MGNREGA can revive Rural India

The scheme needs a higher budget. Finance it by rationalising the regressive subsidy regime

Missing in the slew of recent policy measures to arrest the current economic slowdown is any serious policy antidote for the crisis confronting India’s rural economy. What makes this policy silence particularly deafening is the fact that only a few months ago, when elections were round the corner, the rural economy was top priority. In January this year, PM-KISAN was announced and implemented with great gusto. Now, five months after the election, even as the government has belatedly acknowledged the accelerating economic crisis, implementation has slowed down. Disbursements for the third instalment have been significantly lower than the first two instalments which were paid out in the midst of the election campaign.

Perhaps the electoral victory has shifted the government’s political calculus, and emboldened it to focus on other aspects of the economy, specifically the corporate and financial sector in order to boost private investment. But doing this at the cost of focusing on the rural economy is a serious misstep.

For one, current policy measures, including the big ticket corporate tax cuts, are unlikely, in the near term, to address the fall in aggregate demand which lies at the heart of the current slowdown. As economist Himanshu has highlighted, India is witnessing an unprecedented decline in consumption expenditure. Using National Sample Survey Office data, he calculates that consumption expenditure declined at a rate of 4.4% per annum in rural India and 4.8% in urban areas between 2015-16 and 2017-18.

Second, a slew of policy missteps played an important role in accelerating the pace of the consumption slowdown in rural India. These include an inflation targeting monetary policy regime that moved the terms of trade against agriculture, demonetisation and associated measures such as taxing high value cash transactions, and of course, the Goods and Services Tax. Together, these served to reduce liquidity and disrupt established modes of transacting in rural markets.

These policy missteps require specific correctives. A consumption slowdown in a fragile rural economy is a likely indicator of a rise in poverty. Rural India, thus, urgently needs a stimulus (arguably even more than corporate India) to revive consumption demand, in the short-term.

The two most widely debated policy tools through which stimulus could be introduced are an increased Minimum Support Price (MSP) and PM-KISAN. Interestingly, many state governments have recently followed in the Union government’s footsteps by announcing their own versions of farmer income support. These are far more expansive in their budgetary commitments than PM-KISAN.

Both these instruments, however, have limitations. Increasing MSPs risk distorting prices and crop choices that can make long-term agricultural reforms difficult. Moreover, the government is sitting on large, undistributed stockpile of food grains which limits the space for expanded procurement. Income support schemes avoid the distortionary effects of MSPs but confront serious implementation challenges. As the recently released RBI report on state finances 2018-19 pointed out, the success of these schemes is dependent on underlying conditions like completing the digitisation of land records and linking them to bank accounts. This cannot be done overnight, the rushed roll-out of PMKISAN not withstanding. Telangana, the first state to implement and popularise income support to farmers took nearly two years to get its land records database right.

There is, however, a strong case to be made for an improved MGNREGA to serve as the vehicle for delivering a rural stimulus. By design, the MGNREGA is a demand-driven scheme (work is provided to anyone who seeks a job), and therefore avoids targeting problems that confront income support schemes. More important, the programme is designed to incentivise participation of agricultural labour, not just farmers. MGNREGA, thus, has the potential of boosting incomes across all sectors of the rural economy. Finally, contrary to the widely held perception that MGNREGA has merely resulted in “digging holes”, the scheme has played an important role in improving productivity on agricultural land. A majority of work done through MGNREGA is on developing farm land (for instance, constructing irrigation facilities, livestock sheds) owned by small land owners. Improved land productivity can in principle raise farmer incomes and stimulate demand for agricultural labour, thus planting the seeds for a longer term revival.

Leveraging the potential of MGNREGA, however, will require increased budgets, a higher wage floor and mission mode monitoring of implementation. Since 2012-13, MGNREGA budget allocations have consistently fallen short of demand for work, resulting in spending excesses of over ~5000 crores (2017-18 figures). Consequently, wage payments have been delayed (only 32% of wages distributed in the first half of 2017-18 were paid on time) and the overall MGNREGA wage rate has stagnated at levels significantly lower than state minimum wages. Addressing these barriers is critical.

But how will an expanded MGNREGA be financed, especially when government borrowing is at a high of nearly 10% of GDP? There is a case for financing MGNREGA without dipping in to government borrowing and instead rationalising India’s bloated and regressive subsidy regime (fertiliser, water, power) in a phased manner. Crisis can throw up unexpected opportunities. Reforming India’s subsidy regime has been long overdue. Could the current crisis be the opportunity to engineer this structural shift in public expenditure? Of course, more MGNREGA is only one solution to a deeper structural crisis. But if this could result in subsidy reform, the first step toward addressing the long-term challenge will have been taken.

Yamini Aiyar is president and chief executive, Centre for Policy Research

Source: Hindustan Times, 15/10/2019

A rural stimulus: On MGNREGA wage hike

Putting more money in the hands of rural households will stir up the economy

The government’s statistical machinery has begun work on revising the indices that capture the trends in consumer prices experienced in rural India. This opens up the prospect for an upward revision in the wages paid out to workers under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). The current national average wage is just about ₹178 per day. The decision to finally embark on a long-overdue exercise is welcome, irrespective of the immediate trigger. The basket of items whose prices are tracked for constructing the Consumer Price Index for Agricultural Labourers (CPI-AL), for instance, has not been updated for at least three decades. Apart from essential spending on food, rural expenditure patterns have altered significantly in the intervening period, making space for higher spending on services such as education, transport and, of course, telecom. But two-thirds of the dated inflation index is still driven by food prices, which may effectively end up understating the price pressures facing rural households. This depressant effect could be accentuated when low food inflation coincides with decelerating farm incomes that still drive India’s rural economy. Once a new basket is constructed, the Statistics Ministry, along with the Labour Bureau, plans to improve the currency of the CPI-AL (to which MGNREGA wages are linked) and CPI-Rural indices with annual reviews.

