P Chidambaram interview: Minimum income plan aims to wipe out poverty, MGNREGA had limited objective

On January 28, Congress president Rahul Gandhi announced the party is “committed to a Minimum Income Guarantee for every poor person”.

His brief announcement raised more questions than answers. The financial scale of a scheme that gives a monthly income to the poor in India will be huge. Therefore, how will it be funded? If the programme is funded by, as the Economic Survey had suggested, axing existing welfare programmes, the State’s developmental role will suffer. There is also the risk of competitive populism as other political parties and states follow suit, with a progressive hollowing of the State if they redirect funds to their income support programmes.

Trying to understand what the Congress is planning, Scroll.in contacted former Finance Minister P Chidambaram, who is said to be leading the party’s thinking on income support schemes.

And so, as a followup to my Abhijit Sen interview, my colleague Rohan and I have this email interview with P Chidambaram.

Interview: Income support schemes for farmers are a cop-out, says economist Abhijit Sen

On January 1, when Indian news agency ANI asked Prime Minister Narendra Modi about the government’s plans to reduce agrarian distress, he said loan waivers do not work as a very small segment of farmers take loans from banks. “A majority of them take loans from money lenders,” said Modi. “When governments make such announcements, those farmers do not become beneficiaries of the waivers.”

Calling loan waivers a political stunt, the prime minister told ANI the government would empower farmers in other ways. In that context, an idea from the South Indian state of Telangana has been getting some attention. The state government gives its farmers Rs 4,000 per acre per year as income support. States like Jharkhand and Odisha have followed suit. The first has announced a Rs 5,000 per acre payment from next year. The second plans to transfer Rs 10,000. There is speculation that the Union government might follow suit.

It is easy to understand why politicians find these ideas attractive. As capital becomes global even as labour stays local, governments are increasingly unable to provide jobs for all their people. One outcome, according to economist Abhijit Sen, a former member of the erstwhile Planning Commission, is that politicians, increasingly unable to find answers, turn to interventions like regular cash payments to the citizenry.

The country needs to tread carefully on this idea. Income transfer schemes come with large questions. Where does the money come from? Given competitive politics, can these burgeon out of control? If so, what happens to developmental expenditure? What happens to a society where states collect revenues from a small handful of businesses and keep a large chunk of the population on the dole? Whom are they more answerable to?

Excerpts from an interview.

As MNREGA work dries up, even the elderly in Bihar are migrating to brick-kilns

In a year when large swathes of rural India reeled under drought, the Centre used WhatsApp messages to ask states to go slow on generating employment under the Mahatma Gandhi National Rural Employment Guarantee Scheme.

This startling revelation emerged in the public domain in the last week of October through the reports of the Business Standard.

But for people in villages across India, the news is hardly surprising.

Why lakhs of people leave Odisha to work in distant, unsafe brick-kilns

A small railway station with shanties on either side. A main street running the length of the town, selling everything from household provisions to construction materials. A semi-finished temple, a few lodges and bars, and as the town ends, a series of truck-repair shops.

The tiny town of Kantabanji in western Odisha’s Bolangir district looks unremarkable in the summer.

But come November and it whirrs to life as people arrive from the nearby countryside after harvesting the year’s sole rainfed crop. With no work in the villages for the next few months, they come to the town with their meagre belongings to catch trains to Andhra Pradesh and Tamil Nadu, where they would spend the next five or six months working in brick-kilns.

During those weeks in November, the town becomes the largest migrant labour market in western Odisha. Its guesthouses and hotels fill up as brick kiln owners called “seths” come to recruit workers, with the help of local labour contractors called “sardars”. Two trains heading to Visakhapatnam – the Korba-VSKP Link Express and  the Durg-VSKP Passenger – extend their halts to make sure all the workers enter (or are loaded into) the unreserved compartments.

the persistence of this trade, despite the migrants knowing the harsh conditions which await them at the kilns, is perplexing. in this story, Scroll’s #eartotheground series tries to find answers.

MGNREGA ver 2.0

out today, this story on the changes planned by the nda for nrega.

