#dnaEdit: Don’t dilute MNREGA

The incisive letter authored by leading economists to Prime Minister Narendra Modi urging him not to dilute the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) has once more renewed attention on the importance of welfare schemes in India’s development trajectory. The economists have voiced their concern over the present government’s move to dilute or restrict some critical provisions of the Act. “Wages have been frozen in real terms, and long delays in wage payments have further reduced their real value,” the economists wrote. Underlining the positive difference that the scheme has brought to the lives of the poor, they pointed out that 50 million households are getting jobs each year at a relatively small cost, besides “wide-ranging social benefits”. The Union rural development minister Nitin Gadkari has responded to this widely publicised letter by justifying the government’s decision to limit the scheme to the “most backward and needy districts” as well as reduce the labour-material ratio from 60:40 to 51:49. It is yet to be seen whether the mounting resistance to whittling down this important social welfare policy can stall the changes in the MNREGA.

The tussle over MNREGA is symptomatic of a wider policy debate: a clash of economic ideas and models. Before the Modi government took charge, there was apprehension that the new dispensation would scrap the existing subsidised welfare schemes. Recall in this context the policy debates raging in the months preceding the 2014 general elections. At the heart of these acrimonious face-offs — the charge levelled by neo-liberal economists and corporates that the Congress, by funding a host of welfare schemes, was accelerating the economic crisis. Party president Sonia Gandhi and the National Advisory Council (NAC) were particularly targeted for promoting welfarism and not economic growth.

The food security bill came in for stringent criticism, its critics denouncing the bill for further widening the Current Account Deficit (CAD). Quite often though, these hyped up concerns of welfare schemes draining national wealth have been found to be baseless. For instance, the MNREGA, at a relatively small cost — currently 0.3% of India’s GDP — has brought substantial relief to the poor. Yet to be anointed the country’s Prime Minister, Modi was then perceived as the saviour of economic growth, which was to draw its inspiration from the much eulogised Gujarat model of development.

It’s true that Modi — at least so far — hasn’t taken any emphatic steps to undo existing welfare schemes. Yet all indications point to the government’s resolve to modify some important legislations and schemes — from the land acquisition and rehabilitation bill to the MNREGA. The Modi government has already talked about diluting the rehabilitation component and reducing the consent ratio of those who will have to give up their land for industrial projects. Now, the MNREGA too is under the government scanner. For the time being, these welfare schemes have survived but their provisions could be watered down in a manner that would end up hurting the very disadvantaged communities whom it was meant to serve in the first place. For instance, a majority of MNREGA workers are women and close to half are Dalits and Adivasis. A large body of research also shows that contrary to the popular assumption, the MNREGA has created substantive productive assets. Corruption in the implementation of the scheme too has been curbed.

Finally, as the petitioning economists have underlined, any amendment in the scheme limiting it to the country’s poorest 200 districts would run contrary to a fundamental premise of the Act: “Gainful employment that affords basic economic security is a human right.”