If the index revision concludes soon enough, the Centre is geared up to notify updated MGNREGA wages in the current fiscal year itself rather than wait for the onset of 2020-2021. This sense of urgency suggests the government views giving a fillip to the rural economy as a critical tool to combat the headwinds of the slowing economy. The slowdown narrative (and the Centre’s measures to address it) so far has been dominated by urban India’s consumption crimp and easing the corporate tax structure, but the distress in villages where incomes are more vulnerable is more disconcerting. The Reserve Bank of India, in its annual report, has pointed to weakening rural demand since the third quarter of 2018-19 as a serious concern and termed reviving consumption as its top policy priority. Reflecting rural distress, demand for work under the MGNREGA has been rising. With job creation in a flux and sentiment about the economy worsening, any move to put more money into rural households’ ‘sticky’ spending kitty would likely have a better pay-off towards stirring up the economy than shopping fests and tax sops for urban India.

Source: The Hindu, 21/09/2019

Strengthen NREGS to support the rural economy

We began our own work on the NREGS from a posture of skepticism, documenting corruption and seeking to mitigate it. But our results from a highly-credible randomised evaluation suggest that NREGS may be a surprisingly effective tool both for improving the welfare of the landless rural poor and also increasing overall rural productivity.

The increased policy attention on reducing economic distress among farmers is welcome. Yet, it is as or more important to consider the welfare of the millions of landless rural households who depend mainly on wages, and not cultivation. They do not benefit directly from subsidies, loan waivers, minimum support price increases, or even income transfers to farmers. Further, the one component of India’s safety net designed primarily to benefit them — the National Rural Employment Guarantee Scheme (NREGS) — is under pressure.

The NREGS is the world’s largest public employment programme, with over 600 million eligible workers, and it has generated a commensurate amount of controversy. Proponents argue that it provides a lifeline to the rural poor in the lean season, raising rural wages and enabling the creation of productive assets. Detractors argue that it is wasteful, plagued by corruption and creates unproductive holes in the ground. Much good research has been done on these issues, but all are subject to important technical limitations, and policy views on NREGS seem to be informed more by ideology and opinion than credible evidence.

To make progress, we use data from an unusually large-scale experimental evaluation where the government of (then unified) Andhra Pradesh randomised the rollout of biometric smartcards for making NREGS payments across nearly 20 million people. In prior work studying the impact of smartcards on NREGS implementation quality, we found substantial improvements on several dimensions: Leakage fell by 41%, programme participation increased by 17%, the time lag between working and getting paid fell by 29%, the time to collect payment fell by 20%, and the variability in the payment lag fell by 39%. In other words, the use of smartcards substantially improved the effective presence of NREGS on the ground and brought the implementation quality closer to what NREGS architects had intended.

In addition to informing the ongoing debate on the role of biometric authentication in social programmes, the experiment also gives us a unique opportunity to answer a core question about NREGS itself: What happens to the rural poor when NREGS implementation is improved? The results are striking. In treated areas, the incomes of NREGS jobcard holders increased by 13% while overall poverty fell by 17%. These results from our survey data match those using the completely independent Socio-Economic and Caste Census (SECC), which also shows a significant reduction in poverty.

Some of these gains simply reflect the fact that corruption fell, and NREGS earnings increased. But this turns out to be a relatively small part of the story. In fact, nearly 90% of the income gains we measure come not from the NREGS itself but from increases in market earnings. In particular, we find a significant increase in market wages, perhaps because a better-implemented NREGS forced private employers to raise wages to attract workers. Moreover, private employment did not fall as a result; once we account for spillovers into neighbouring sub-districts, we find that it actually increased.

How could both wages and employment go up at the same time? First, lower leakage could have improved public asset creation, thereby increasing productivity, wages, and employment. Second, if employers had monopsony power and were able to coordinate to keep wages low, then economic theory predicts that an increase in minimum wages can also increase employment. Finally, reduction in credit constraints (which we find evidence of) could have boosted private investments and productivity. Over time, the increase in rural wages may also speed up mechanisation of agriculture, which would further increase productivity as seen in historical evidence from the US.

Overall, a better implemented NREGS reduced poverty without crowding out private sector economic activity. Regardless of the underlying economic mechanism, this is a crucial fact for policy making. It has certainly shifted our own thinking. We began our own work on the NREGS from a posture of scepticism, documenting corruption and seeking to mitigate it. But our results from a highly credible, randomised evaluation suggest that NREGS may be a surprisingly effective tool both for improving the welfare of the landless rural poor and also increasing overall rural productivity.

Policies that improve both equity and efficiency are quite rare, and a well implemented NREGS may fit this category. Given what we currently know, the government should strengthen NREGS rather than cutting it, or letting it slowly atrophy though weak implementation. It is good that the recent budget has increased the allocation for NREGS. The government should now follow through to deliver on the full potential of this allocation, ensuring that funds reach projects and beneficiaries in a timely manner. Prioritising timely wage payments as well as asset quality will improve both short term beneficiary welfare and long term rural productivity.

The authors are economics faculty members at UC San Diego (Karthik Muralidharan and Paul Niehaus), and the University of Virginia (Sandip Sukhtankar)

Source: Hindustan Times, 6/03/2019

The solution is universal

Strengthening the MGNREGA would be more prudent than a targeted cash transfer plan like PM-KISAN

Rural distress has hit unprecedented levels. According to news reports, unemployment is the highest in 45 years. To allay some misgivings of the distress, one of the announcements in the Budget speech was that “vulnerable landholding farmer families, having cultivable land up to 2 hectares, will be provided direct income support at the rate of Rs. 6,000 per year”.

This cash transfer scheme has been called Pradhan Mantri Kisan Samman Nidhi (PM-KISAN). The Ministry of Agriculture has written to State governments to prepare a database of all eligible beneficiaries along with their Aadhaar numbers, and update land records “expeditiously”. The letter further states that changes in land records after February 1, 2019 shall not be considered for this scheme.

A comparison

Undoubtedly, farmers’ distress needs urgent attention but let’s see if the PM-KISAN is a reasonable solution. Let us first compare some basic numbers with the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). For example, if two members of a household in Jharkhand work under MGNREGA (picture) for 30 days, they would earn Rs. 10,080 and a household of two in Haryana would earn Rs. 16,860 in 30 days. Jharkhand has the lowest daily MGNREGA wage rate, and Haryana the highest. Put simply, a month of MGNREGA earnings for a household is more than a year’s income support through PM-KISAN anywhere in the country.

