‘I’m a little nervous about NREGA-2’

Prof Jean Dreze, a visiting professor at the University of Allahabad’s department of economics, is one of the architects and experts of the ambitious NREGA. He is actively involved in field studies and sensitisation of the poor about their rights under the act. He spoke to DNA.

Is NREGA making an impact in rural India?
The scale of NREGA is still quite small, compared to the economy as a whole, and its impact has to be seen in that light. However, where work has been generated on a significant scale, it is certainly making a difference. In Rajasthan, for instance, NREGA is a new lifeline for the rural poor. It also contributes to women’s empowerment, slows down distress migration and creates productive assets.

What are NREGA’s advantages in fighting poverty and unemployment? Is it benefiting women, SC/STs and marginalised groups?
According to official data, in 2009-10 NREGA provided work to 45 million households, each household earning about Rs4,000 on an average. The figures might be inflated, but even after a generous discount, they show that NREGA is an important form of social security in rural areas. It is especially important for women, who make up half of the NREGA workforce. In a survey of 1,000 NREGA workers last year, only 30% of women workers had earned any cash  other than NREGA wages in the preceding three months. A majority of workers come from SC/ST families.

What are the biggest challenges before NREGA?
The biggest immediate challenge is to end delays in wage payments. Under the Act, workers are entitled to payment within 15 days. In reality, workers wait for weeks if not months. This defeats the purpose and, worse, it saps people’s motivation to apply for work. Where wages are delayed, compensation should be paid under the Payment of Wages Act. The biggest challenge facing NREGA is to put in place effective grievance redressal systems. The whole purpose of having an Act, as opposed to a mere “scheme”, is to ensure that people have enforceable entitlements. However, most of the grievance provisions have been sidelined, whether it is the unemployment allowance, or the penalty clause, or compensation. The governments don’t seem to be interested in making themselves accountable.

How effective is the new system of bank payments of NREGA wages?
In principle, it is a good idea. It certainly makes it much harder for crooks and middlemen to embezzle NREGA funds. However, it was a mistake to attempt an overnight switch. This has led to a big jam in the banking system, growing delays in wage payments, and enormous hardship for NREGA workers. The new system should have been introduced gradually, beginning with villages that are relatively close to the nearest bank or post office. Also, the government tends to over-rely on bank payments as a safeguard against corruption, and to neglect other transparency measures. Recent experience shows the system of bank payments is not foolproof.

There is much talk now of NREGA 2. Any view?
Personally I am a little nervous about this “NREGA-2” talk. For one, a lot of groundwork remains for the success of “NREGA-1”, with its focus on core entitlements like work on demand, minimum wages and payment within 15 days. For another, I have doubts about the means that are being proposed to enhance labour productivity, such as wider use of machines. The virtual disappearance of labour-displacing machines from NREGA worksites is one of the main achievements of the last few years, and it should not be reversed. Of course, enhancing productivity is important, but there are better ways. For instance, the productivity of existing NREGA works could be greatly enhanced with moderate doses of scientific and technical inputs.

Are there any lessons from NREGA for the proposed Food Security Act?
Certainly. The Food Security Act must have strong, in-built accountability provisions, including severe penalties on irresponsible officials, swift compensation when entitlements are violated and independent grievance redressal authorities. And we should not be afraid of the financial burden. The Indian economy desperately needs redistributive mechanisms.