along with an Act with a flexible legal and wage framework; restricted to poor households only and uncommitted geographical coverage with a high degree of financial burden on the states. It is now learnt from reliable sources that the Employment Guarantee Act has been seriously diluted and compromised. The indications had started coming in over a month ago. Now, the Act has taken final shape and the Finance Ministry and the Planning Commission is hoping to bulldoze this diluted anti-people, anti-woman and anti-State government Act through. They have played into the hands of Finance Capital by designing an act that is effectively a narrowly targeted scheme which can move from district to district at any wage, all at the whims and fancies of the central government run by this unholy trinity. The Left and other progressive allies in Parliament have a historic role to play, because the present conjuncture has produced a confrontation between two opposing tendencies: a leftward shift of the masses as they bear the burden of neo-liberalism on the one had and the ascendancy of neoliberal adherents in government on the other. The Left has to plan a strategy that pushes a pro-people EGA while fighting against this diluted draft. The main revisions in the final draft, their implications and alternative formulation are summarized below. The government has created a targeted scheme dependent fully on the whims and fancies of the central government, which places an unnecessary and unaffordable burden on state governments. Final revisions in the Act: The Preamble has been reformulated to include the word poor before defining the households whose livelihoods are sought to be secured. ''An Act to enhance livelihood security of the poor households in rural areas of the country by providing at least one hundred days of guaranteed wage employment to every household whose adult member volunteer to do unskilled manual work.'' Targeting has many problems. The identification of the poor is far from satisfactory, both in terms of the criteria and procedure. The problem of wrong exclusion is rampant and has far more serious consequences than wrong inclusion. The livelihoods of vast sections of the near poor too are extremely precarious and fragile. Droughts and even minor disturbances can push huge sections into poverty, hunger and malnourishment. No matter what measure one uses of hunger or malnutrition, there is no doubt that Indian people suffer pervasive and persistent food insufficiency. According to Madhura Swaminathan, the National Family Health Survey 1998-99 shows that 47 per cent of children below the age of three are malnourished by the weight-for-age criterion; the National Nutrition Monitoring Bureau shows that 48.5 per cent of adults had a Body Mass Index below the norm in 1993-94. Utsa Patnaik finds that 75 per cent of the rural population and 50 per cent of the urban population consumes less than the norm of 2400 calories per day for rural and 2100 for urban persons. Recommendation: Both the employment guarantee and the payment of the unemployment allowance must remain universal and self-targetted, if not for all rural adults who are willing to work than at least for all rural households, as per the CMP. This backdoor targetting is a direct violation of the CMP. The center has been empowered to notify the areas as well as the period for which the act will remain in force in different states. ''The Act shall come into force in those districts in a State on such date for such period as may by notified by the Central Government and different dates may be appointed for different districts of the States. Provided that it shall come into force immediately in such areas and for such periods as may be notified and shall be extended to cover all the rural areas of India after evaluating the implementation of Act in the districts chosen.'' This effectively erodes its ability to act as a legal right or guarantee for all rural households. It is a contradiction to guarantee employment through an Act while retaining the privilege of withdrawing it, any time! Linking geographical coverage to an evaluation of the programme again does the same thing. Recommendation: The notification of areas to be covered under the Act must be irreversible. The Act must clearly state a time period of 5 years within which all rural areas of India will be notified and brought under coverage. The monitoring and evaluation is necessary to strengthen the provision of the employment guarantee, etc. Only those who are identified as BPL are entitled to the payment of the unemployment allowance. This effectively reduces the scheme to a targeted one, since there is no penalty for not generating work to those outside the BPL list. ''If the applicant, who is from a poor rural household, is not provided with employment in the manner provided in sub-section (3), he or she shall be entitled to a daily unemployment allowance in accordance with provisions made in Section 11.'' Recommendation: The entitlement to the unemployment allowance is an important safeguard to ensure access to the employment guarantee. Thus, every person/household entitled to the employment guarantee must also be eligible for payment of the unemployment allowance, which must remain universal and self-targetted. Wages are no longer linked either to the statutory minimum wages or the central advisory minimum wage. ''Notwithstanding anything contained in the Minimum Wages Act, 1948, the Central Government may fix the rate at which wages shall be paid to the labourers employed under the Programme. Provided that, different rates may be notified for different areas. Provided further that, until the Central Government notifies wage rates for the purposed of this Act, labourers shall be paid the statutory minimum wages fixed by the respective State Governments for the agricultural labourers''. This puts in place a framework of completely flexible and arbitrary wages, without