PM-KISAN is a targeted cash transfer programme and MGNREGA is a universal programme. Any rural household willing to do manual work is eligible under the Act. According to the 2011 Socio-Economic and Caste Census, around 40% of rural households are landless and depend on manual labour. The landless can earn through the MGNREGA but are not eligible for the PM-KISAN scheme. Notwithstanding the meagre amount, the PM-KISAN might be pitting the landless against a small farmer.

Further, it is unclear how tenant farmers, those without titles, and women farmers would be within the ambit of the scheme. There is also substantial evidence to demonstrate that universal schemes are less prone to corruption than targeted schemes. In targeted programmes, it is very common to have errors of exclusion, i.e., genuine beneficiaries get left out. Such errors go unrecorded and people continue to be left out. It is in some of these contexts that strengthening an existing universal programme such as the MGNREGA would have been a prudent move instead of introducing a hasty targeted cash transfer programme.

The Agriculture Ministry’s letter states that “funds will be electronically transferred to the beneficiary’s bank account by [Government of India] through State Notional Account on a pattern similar to MGNREGS”. There are important lessons to be learned from the MGNREGA implementation. The Centre has frequently tinkered with the wage payments system in the MGNREGA. It’s creditable that timely generation of pay-orders have improved, but contrary to the Centre’s claims, less than a third of the payments were made on time. And in contempt of the Supreme Court orders, the Centre alone has been causing a delay of more than 50 days in disbursing wages.

Field realities

Moreover, repeated changes in processes result in a hurried bureaucratic reorientation on the ground, and much chaos among workers and field functionaries alike. Field functionaries are pushed to meet stiff targets. Being short-staffed and inadequately trained, this results in many technical and unforeseen errors. A case in point is the rushed manner in which Aadhaar has been implemented for the MGNREGA.

Several MGNREGA payments have been rejected, diverted, or frozen as a consequence. In the last four years alone, more than Rs. 1,300 crore of the MGNREGS wage payments have been rejected due to technical errors such as incorrect account numbers or faulty Aadhaar mapping. There have been no clear national guidelines to rectify these. There are numerous cases of MGNREGS payments getting diverted to Airtel wallets and ICICI bank accounts. In a recently concluded survey on common service centres in Jharkhand for Aadhaar-based payments, it was found that 42% of the biometric authentications failed in the first attempt, compelling them to come later. This continued harassment faced by people would have been a more humane question to address rather than brushing them aside as “teething problems” and build a new scheme on similar shaky platforms.

The success of the PM-KISAN is contingent on there being reliable digital land records and reliable rural banking infrastructure — both are questionable at best. While Rs. 75,000 crore has been earmarked for this scheme, the MGNREGA continues to be pushed to a severe crisis. The MGNREGA allocation for 2019-20 is Rs. 60,000 crore, lower than the revised budget of Rs. 61,084 crore in 2018-19. In the last four years, on an average, around 20% of the Budget allocation has been unpaid pending payments from previous years. Thus, subtracting the pending liabilities, in real terms, the Budget allocation has been lower than 2010-11. Despite a letter to the Prime Minister by citizens and MPs in January 2019, (as of February 8) all MGNREGA funds have been exhausted. While the country stares at an impending drought, workers languish in unemployment. The MGNREGA is neither an income support programme nor just an asset creation programme. It is a labour programme meant to strengthen participatory democracy through community works. It is a legislative mechanism to strengthen the constitutional principle of the right to life. That the MGNREGA works have demonstrably strong multiplier effects are yet another reason to improve its implementation. Despite all this, the MGNREGA wage rates in 18 States have been kept lower than the States’ minimum agricultural wage rates. This acts as a deterrent for the landless. Yet, work demand has been 33% more than the employment provided this year — underscoring the desperation to work. By routinely under-funding this Act, the Bharatiya Janata Party government continues to undermine the constitutional guarantee.

In an employment programme, adequacy of fund allocation and respectable wages are crucial, so meaningless claims of “highest ever allocation” and other dubious claims through a management information system are unhealthy for democracy.

At a time of such acute distress, does it not behove the Central government to improve the existing universal infrastructure of the MGNREGA before plunging into a programme pretending to augment farmers’ income?

Rajendran Narayanan teaches at Azim Premji University, Bengaluru. Debmalya Nandy is a social worker

Source: The Hindu, 11/02/2019

A guarantee, an illusion

MGNREGA provisions on right to work and timely wages are being violated.

MGNREGA, one of the world’s largest livelihood programmes, is a pioneer as far as workers’ rights are concerned. Notwithstanding the recent purported budget increase and an announcement to use “space technology” for its monitoring, the programme — and the budgetary exercise — could be pointless given that essential legal safeguards are being trampled regularly. MGNREGA’s robustness owes to provisions such as unemployment allowance, when work is not provided on demand, and compensation for delays in wage payments beyond 15 days. Crucial provisions that enable the right to work and the right to timely wages have been repeatedly violated. These matters are being heard by the Supreme Court based on a public interest petition by Swaraj Abhiyan with regard to drought relief.

In May 2016, the apex court had ordered immediate disbursement of compensation against delayed payment of MGNREGA wages. But merely 4 per cent of the total dues were paid as of January 2017 across all the states (calculations are based on reports accessed on 29th January, 2017 from http://nrega.nic.in [R14.1 Delayed Compensation FY: 2016-2017] by taking a ratio of the total amount paid to the total amount payable). In a recent hearing, the division bench of the court expressed dismay: “We [the Supreme Court] pass orders. They [state governments] don’t obey and you [central government] throw up your hands”.

MGNREGA was designed to be bottom-up and demand driven — a labourer should get work within 15 days of requesting for it. However, inadequate and untimely release of funds from the Centre have made the programme top-down and supply-driven. This year, more than half the states have run out of funds; the current liability is Rs 3,649.38 crore. Work is allocated only when funds are available as opposed to when the demand for work is registered. There are several instances where the programme’s Management Information System (MIS) has been manipulated to match the date of work allocated with the date of work demanded, thus precluding the need to even calculate any unemployment allowance. The MIS is supposed to automatically calculate and create a report for the unemployment allowance. On several occasions,, the authorities have refused to accept legitimate claims for unemployment allowance.

