What Jaitley Is Trying To Teach Modi

Last week, I found myself back in Bandlapalli village of Anantpur district, Andhra Pradesh, to celebrate the tenth anniversary of the launch of the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA), accurately described as the world's biggest public works programme. It is aimed at alleviating rural distress for the most marginalized sections of our population, the poorest of the poor, particularly during the months of seasonal agricultural unemployment and at times of agrarian crisis, such as we have witnessed in the two years of the Modi government.

This was the programme described by Narendra Modi during the Lok Sabha election campaign as designed to "line Congress pockets" (with no explanation as to how his party's electoral pockets were lined with tens of thousands of crore). On becoming PM, he dismissed the programme as a monument to the failure of 60 years of Congress governance, and as amounting to no more than digging holes and filling them up, thus betraying not only a callous disregard for those most in need, but also of the statutory provisions governing MNREGA works that cover a range of rural infrastructure required for agricultural growth in the public domain as well as on private farms.

It appeared for a while that Modi was threatening MNREGA with closure, but in the end, wiser counsel prevailed and the Modi government has persisted with the programme - although in sporadic ways with severe financial cuts, failure to disburse funds on time, and lacking the political will essential to continue touching the lives of one in six Indians who, according to a World Bank estimate, are beneficiaries of the programme.

The tenth anniversary is not a moment for carping criticism as favoured by the BJP, but for deep and honest reflection on what the programme has achieved, what are its deficiencies and what are the required course corrections. At Bandlapalli, Dr. Manmohan Singh, the Prime Minister who had launched the programme ten years earlier, remarked that "The Employment Guarantee Act is the most significant legislation of our times". He explained that this was because, for the first time ever, our rural communities had been given a "regime of rights" covering employment, income, livelihood, self-respect and dignity, in particular, scheduled castes, scheduled tribes, women, and small and marginal farmers in general.

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The programme needs evaluation not in a narrow partisan perspective, or even in technical economic terms, but principally in humanitarian terms: compassion when cold economics disproportionately benefits a few and barely impacts on the many; the contribution MNREGA makes to the livelihood security of the poorest and most needy who are but tangentially included in ordinary processes of economic development; the measure of equity it supplies when fast growth widens inequalities; the involvement it promotes for those whom both democracy and development push to the sidelines; the restraint it furnishes on distress migration to the cities; the gender equalities it encourages by offering employment to women in their immediate neighbourhoods (that has resulted in almost equal participation of men and women in MNREGA works); more importantly, the equality in wages it assures women with men; conferring on the people the right to demand and secure work when most needed; financial inclusion for the poor, as evidenced in the opening of more than ten crore bank and post office accounts through which 80 per cent of MNREGA wages are paid; and the creation of a large number of durable rural assets that facilitate an increase in rural productivity and, as Dr. Singh put it, "accelerate the growth of the rural economy" besides "unlocking the potential of the rural poor to contribute to the reconstruction of their environment".

A major spin-off benefit is that with MNREGA covering the whole country from 2008, rural wages that had been stagnant over the previous six years at last began rising. The aching poverty of the really poor could no longer be as easily exploited by contractors and large landlords as had been the case pre-MNREGA. This is the socio-economic reality, not "playing with mud", as some mischievous and malignant critics have described MNREGA.   

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As the Union Panchayati Raj Minister, I fought a rearguard action to secure for the Gram Sabhas and Panchayati Raj Institutions a central role in running MNREGA. This has not only given village panchayats an average of Rs 15 lakh annually in their kitty, it has empowered the Gram Sabha to participate in the selection of works and supervise through social audit the implementation of the programme. Thus MNREGA has empowered local communities more effectively than any of the other rural welfare programmes, giving financial teeth to participatory democracy at the grassroots, particularly for SC/ST/women who are the principal beneficiaries of this social security net. This is their guarantor of livelihood at times of the worst stress for the most economically and socially stressed citizens of our country.

Of course, the implementation - and even conception - of the scheme has flaws that need to be corrected. The tenth anniversary would have been the appropriate occasion for high-level introspection. Instead, the Modi government has ignored the historic opportunity for making changes and continues with the scheme in a lackadaisical manner only because its rural and agricultural development programmes have in these two drought years been such a flop that if they were to withdraw MNREGA in today's circumstances, the drubbing they have received in the panchayat polls in Modi's home state of Gujarat as well as Maharashtra and Rajasthan, besides the reverses they have suffered in by-elections in Madhya Pradesh, would be replicated country-wide as comprehensively as Kejriwal has done in Delhi and Nitish did in Bihar.

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Among the improvements to be made are: better methods of recording real demand for employment; putting in place easily comprehended methods for recording demand for employment; activating the legislation that States provide doles if employment demanded is not made available within fifteen days; streamlining the steady and uninterrupted flow of funds from the centre to the states and from the states to the panchayats; ensuring that Gram Sabhas get involved in raising demand from the present average level of less than 50 days to nearer the target of 100 days, especially in states like UP and Bihar where rural unemployment and under-employment are most rampant; taking corrective measures to bring balance between the better performance in MNREGA of well-administered states like Andhra Pradesh and Tamil Nadu, which need MNREGA the least, and the much worse performance of badly-administered states in North and East India where the need for MNREGA is the most; rendering far more effective than at present the prevention of corruption and elite distortion, as well as leakages, in the programme; and perhaps most important of all, revamping the programme to make the quality of assets created by MNREGA significantly add to rural productivity without falling into the trap of reducing the labour: materials ratio.

It must always be remembered (although economists and right-wing commentators often to choose to forget it) that the primary aim of this programme is the provision of emergency employment in times of rural stress and to contribute to rural productivity.

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Hence, it is critical to complement the employment guarantee goals of MNREGA to combat rural distress with massive public investment to raise productivity in agriculture and rural development, both of which have suffered severe neglect. It is such programmes that should be measured in terms of poverty alleviation, not MNREGA, which is principally designed as a social security net in times of rural distress and disaster.

The economy under Modi is staggering because of falling rural demand and joblessness in the manufacturing sector. Both factors can be combatted if MNREGA is strengthened and its deficiencies addressed. I think that is what Jaitley is trying to teach Modi.

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(Mani Shankar Aiyar is a Congress MP in the Rajya Sabha.)

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