setting a lower bound linked to a minimal standard of living. At the moment, most centrally-sponsored programmes like the food for work, the SGRY, etc. support statutory minimum wages fixed by the respective State Governments for agricultural labourers without administrative or legal difficulty. The present Act proposes to introduce the concept of wage flexibility without a minimum linked to cost of living in government programmes, which is not acceptable. Recommendation: The wage should be no less than the current level of the minimum national reference wage/national advisory wage of Rs 66/-, which should be indexed to the All India CPI-AL for future revision. Alternately, the center should support the statutory minimum wages fixed by the respective State Governments for agricultural labourers as in the case of the SGRY and the FFW programme. The definition of works has been narrowed substantially and made even more stringent than before ''The focus of the Programme shall be on works relating to water conservation, creation of additional irrigation potential through micro and mini irrigation, drought-proofing (including afforestation and tree-plantation) and wasteland-development. Flood control and protection works (including drainage in water-logged areas), rural connectivity to provide all weather access and such other labour intensive activities, as may be notified by the Central Government from time to time, may also be included under the Programme. The State Council shall prepare a list of ''preferred works'' for different areas based on their potential to enhance water conservation, drought proofing, and their ability to create durable assets''. While it is important that the scheme mobilizes surplus labour for social and economic development through the creation of durable assets and provision of useful public services, over-specification will severely erode the ability of the scheme to provide employment guarantee. Large sections may be pushed on to the unemployment allowance and many areas may be left out for this reason. The panchayats too may be severely constrained and unable to generate work if permissible works are defined too narrowly. The principal aim of the Act must remain employment guarantee. Recommendation: All works undertaken under the Act should be productive in the broad sense that they contribute directly or indirectly to the provision of essential public services, the increase of production, the creation of durable assets, the preservation of the environment, or the improvement of the quality of life. State governments have to meet 25% of the material cost as well as the entire unemployment allowance. This strains already overburdened and crisis ridden state finances. It gives the state governments a motive to support the targeted unemployment allowance entitlement. ''The wage component of the cost of the Programme shall be met by the Government of India. The material component of the costs of the programme upto the percentage specified in clause (v) of sub-section (3) of Section 8, shall be shared by the Central and State Governments in the ratio of 3:1. Any material cost in excess of the percentage prescribed shall, however, be paid by the State Government. Unemployment allowance payable under the provisions of the Act shall be liability of the State Governments.'' The finances of state governments too are under severe strain largely on account of policies beyond their control, including lower transfers from the center than recommended by the Finance Commission, salaries and pensions of government employees, interest rate policy, access to borrowings, etc. At the same time, most social and economic development activities and the provision of infrastructure is the responsibility of the states. Additionally, it is constitutionally not correct for the central government to impose a financial burden on the states without conformity Acts being passed in each state assembly, a procedure likely to cause long delays. Recommendation: Financial structure to be designed along the lines of the food for work programme with 100 % funding by the center The wage contribution of the centre must extend at least to a national norm initially fixed at no less than Rs 66 per day, and indexed to the All India CPI-AL for future revision. Additionally, the Centre should finance material costs in the ratio of 70:30 labour : material. When there is a delay in the devolution of funds to the state government from the Central Fund, the Central government must reimburse the state government for the associated unemployment allowance payments. To meet the administrative costs of the Programme, the funds devolved by the Centre to each state should include an additional component amounting to 5% of the total spending on wages and materials.'' There is an apprehension that women would be excluded from the scheme, which was dangerous in the context of abysmally low levels of poorly paid employment of women in rural areas reported by all surveys. Unfortunately, the Act does not provide adequate safeguards against the exclusion of women from the scheme, which becomes relevant in the context of an Act that does not provide individual guarantee. The Act merely brings grievances relating to discrimination of and harassment of women under the purview of the redressal mechanisms which will be prescribed by the State Government under the rules. Recommendation: The Act should safeguard the interests of women and give full attention to their concerns with regard to availability, location, type and organization of work. In the unfortunate event where the employment guarantee is restricted to a specified number of days per household (as proposed in the Common Minimum Programme), it should be ensured that at least 40 per cent of workers employed in a particular Block are women, so that women are not pushed disproportionately on to the unemployment allowance or out of the scheme.



© MACROSCAN 2004