According to Section 3 of the MGNREGA, the wages for a week of work have to be paid within 15 days of completion of a work week, failing which the workers should get a compensation for each day’s delay. At present, there are at least three key concerns in this regard — one, the method of calculation of the delay compensation is itself flawed, two, powers to reject the payment of compensation are arbiThe compensation should ideally be calculated from the 16th day of the completion of a work week till the day on which the workers actually receive their wages. However, the MIS calculates the compensation in a flawed manner. Instead of counting till the date when the wages are actually credited to the workers’ accounts, the MIS calculates delay in days till the payment date — a misnomer, this is actually the date on which the second signature is made to approve the funds transfer order (FTO) at the block. Thereafter the FTOs get collated at the district and the amount is then transferred to the workers’ accounts. It takes several days before the wages reach the worker even after the FTO is signed. The situation is even worse in the case of postal payments where the time taken for the wages to be transferred from the district to the village can extend to a year.

The reports for delay in compensation, using this flawed method, are routinely generated in the MIS. The programme officer (PO) at the block verifies this report and has the authority to decide if this compensation has to be paid. This power is repeatedly abused and most POs reject the payment of compensation. This defeats the purpose of an automated report.

In 2005, when this employment guarantee act (then NREGA) came into force, workers were entitled to a payment of up to Rs 3,000 for delayed wages to commensurate with the Payment of Wages Act (PoWA). The revised schedule of the act has drastically reduced the compensation rate to 0.05 per cent per day of the pending wages and removed the reference to the PoWA.

The pillars of transparency and accountability are in peril with respect to the two key provisions of the act. Funds for the work should be made available throughout the year and checks should be put in place to ensure timely and complete entry of work demand in the MIS. The delay compensation should be automatically calculated based on the date on which the wages are credited to the workers’ accounts and should be deposited directly, electronically. This should be done without any administrative interference.

Narayanan is an independent researcher and Dhorajiwala is a student of public policy, St Xavier’s College, Mumbaitrary and, three, the rate of compensation is abysmally low.

Source: Indianexpress, 14-02-2017

NREGS Promises Jobs But Wages are No Guarantee

Ruchika Chitravanshi

New Delhi:





CASH CRASH Eight states raise serious concerns with the Centre on a "terrible cash crunch" post demonetisation leading to difficulty in payments which are already delayed

National Rural Employment Guarantee Scheme (NREGS), the government's flagship rural programme, has run into a major hurdle with payments to workers getting stuck due to demonetisation. At least eight states have raised serious concerns with the Centre on a “terrible cash crunch“ leading to difficulty in payments which are already delayed.Daily wages to NREGS workers call for payment to be made in smaller denomination notes which are in short supply even after the government has focused attention on making cash available in rural areas. The average wage rate in NREGS is about . 160 per day per person.` “We are assessing the situation and talking to all states on the impact they are facing after the demonetization drive,“ a senior government official said.
States which have flagged off such concerns include West Bengal, Jharkhand, Rajasthan, Odisha and Manipur among others. The Centre has so far released nearly 90% of the total funds allotted to NREGS amoun . 38,935 crore.ting to ` India made the ` . 1,000 . 500 and ` notes, which accounted for 86% of currency in circulation, invalid on November 8.
It is also a month when activity in NREGS picks up after the labourers get free from agricultu re related work.
So far this year, 151crore person days have been generated under the scheme. Even though the Centre is able to transfer money into a large number of beneficia ries' accounts, the last-mile reach is still a challenge. Between 2,62,000 gram panchayats in the country, there are less than 50,000 bank branches.
While it is a wait-and-watch situation for states, the rural development ministry is taking forward Prime Minister Narendra Modi's drive for cashless economy and Digital India. The government will train 150 people as national resource persons to further train people from states, districts till the gram panchayat level in conducting cashless transactions. The pool of 150 people would include bankers, state and district level officials from each state.
The two-day training programme has been designed by the National Institute of Rural Development and vetted by the NITI Aayog which has also conducted similar such training in government departments in Delhi.
As of now, there are 10.88 crore active workers in NREGS. Government wants to educate all of these workers on using digital payment tools. Besides, the government is trying other options to meet the last-mile challenge of delivering payments, through a better banking correspondent system, and use of mobile banking or interoperable cards in rural areas.

Source: Economic Times, 8-12-2016

All about means and ends

The Management Information System of MGNREGA is a way to providing data on implementation. But to achieve complete transparency it has to overcome several shortcomings

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is not only a pioneering livelihood security programme but also a great example of proactive disclosure of information through its Management Information System (MIS). It is the first transaction-based real-time system for any public works programme in the country that is available in the public domain. There has been a digitisation of all the processes in MGNREGA — right from a worker registering demand for work, to work allotment, to finally getting wages for completed works. Another notable feature of the MIS is the availability of information through online reports at various levels of disaggregation. This has enabled any citizen to monitor the implementation of the programme and has consequently charted a new paradigm of transparency since the enactment of the Right to Information (RTI) Act. The sheer scale of information available on implementation is also no mean achievement. Individual worker details from around 2.5 lakh gram panchayats are available in the MGNREGA MIS.

While this system is certainly a great feather in the cap of a transparent democracy, it is critical to understand its current shortcomings and possible ways to improve its functioning.

Shortcomings

To begin with, the MIS is accessible only from 6 a.m. to 6 p.m. Indian Standard Time. This is a huge impediment for collaborative work across time zones.

Second, it does not provide any data dictionary. A data dictionary is a repository of all the names of variables/columns used in various reports, containing a brief explanation of its meanings. Such a dictionary is crucial so that any citizen accessing the online reports can understand the content in them. As things stand, unless somebody has spent a lot of time in rural areas, it is difficult to comprehend the details of many reports.