Sanitation projects to reduce open defecation, increasing green cover and emphasis on creating assets form the crux of the Narendra Modi-led government’s blueprint for redeploying UPA’s flagship social sector programme — the Mahatma Gandhi National Rural Employment Guarantee Act or MGNREGA.Top officials aware of the government’s re-orientation roadmap for the rural employment guarantee scheme, being steered by rural development minister Nitin Gadkari, told ET that assessment of its outcome would go beyond number of man days of work offered to tangible ground-level changes it achieved.

For instance, people digging a pond will have to mention the storage capacity being created, its impact on groundwater level, and so on. Similarly, folks digging compost pits will have to outline the quantum of compost they will generate. According to the officials, it is proposed that about half of the scheme’s fund allocations will be earmarked for rural sanitation projects and plantation of trees along highways and rural roads.

is this a good idea? on one level, yes. rural india’s tree cover is falling. as are its groundwater levels and organic carbon in its soils. at another level, however, are these changes good for nrega?

The question is whether these problems should be fixed using MGNREGA. Corruption and payment delays have shrunk the number of people seeking work under the NREGA, said Himanshu, assistant professor in economics at JNU’s Centre for Informal Sector and Labour Studies.”MGNREGA is not a sanitation programme, but a safety net for people who can demand work whenever they need it. In the process, some assets also get created,” he told ET, adding that the Act ceases to deliver ‘work available on demand’ the moment it gets linked to another program like sanitation. “What if the money for sanitation is not released? Then NREGA, with 20% of its budget earmarked for sanitation, will suffer,” he added.

from the 2014 economic survey

Bigger public-private partnership (PPPs) in social sector programmes and a thorough overhaul of the rural employment scheme to link it with creations of assets and infrastructure relating to agriculture and tourism are on the government agenda, the Economic Survey said. The biggest challenge confronting India is “unleasing the potential of its demographic dividend’, it said. This advantage is starting to slip away. In some states, the average age of the population has already crossed 30. Kerala, for instance, has an average age of 33 years, while the corresponding number for Himachal Pradesh stands at 30.4, the survey said.

i am back from a long holiday. work resumes. first off, this quick and dirty snapshot from the economic survey on the social sector. in the story, see what nikhil dey says about the survey’s suggestion that zero-based budgeting be followed for all social sector programmes.

The biggest challenge confronting India is “unleasing the potential of its demographic dividend’, it said. This advantage is starting to slip away. In some states, the average age of the population has already cros ..

on how the upa’s development initiatives might fare under the nda

out today, a story on the possible outlook for the upa’s major development initiatives — aadhaar, cash transfers, npr, rights-based legislations, the proposed environment authority, the land acquisition bill — once the modi government takes over. 

upa1 vs upa2

and so, upa2 presented its final budget – a vote on account – yesterday. and i wrote this quick little story comparing the developmental efforts of upa1 and upa2.

in which the UPA window-dresses nrega

for a while now, we have known that nrega is not doing as well as before. this fact was painfully brought home last week when the hindustan times carried a story reporting that some nrega workers had committed suicide due to delays in payments. however, if you read the booklet that accompanied the prime minister’s press conference on the fourth of this month, you would have thought nrega is flourishing.

amazing what one can do thru the selective use of data. take a look. striking too that nrega did well during UPA1 and then worsened during UPA2. which seems like a pretty common refrain.

A cynical, instrumental use of Law

Cast your mind back to the days when Kapil Sibal and others were negotiating with Team Anna about the Jan Lokpal Bill. Team Anna, at one point, wanted its version of Lokpal Bill to be passed by the Parliament by a particular date. Fail to pass the bill, the team members said, and Anna would stop eating again. At that time, Sibal and his cabinet colleagues described the demand as unconstitutional. Not to mention disrespectful to the Parliament.

It’s interesting to recall those halycon days in the wake of the Standing Committee on Finance report on the UIDAI Bill. One reason the Committee rejected the National Identification Authority of India Bill is that due Parliamentary process was not followed. Nandan Nilakani’s UIDAI was collecting biometrics and issuing numbers even before the Bill became law. The committee’s report says it was at a “loss to understand as to how the UIDAI, without statutory power, could address key issues concerning their basic functioning and initiate proceedings against the defaulters and penalize them.”

