The rhetoric and reality on welfare schemes

KR Shyam Sundar | Updated on: Feb 03, 2019
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The Budget’s allocations for pension for unorganised sector workers and MGNREGA should be backed by commitment

The so-called interim Budget presented today in Parliament transcended the terse limits of being a technical vote-on-account budget and spelt out big ticket incentives and sops to various target groups such as the farmers, workers in both the organised and the unorganised sector, the middle class and the aspirational business class.

The government has used the Budget to remind the working class of the good work it has done, even though some measures like the extended maternity benefit (from 12 to 26 weeks) and the 10 per cent reservation for economically backward general category people are facing implementation issues.

Interim Finance Minister Piyush Goyal has allocated ₹60,000 crore to MGNREGS, which seems huge. However, the NREGA Sangharsh Morcha has shown that allocation for MGNREGS as a percentage of national income decreased from 0.33 per cent in 2011-12 to 0.26 per cent in 2017-18, and it is not unusual to experience a shortfall in the funds by the third quarter of the fiscal. MGNREGA moderated rural distress to a great extent despite its shortcomings.

Recent press reports on the job front provide a grim picture. According to the leaked data of NSSO for 2017-18 unemployment peaked to 6.1 per cent, labour force participation declined (from 39.5 per cent in 2011-12 to 36.9 per cent in 2017-18) and youth unemployment rate has climbed steeply (18 per cent for urban male and 27 per cent for urban female). The CMIE data has shown a loss of 11 million jobs during 2018.

But the government is unmoved by these and Goyal has stuck to EPFO data to argue that registrations under the EPF scheme have grown by nearly 2 crore in the last two years, showing both formalisation and job creations.

But much of these huge additions could be due to increasing formalisation and not reflective of jobs creation. At the same time the widely contested revised GDP growth rates project a rather rosy picture of the post-demonetisation years of 2017-18.

What is worrying is that neither the government nor the NITI Ayaog have devised even a reformed statistical system on the labour market. But the most striking aspect of the new narrative on jobs is the radical shift in emphasis from wage employment to self-employment. In this sense job multiplier is claimed to be higher. This narrative is baffling as it does not consider the job mortality rates amongst this category; many rendered unemployed end up in the unorganised jobs like Ola/Uber drivers. Hence job count may be duplicating or not reflective of realities.

The government has come up with a contributory pension scheme with matching contribution by the government for the 42 crore workers in the unorganised sector earning less than ₹15,000 per month. This figure is much higher and even double than the minimum wage in many States and raises questions again on defining poor and the vulnerable (as in the case of eligibility criteria for 10 per cent reservation). Though the premium is pegged at progressively lower amounts as the age of workers is lower, the assured pension of ₹3,000 per month for workers in say 2052 (when the workers reach 60 years) will be a pittance.

This could have been a minimum pension and not a maximum given the different inflationary contexts. Further, the real challenge is administering the scheme. The devil may be in the detail, such as the minimum period for which contribution will have to be made, manner of registration and the contributory premium for older workers, among other aspects.

The second detail is surely on the delivery front as reflected by the failure of existing pension schemes — highlighted by a recent protest of unorganised sector workers in Delhi.

A section of the salaried class is surely set to rejoice over the spate of sops provided on personal income tax and the ruling dispensation has bet heavily on them for returning to power.

The other sections of the salaried class need to wait for a full-fledged Budget. Concerns over the design of grand schemes such as Ayushman Bharat or the poor implementation of MGNREGA can take the sheen off these grand schemes.

Hence the political returns may not be as high as envisaged by the government.

Professor, XLRI, Jamshedpur

Published on February 03, 2019

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