Third, the nomenclature of the column names in the online reports is not consistent. The same column name is labelled differently in different reports. For instance, what is referred to as the Payment Date in the report of weekly works (‘Mustroll Report’) is known as the Second Signatory Date in a report titled ‘FTO Second Signatory’. Payment Date is also a misnomer as it does not refer to the date on which a worker gets paid. Although obfuscation of the column names may not be intentional, it nevertheless becomes excruciating for any citizen or researcher to make meaningful sense of the reports.

Fourth, some obvious worker-centric links in the data structure are missing. For example, every household that does MGNREGA work has a unique job card number. This number is crucial to get work. Upon completion of a work week, a Funds Transfer Order (FTO) is generated containing the details of each job card holder’s earned wages. On the MIS, there is no clear link between these two crucial pieces. As such it becomes difficult to follow the trail of each job card holder from the time of work demanded to getting the wages.

Passing the baton of accountability

While computerisation of all transactions is a welcome move, officials are passing the baton of accountability. One should be mindful that an information system doesn’t end up controlling the legal rights. There are several situations when a written request for work by a worker is not entered in the MIS till funds for work allocation are made available from the Centre. This is illegal as the Act mandates provision of work within a stipulated time of requesting for it. Similarly, the generation of the FTO is withheld till funds for wage payments are released. There are other instances when the FTO is not generated if a worker fails to furnish his or her Aadhaar number. Some are harder to locate as there is no paper trail or stated intention but realised only retrospectively once the workers are affected. There are other such examples illustrating how the IT infrastructure becomes a tool prioritising administrative needs as opposed to being a programme enabler. In this regard, it is instructive to recall the phrase “code is law” popularised by the Harvard Law professor, Lawrence Lessig. Code, as in software, and code, as in law, can both be instruments of social control. To quote him: “We can build, or architect, or code cyberspace to protect values that we believe are fundamental. Or we can build, or architect, or code cyberspace to allow those values to disappear. There is no middle ground. Code is never found; it is only ever made, and only ever made by us.”

Technological architecture can also be used to perpetuate falsehoods. For instance, consider the flawed mechanism of the calculation of delay compensation when wages are not paid on time. Ideally, the compensation should be calculated from the 16th day of completion of a work week till the day on which the workers actually receive their wages. However, the compensation is computed based on the payment date, which, as we have mentioned, is not the date on which the wages get credited into the workers’ accounts. The difference of the two calculation methods run into crores of rupees that rightfully belong to the workers. While the automated calculation is a progressive measure, its basis must be correct and transparent. The fact that even with the flawed calculation no compensation has been paid corroborates that technology can be a strong aid but not a replacement for accountability.

The MIS is a powerful mechanism to have an evidence-based discourse for monitoring basic services. But a governance framework for the MIS needs to be put in place that lays out the minimum standards and accountability of the Ministry managing the system. Such a framework must be built in consultation with all concerned parties and should follow the provisions of the law (both MGNREGA and RTI). The system design choices should reflect the values of the worker-centric programme and hence principles need to be followed for compassionate design. Otherwise, we fear that technology is dictating administrative choices, akin to the phrase “architecture is politics”.

Sakina Dhorajiwala is a student of Public Policy at St. Xavier’s College, Mumbai. Rajendran teaches at Ashoka University, Sonepat. The views expressed are personal and don’t reflect their respective institutions’ perspectives.

Source: The Hindu, 4-10-2016

MGNREGS provided just 49 work days on average

he rural job guarantee programme provided only 49 days of work on an average across the country in 2015-16 when drought in several states affected farm output and crimped income.

Rural development minister Chaudhary Birender Singh, though, highlighted this number as a record.

Only 10.1% of the total households that had been provided employment had been able to complete 100 days of work as stipulated by the Mahatma Gandhi National Rural Employment Guarantee Act, according to a Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) outcome report by the rural development ministry.

And the number of households that had completed more than 100 days of work in areas where a drought had been declared was 283.5 million or 5.9% of the total, the outcome report said. Activities under MGNREGS, including building check dams and village ponds, resulted in 46.43 hectares of land being brought under irrigation, the report said.

Ordinarily, in a year of scanty rain, those engaged in agricultural activities—farm labour and even small farmers—would have been unemployed and looking for jobs and even migrating in search of work.

The year 2015-16 was the second consecutive year that rains had failed. At least 11 states, including Andhra Pradesh, Telangana, Gujarat, Rajasthan, Maharashtra, Jharkhand, Odisha, Chhattisgarh and Karanataka have declared a drought. Last year, the central government announced an extension from 100 to 150 days for work under MGNREGS for areas declared as affected by a natural disaster.

It was to stem distress migration and suicides among farmers and alleviate rural distress that MGNREGS was introduced in 2006.

The programme guarantees up to 100 days of unskilled work in a year to every rural household and has been credited with raising rural household incomes. It has been a key source of livelihood for millions of rural households.

“The average of 49 days of work is a record,” rural development minister Singh told reporters on the sidelines of a conference in New Delhi.

MGNREGS has had a record of never completing 100 days a year since its inception, said Himanshu, associate professor at Jawaharlal Nehru University and visiting fellow at Centre de Sciences Humaines, New Delhi, and a Mint columnist.

“It is only 2% or 3% of the people who complete 100 days of work in a year. The reason for that is that some state governments are proactive, some are not, some pay wages on time, others don’t. So, there are a number of factors for this,” Himanshu said.

“Also, the number 49 days is an all-India average; so it is not correct to compare this with 100 days in a year,” he said.

Another reason for MGNREGS to clock an average of 49 days is because wages under the scheme have fallen below other wages stipulated by states; so the priority will be to go for better paying daily wage jobs, he said.

According to the report, the number of households that demanded employment in 2015-16 were 53.5 million and of these, 48.2 million had been prov i d e d with work. The total person days—or the number of people multiplied by the number of days they had been provided work—stood at 2.36 billion in 2015-16, the report said.

The number of jobs undertaken for asset creation under MGNREGS in the past decade stood at 32 million, of which 23 million were completed, the report said. Land development and irrigation works topped the list of activities under the MGNREGS, it said, followed by water conservation and maintenance and development of traditional water bodies.