Commenting further on the UIDAI Bill, the Standing Committee described the government’s failure to get a bill passed before proceeding to collect biometric information “unethical and violative of Parliament’s prerogatives”. In this opinion piece, I say that  the India’s current UPA government is using the country’s legal framework in a deeply opportunistic manner. It turns to the Rule of Law whenever expedient. And ignores it whenever inconvenient.

What I talk about when I talk about Jharkhand

Watch Jharkhand. It is the testing ground for two pilot projects that challenge the historical templates for delivery of welfare services and banking services. Jharkhand is trying to use technology to retool the delivery of these services so that every citizen in the state can access them – easily, efficiently and corruption-free . What it is doing has a bearing on the rest of India. In the next year or so, Jharkhand will start throwing up answers on whether it is a good idea to convert India’s welfare programmes – that deliver benefits of about 3,00,000 crore on paper, but sizeably less in real – into cash transfers.

Over the same period, the state will also throw up answers on whether its new model of rural banking can address the last-mile problem better than existing models. The state has found an ally in the Unique Identification Authority of India, the government body headed by Nandan Nilekani that is creating the backbone and the architecture to deliver welfare benefits. The UIDAI number two, Ram Sewak Sharma, is from the Jharkhand IAS cadre. The two stories that follow explain what Jharkhand and UIDAI are doing, and why the rest of India should be interested.

a couple of weeks ago, i went to jharkhand to take a look at the state’s plan to use aadhaar to pay nrega wages. this is the first large scale test for the aadhaar proposition of biometric verification and electronic benefits transfers.

a high stakes pilot, essentially. and so, a report from jharkhand on the rollout, an explanation on what makes them critical, the challenges before the pilots, and the parameters which could be used to decide success/failure of the rollout.

along the way, i also discovered that the state govt is planning to use its common service centres as extension counters for banks — it is a part of this drive to overhaul nrega’s payment structure in the state. it is an interesting idea which seems to be significantly better than the banking correspondent model everyone seems to be so excited about.

see both stories, here.

the first six years of nrega: an interview with reetika khera

economist and iit delhi professor reetika khera is out with a new, edited volume on the first six years of nrega. and given that i am interested in figuring the myriad ways in which india — politicians, state governments, the centre, rich and poor farmers, babus, what have you — is responding to nrega, i mailed her a bunch of questions.

for instance, half the country says nrega is responsible for wage inflation. votaries of nrega say it has empowered the poor. and then, you look at the stats and realise that nrega is nowhere near offering the 100 days of work per household that it guarentees. in 2009-10, for instance, it offered about 50 days. how can 50 days of employment in a year foster empowerment, engender wage inflation?

here is what khera had to say:

You say that 53 days of NREGA employment is too little. In a sense, I agree because I suspect that the actual demand is much higher. On the other hand, 53 days of employment – in one’s own village, at the minimum wage – means something for a poor family. In Bihar in 2008, labourers who were getting 10-20 days of NREGA employment told us that it had made a big difference in their lives.  You may wonder how so little can matter so much. That’s because the alternatives for NREGA workers are very unattractive. For instance, migrating to work in brick kilns, or as agricultural labour, often to another state, without proper shelter for your family, captive in the hands of the “thekedar” who takes you there for 2-3 months at a stretch. On the other hand, if 10-20 days of work at Rs 100 per day is available locally, labourers can combine it with work on their own lands or even as poorly paid agricultural labourers locally and stay with their families.

the rest of the interview here. 

On Ruing Missed Chances

Sometime this month, Justice N Ramamohana Rao of the Andhra Pradesh High Court will deliver a verdict that will directly impact earnings of the 114 million people who work under the National Rural Employment Guarantee Scheme (NREGS), the Central government’s work guarantee programme. The verdict will also indirectly impact earnings of the 400 million workers and labourers who toil in India’s factories and fields for ‘minimum wages’.

The question Justice Rao will try to answer is this: can the Centre fix NREGS wages in isolation, or should it set it at the minimum wage rate prevailing in each state? The first option confers power on the Centre and allows it to pay less than the minimum figure set by a state for its workers. In doing so, it goes against the Minimum Wages Act, 1948, the law that sets the baseline for worker earnings.

