Bhagvati Patel

THE UNITED PROGRESSIVE ALLIANCE (UPA) Government has fulfilled one of its commitments in the National Common Minimum Programme. The Bill on the National Rural Employment Guarantee Scheme (NREGS) seeking to provide guaranteed employment to one member of every rural household for 100 days on a minimum wage of Rs 60 per day has passed both Houses of Parliament. The Government has allocated Rs 40,000 crore for the scheme.

The scheme, prima facie, appears to be a remedy worse than the disease. Guaranteed employment is necessary for those who are severely affected by natural calamities; it cannot be made a nationwide feature for all and for ever.

Under the present scheme, guaranteed employment is not confined to those who are indeed in need, are most vulnerable, or are chronically unemployed. There are around 14 crore rural households, of which about 30 per cent are families below the poverty line, really needing assistance. During the last three decades, while the rich have become richer (as is evident from the expanding consumer and durable goods market in the rural areas), the poor have become poorer. Many marginal farmers have become landless labourers. The economic condition of a significant number of landless labourers and those who reside in tribal, hilly, desert and drought-prone areas has worsened. Despite a large number of programmes and schemes subsidised by the government and credit granted by financial institutions, the poor have not benefited because of ineffective delivery systems and mismanagement. Well-established monitoring-cum-concurrent evaluation and ex-post evaluation techniques for such programmes are available and should have been utilised to restructure the programme to suit the needs of the really poor.

According to an evaluation by the Planning Commission and the National Sample Survey, out of every one rupee spent on anti-poverty programmes by the government, only 15 paise reaches the beneficiary. For every new programme new agencies are created but none of them has been made responsible to the people for whom the programmes are meant. Panchyati Raj institutions would implement a scheme and the Gram Sabhas would decide the type of work and how to use the funds.

The NREGS calls for rigorous resource planning, technical, managerial and administrative skills, which the Panchayati Raj institutions do not possess. Who will be responsible for capacity building of the members of these institutions?

The NREGS does not provide a long-term solution to the pernicious problem of unemployment. A solution that will reduce the pressure on land and create large-scale self-employment opportunities in the secondary and tertiary sectors in the rural areas has to be found. Investment in agriculture (which has declined from 1.92 per cent of GDP in 1991 to 1.32 per cent in 2003-04) and rural infrastructure is the need of the hour.

Also, employment generation and poverty alleviation programmes should be comprehensive and integrated with backward and forward linkages so that the target group receives good quality assets (land, livestock, rural industries and so on).

They must be given a full package of services, which includes training, inputs, raw materials, equipment, storage, transport and marketing credit facilities.

(The author is a New Jersey-based freelance writer on rural credit and rural development.)

(This article was published in the Business Line print edition dated October 4, 2005)
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