Source: Mintepaper, 29-06-2016

Starving MGNREGA

The MGNREGA was inspired by the Maharashtra Employment Guarantee Act, passed in 1977, wherein policymakers found wage employment as the best way to empower people against drought 

As India faces the onslaught of another severe drought, and water, food, and employment dry up, the government will claim that it is doing its best to cope with the adversity. But, given the facts, that will be a patently false statement.

The cynical attitude towards the MGNREGA is an example of how policymakers are deliberately and knowingly — by squeezing funds and subverting the legal mandate of the law — causing immeasurable misery and suffering to people. Through the fund squeeze, the government has consciously crippled the MGNREGA’s ability to help people facing drought.

Officially, the drought has affected over a third of the country — nine out of the 29 states, 248 out of 660 districts, 2,327 out of 6,800 blocks, and 96,954 out of 2,57,000 panchayats. Unlike natural disasters, such as floods and earthquakes, which destroy ecosystems in a few moments, droughts take hold slowly and provide clear warnings to policymakers, thus giving them a chance to plan and execute effective drought management strategy. Yet, once it settles in, a mismanaged drought can wipe out economic progress made over decades, pushing an entire generation back into abject poverty.

The MGNREGA was inspired by the Maharashtra Employment Guarantee Act, passed in 1977, wherein policymakers found wage employment as the best way to empower people against drought. The funding for the state scheme came from four taxes, imposed on those less affected by the drought. The money so received went into a fund dedicated to the scheme.

However, the MGNREGA hasn’t been as fortunate. Despite its proven success, the scheme is itself facing a monetary drought. Some facts: A whopping Rs 10,588 crore is currently pending in payment delays.

In other words, nine crore workers in 25 states are facing illegal delays in wage payments. More than half of this amount is in drought-affected states.

The saddest part is that notwithstanding the government’s grand announcement — increasing the number of workdays to 150 in the nine drought-affected states — all these states have a negative cash balance. It’s hardly surprising then that only 5 per cent households have completed 150 days of work. This is conclusive proof that the government is ignoring the two most important legal requirements of the MGNREGA — work on demand, and full and timely payment of wages.

Despite its proven success, the scheme is itself facing a monetary drought.

The fund squeeze sets off a vicious cycle — delayed payments leading to lesser demand and still fewer payments — resulting in helplessness and distress migration. The continued shortage of funds severely undermines the credibility of the law.

State governments and local administrators, too, are in a quandary: The law requires them to provide work but they don’t have enough money to pay the wages. Communication accessed under the RTI Act shows that state governments have been unsuccessfully appealing for adequate fund releases, and are being forced to ration funds for the year. This distortion turns the law into a cruel joke.

But drought-affected people are not the only ones distressed. Many company heads, who have unpaid dues stacking up as bank NPAs, such as Vijay Mallya, too, have been forced into distress migration! In the budget, there’s a full section on taxes forgone for the corporate sector. And on March 23, Ravi Shankar Prasad, the minister for communication and information technology, announced a Rs 14,724 crore Holi gift for government employees, with a 6 per cent increase in their daily allowance. It’s clear that there are many competing priorities in India.

As prime minister, Lal Bahadur Shastri had suggested that the well-off should forgo meals so that the starving could be fed. That noble thought never worked. The MGNREGA was an attempt to institutionalise responsibility and move beyond such individual efforts. But this has been systematically undermined, with disastrous consequences. The MGNREGA is not the only measure required to fight a drought but an honest implementation of the law could make a huge difference. There’s no substitute for an honest effort.

The writers are social activists working in Rajasthan

Source: Indian Express, 30-03-2016

A DECADE OF MGNREGA

This

week, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) completes a decade of existence. The Act came into force on 2 February 2006 covering only the 200 poorest districts of the country and was expanded to cover all rural areas of the country from April 2008. This is the largest programme of its nature for providing employment in rural areas anywhere in the world.

In the short span of 10 years that the Act has been in existence, it has generated 19.86 billion person-days of employment benefitting 276 million workers, with more than half the jobs going to women workers and almost a third to members of scheduled castes and scheduled tribes. These numbers are staggering by themselves but what is relatively less known is the impact of MGNREGA on several other aspects of the rural economy, such as wages, agricultural productivity and gender empowerment. While most critics lament the quality of assets created under MGNREGA, there is now increasing evidence based on rigorous studies, which suggest that not only has the asset quality been better than comparable government programmes, they are also used more by the community. An anthology of research studies on MGNREGA (MGNREGA Sameeksha) was brought out by the United Progressive Alliance (UPA) government in 2012 and a follow-up by the current government last year.

However, a proper evaluation of the impact of MGNREGA has to go beyond the standard metrics of programme evaluation. The achievements of the programme in terms of its impact on rural demand, political participation, women’s empowerment and improvement in rural infrastructure are hard to quantify, but are visible to anyone who has been tracking developments in rural India. And it is these that have been crucial in sustaining the demand for the programme, despite efforts to downsize it. While these were important drivers of the buoyancy in rural economy during the UPA regime, MGNREGA has emerged as an important intervention by the current National Democratic Alliance government during a period of severe distress in the rural economy.

However, the improvement in performance of the MGNREGA in the latter half of last year has come too late. Even with the improvements, the current year’s performance indicators are much less than the performance of the programme in 2009-10 or in 2010-11. The UPA, which to its credit legislated the Act, has also been responsible for the programme losing steam after 2010. Not only was there a cutback in funds available for MGNREGA, there were attempts to change the nature of the programme from essentially demand-driven to supply-driven.

The result was a sharp decline in employment generated, which fell from 2.84 billion person-days in 2009-10 to 1.66 billion persondays in 2014-15. This was also the case with the average number of days of employment provided, which fell from 54 person-days per household in 2009-10 to just 40 person-days per household in 2014-15. Whereas seven million households completed 100 days of employment in 2009-10, it was down to only 2.5 million in 2014-15.

This was largely a result of a decline in funds made available to MGNREGA, which fell not only in nominal terms after 2009-10, but also in real terms, by more than half by 2013-14 compared with the peak years of 2009-10. This happened at a time when the wage rates in rural areas were increasing at more than 5% per annum since 2009-10. To add to the problems, the administrative reforms in MGNREGA were designed to keep the poor and vulnerable out of the programme, with insistence on technological quick-fixes. The net result of these financial and administrative measures was a decline in participation in the programme, a classic case of discouraged worker syndrome.