The second option makes it toe that law. The five-year experience of NREGs, and what it has done to worker empowerment and minimum wages in India, shows that this is a complex question. Interwoven into it are livelihood issues, worker rights, centre-state relations and politics.

and so, with a empty laugh, i present my story on the ongoing tussle between states, centre and civil society over the whether nrega wages should respect the minimum wages act.

why empty laugh? because this is a complex, nuanced story and i have not done justice to it. the centre, worried about the financial implications of the states being left free to set nrega wages, has delinked nrega from the min wages act. civil society is worried about the implications of this delinking, saying it weakens both nrega and the min wages act. the states are up in arms because, from now on, all this also means that the centre will be the one determining effective minimum wages across india — as a market intervention, nrega wages have done more than any state commandment to enforce min wages. with the delinking, pop goes all that!

the story does a decent job of presenting all three perspectives. but fails in its conclusion. i am still trying to figure out why.

India And Her Myriad Responses to NREGA

the third of three stories for et 50.

It will probably take a big, fat book to describe the myriad impacts the National Rural Employment Guarantee Act (NREGA ) has had on India. At one level, it has created a safety net for rural folks during summer months when employment is scarce. It has improved their bargaining power vis-a-vis large farmers and other employers. By paying the same wages to men and women, it has sent a strong message to our male-dominated society. In parts of India,bonded labourers have used NREGA to free themselves. Yet others have used the lumpy NREGA payments, which are not paid out at the end of the day’s work but together for several days’ work, to acquire bicycles, etc.

At another level, small and medium farmers are unable to compete with NREGA for labour. Even large farmers complain they struggle to find labour. As for the labourers, they report it is not easy to get 100 days of work. Indeed, the national average in 2009-10 was about 53 days of work. It is even harder to get the unemployment allowance that the Act entitles workers to if the state fails to provide 100 days. In parts of the country, tribals and SCs have found banks unwilling to open accounts. Then, despite being a self-selecting programme, NREGA has not been widely successful in attracting the poorest of the poor. People so poor that they need money to eat the next day, if not the same day, do not turn to NREGA. Why would they? It is almost impossible to predict when the cash will show up in bank accounts.

Then, across the country, the scheme continues to haemmorhage money to corruption. This is surprising. For, unlike the cash-for-work programmes of yore, where contractors were not above cooking up muster rolls or retaining a part of the workers money, NREGA deposits cash directly into workers bank accounts. However, rural Moriartys have neutralised that policy response. Sarpanches and village sachivs cut a deal with villagers where they get a part of NREGA money in return for putting the villagers name on the muster roll. The stakes are high here. Try and expose them. And honest bureaucrats might get transferred. Locals might get killed.

And then, there are more unexpected changes. For instance, panchayat elections in Chhattisgarh last year saw a new trend. The number of candidates vying to be sarpanches went up. And wannabe sarpanches spent far more than before on campaigning. Stories about candidates calling villagers over on the night before the polling, treating them to chicken, mutton and liquor were endemic. As were stories about poorer candidates selling their land to raise money for campaigning. One reason for this change was the jump in schemes like NREGA where government money flows directly to the panchayat. Much of which is spent at the discretion of the sarpanch.

The first six years of NREGA have been interesting. India with her myriad classes and castes has responded to the Act in myriad ways. Let us see what the coming years have in store.

Making The Indian Government More Accountable

december has been a slow month. i kept falling ill. anyway, here is a small (and guardedly optimistic) story on how to make the indian state more accountable.

…a clutch of new laws, like the Right To Information Act (RTI) and the National Rural Employment Guarantee Act (NREGA), are moving the government’s developmental promises beyond “the realm of a privilege that benevolent regimes might provide to their citizens to a right that could be ‘legally enforced’, claimed and asserted,” to quote feminist scholar Srilatha Batliwala…

…The question is: Have these Bills begun to change the relationship between the state and the people? Are we, as MKSS activist Nikhil Dey puts it, moving from being subjects to citizens?

Yes, but at a slow pace.

the complete story, here.

ps – falling ill is not as bad a deal as it sounds. i finished reading some good books. including, drumroll, raag darbari. which i had picked up during the rural research days of 2008 but not read uptil now. anyway, have a super 2011, y’all. 🙂