However, the relevance of MGNREGA in rural areas goes beyond its success in creating public employment and its impact on wages. MGNREGA has played a much larger role in revitalizing the labour market in rural areas. Not only has it led to the creation of a class of workers who are using the MGNREGA as a safety net, but these workers are also able to use it as a bargaining tool for extraction of higher wages. There is consensus that it did play a role in the acceleration in wage rate growth after 2008, directly through upward pressure on wages and tightening of the supply of casual labour to the market and indirectly through the pressure on the state governments to increase minimum wages. Although to a lesser extent, there is also evidence that it did lead to a slowdown in rural-urban migration along with contributing to an increase in agricultural productivity through the creation of rural infrastructure.

While the attempt of the current government to revive the MGNREGA is welcome, it is difficult to attribute it to any change in perception towards the scheme. Not only have the last two budgets of the NDA government failed to increase the budget for MGNREGA, there was hardly any effort to address the issues of delay in wage payments or improving the financial flow to the lowest functionaries until late last year. However, better late than never. The rebound in demand for work from MGNREGA is a clear indicator of the need of MGNREGA. More so in a situation of rural distress, where the rural economy has not only suffered back-to-back droughts but the decline in agricultural commodity prices has led to declining agricultural incomes. The fact that wages in rural areas have been stagnant in real terms since November 2013 has also contributed to the rural distress. Given the severe stress in the rural economy, reviving MGNREGA will not only require strengthening the administrative structure of the programme but also financial support to make it truly demand-based. This budget is not just an opportunity to reverse the years of neglect by financial infusion in MGNREGA, it may also be the only opportunity to revive the rural economy.

Himanshu is an associate professor at Jawaharlal Nehru University and visiting fellow at Centre de Sciences Humaines, New Delhi.

Source: Mint, 3-02-2016

UPA flagship scheme MGNREGA back on track, job numbers hit five-year-high 

The Mahatma Gandhi National Rural Employment Guarantee Scheme, the flagship welfare programme of the previous UPA government, appears to be staging a revival of sorts. And this turnaround is being attributed mainly to better monitoring by the Centre and timely release of funds.

The July-September quarter witnessed 45.82 crore person-days of employment generated under MGNREGA. This was the highest for the quarter in the last five years. “It was more than even the 42.40 crore person-days during July-September 2012, which also happened to be a not-so-good monsoon year,” Rural Development Ministry officials told The Indian Express.

According to officials, the last quarter (October-December), too, posted a similar trend. “In October alone, we provided 14.09 crore person-days employment, a record for the month. The data for the entire quarter is still being uploaded in our MIS (management information system) portal, but our expectation of the total person-days of work during October-December is 47 crore. That will again be a five-year-high for the quarter,” they said.

The seeming revival over the last two quarters reverses the trend of declining employment under MGNREGA seen during the first year of the Modi government

In 2014-15, the programme — which provides 100 days of guaranteed wage employment in a year to every rural household whose adult members volunteer to do unskilled manual work — generated only 166.32 crore person-days employment, compared to 221.15 crore and 230.33 crore in the preceding two fiscals and the peak 283.59 crore achieved in 2009-10 (a drought year). Also, the average days of employment provided per household dropped to 40.17 in 2014-15, from 45.98 in 2013-14, 46.19 in 2012-13 and 53.19 days in the best performance year of 2009-10. “This year, we have already done 37.5 days, which should cross 50 by March-end,” the officials claimed. They attributed the better numbers this year mainly to better monitoring by the Centre and timely release of funds. “In 2014-15, most states, including those implementing the programme well, ran out of funds by October. When supply of funds dried up, leading to delayed payment of wages, there was less demand from the gram panchayats as well to take up works even in a drought year,” the officials admitted. That has changed this year, with the proportion of delayed payments — i.e. beyond 15 days after the closure of muster rolls — falling to 53 per cent from 72 per cent in 2014-15. Development economists pointed out that MGNREGA’s apparent turnaround in the last two quarters was a result of political and civil society pressure, forcing the government to release funds. “The increased person-days employment numbers dispels the myth of low demand for work. The truth is that MGNREGA had increasingly become supply-driven, though it is in spirit and letter demand-driven. This was even more so after this government took over, with everybody from Rajasthan Chief Minister Vasundhara Raje to Nitin Gadkari (the then Rural Development Minister) and Modi himself sending out signals of downsizing MGNREGA”, said Reetika Khera, associate professor at Indian Institute of Technology, Delhi. Incidentally, of the 137 crore person-days MGNREGA employment generated so far in 2015-16 (based on latest uploaded data), more than half has been accounted for by five states: Tamil Nadu (24.9 crore), Andhra Pradesh (14.6 crore), Rajasthan (14.3 crore), West Bengal (13.6 crore) and Uttar Pradesh (10.9 crore). On the other hand, the states worst affected by drought — Maharashtra (4.5 crore), Karnataka (2.5 crore) or even Madhya Pradesh (6.6 crore) and Chhattisgarh (3.7 crore) — haven’t registered any significant uptake in MGNREGA works. “We have now moved to linking fund releases to performance, measured in terms of both person-days generation and quality of asset creation. The states doing well on these counts will get MGNREGA money, which will otherwise simply be parked for earning interest,” officials said. -

Source: Indian Express, 6-01-2015

UNDP calls MGNREGS best job guarantee plan

Swati Mathur & Sruthi Nair

Lucknow: TNN





The latest edition of the United Nations Development Programme report on Human Development Index released on Monday has referred to Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) as among the best known employment guarantee schemes providing direct jobs to the rural poor. Interestingly, in February this year, Prime Minister Narendra Modi had referred to the scheme as a “living monument“ of Congress-led UPA government's failures.MGNREGS, which finds mention as a “milestone“ in the UNDP report's chapter dedicated to enhancing human development through work, has also been cited as exemplary in accelerating job creation from less than 1 billion working days among 20 million households in the scheme's first year of oper ation (2006-07) to 2.5 billion among 50 million households in 2010-11. “Instead of cash transfers or conditional cash transfers, countries have also provided employment guarantees. Jefes de Hogar in Argentina and the regional Karnali Employment Programme in Nepal are examples, though the best known is the National Rural Employment Guarantee Scheme in India,“ says the report.
However, pointing to the humongous nature of the MGNREGS, the report says, “Its (MGNREGS) size has no precedent nationally or internationally, posing important design and management challenges.“
The MGNREG Act, pop ularly known as NREGA, was mandated by the UPA government in 2005 as a demand-driven employment creation programme to benefit the rural poor through projects that improve agricultural productivity and alleviate land degradation. The scheme guarantees rural households 100 days of unskilled manual work.
Extrapolating from the MGNREGS figures, the UNDP report said, “ A simulation estimated that GDP would increase (by) 0.02­0.03%, that labour income would rise (by) about 700 million rupees and that the welfare of the poorest households (as measured by Slutski-adjusted consumption relative to initial consumption) would increase up to 8%. People belonging to Scheduled Tribes or Scheduled Castes would also benefit.“

Source: Times of India, 16-12-2015

Don’t dismantle, reform

There are few government programmes that excite as much passion as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). For advocates, it is a lifeline for the rural poor. For critics, it is a programme that distorts labour markets and does far more harm than good. In this partisan quicksand, it is hard to find firm ground from which to evaluate the promises and challenges of the MGNREGA 10 years after its enactment. However, in recent years, more empirical studies have emerged to provide a solid foundation from which to address a number of questions.

One, how well does the self-targeting mechanism work? The MGNREGA is a self-targeting programme that assumes that only those who can’t find better-paying, less-strenuous work will participate in the hard manual labour offered under the act. A recently published report (of which I am principal author) by researchers from the National Council of Applied Economic Research (NCAER) and the University of Maryland, based on the India Human Development Survey (IHDS) of over 28,000 households before and after the implementation of the MGNREGA, shows that the programme is moderately effective in this. Thirty per cent of poor and 21 per cent of non-poor households participate; and 30 per cent of illiterate households versus 13 per cent of households with college graduates participate. However, it also offers work to a variety of middle-income rural households, such as moderately prosperous farmers who can’t find work during non-harvest periods. Since programmes solely directed at the poor rarely enjoy wide political support, this broad participation may be one reason for its popularity.

Two, does it really reduce poverty? The IHDS shows that among the 24.4 per cent of MGNREGA-participating households, the median number of days worked is 40 and the median annual income from the MGNREGA is Rs 4,030, forming about 8.6 per cent of total household income, a small but crucial part of the household budget. The impact of the MGNREGA on poverty depends on assumptions about what workers could do in the absence of the programme. But estimates based on a variety of assumptions suggest that without the MGNREGA, the poverty ratio would be at least 25 per cent higher among participants. These estimates are based on comparing pre- and post-MGNREGA poverty rates for MGNREGA households and their neighbours with comparable characteristics, even after accounting for poverty reduction due to a strong economy.

Three, does it distort labour markets? The biggest complaint against the MGNREGA is from large farmers, who claim it has provided alternative jobs to agricultural labourers and increased agricultural wages. Data show that agricultural labour wages have risen faster than other wages, but it is not clear that this increase can be totally attributed to the MGNREGA. Although 24.4 per cent of IHDS households participate in the MGNREGA, most households have more than one worker, so only 12 per cent of the men and 9 per cent of the women in the IHDS sample participated in the programme. While individuals often worked 30-34 days, at the population level, this comes to less than four days of MGNREGA work per person; about 2.5 per cent of total workdays for men and 5 per cent for women. Thus, the MGNREGA forms a very small part of rural labour and the impact of other transformations, like the growth in the construction sector, is likely to be greater. While this does not discount farmer concerns in areas with high levels of MGNREGA participation or in those reliant on migrant labour, such as Punjab, much of the impact of rising wages is limited to large farmers. The small and marginal farmers who own the bulk of India’s farms are both MGNREGA workers and employers of farm labour. Thus their MGNREGA income more than makes up for any hardships caused by an increase in agricultural wages. Medium to larger farmers — less than 10 per cent of cultivators — are affected by increases in agricultural wages. The recent MGNREGA emphasis towards improving agricultural infrastructure and irrigation should compensate for this hardship.

Four, why are 70 per cent of the poor not participating in the MGNREGA? The effect of the programme on poverty reduction has been limited by the fact that only 30 per cent of poor households participate. In the IHDS sample, more than 60 per cent of interested households complained of not having sufficient work due to poor implementation. This phenomenon, known as work rationing, varies across the country and some of the poorest states, such as Bihar and Odisha, have particularly low participation rates. Since about 40 per cent of the excluded poor live in low-perfoming states, better performance in these states will be a tremendous step towards increasing inclusion of the poor.

Five, what about cash transfers? Recently, a lobby for replacing employment guarantee programmes with cash transfers has emerged among economists. This would dismantle the bureaucracy and get cash into the bank accounts of individuals without distorting labour markets. However, welfare versus workfare is an old debate. Developed countries, where incomes are well documented and the poor can be more easily identified, often provide cash incomes to the poor. Indian experiments with identification of the poor have been dismal failures, leading to enormous errors of inclusion (the non-poor getting benefits) and exclusion (the poor being left out). There is no reason to believe that we can do a better job of targeting subsidies if we eliminate the self-targeting aspect of work requirement. If cash is to be given to all households for 100 days without that barrier, the financial burden would be enormous.

Cash transfers have other unanticipated impacts, and countries like the US, which have considerable experience with cash benefits, have struggled to incorporate work requirements in cash assistance programmes. For example, in the US, concerns about welfare dependence — and strong political distaste for so-called “welfare queens” — led to reforms that required work participation for single parents, with young children receiving welfare assistance.

Given these considerations, it would not be prudent to let our cynicism about public programmes push us into dismantling the MGNREGA instead of reforming it to ensure better performance — both for household welfare and for infrastructure development.

The writer is professor of sociology at University of Maryland and senior fellow at NCAER. Views are personal.

Source: Indian Express, 12-11-2015