October 26, 2014
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Fight To Save & Strengthen MGNREGA In Favour Of The Workers

Brinda Karat

THE BJP which had promised the creation of jobs as its prime election slogan has openly declared war on MGNREGA, the only demand driven legal guarantee for employment of at least 100 days a year per family in rural India. The legislation, though poorly implemented, had brought some relief to the unemployed and underemployed rural poor. According to the Economic Survey presented by the BJP finance minister Arun Jaitley in June this year, under this legislation 4.5 crore households had been provided an average of 45 days work in 2013-2014 at an average daily wage of Rs 132. Although this is woefully inadequate, the present dispensation wants to eliminate the law itself, incrementally, instead of reforming the implementation of this law to strengthen the right to work.

 

The attack on MGNREGA should also be seen as a reflection of the BJP’s, and more significantly Modi’s idea of “development,” which is a deep commitment to the trickle-down theory of growth – help the rich get richer and some of it will trickle down to the poor. The Congress and UPA also subscribed to this theory which is why the UPA-2 took steps which weakened and diluted its own legislation.

 

The ideological underpinnings of the present assault on MGNREGA is linked to the approach as to how national resources should be used. MGNREGA, however inadequate, makes a step in the right direction:

·        it provides a share of national resources to  create work opportunities in rural India thus directly increasing the purchasing power of the rural poor

·        the planning of the projects is to meet the requirements at the village or area level unlike planning to build infrastructure which primarily helps corporates

·        there is a wider impact which prevents wages coming down below the legal level, thus preventing, at least in theory, gross exploitation of rural labour through dismal wages by the various sections of the rural elite. That is why the scrapping of the Act has the backing of representatives of the rural elite, the landlords and big contractors.

 

What are the various steps that the government is taking to eliminate rights of the rural poor under MGNREGA?

 

DRASTIC CUT

IN FUNDS

 

The first attack has been to drastically cut down the funds for MGNREGA. This has already started to have a very negative impact on the rural poor in the states.

 

The exercise of deciding labour budgets (LB), that is the cost of the number of person days to be created in the financial year, is usually completed in February and is jointly done by the state government and the central ministry. This gets translated into the allocation required taking into account the wages in the different states. The centre pays 90 percent of the costs.

 

All the states in agreement with the centre worked out their labour budgets for the FY 2014-2015 in February. It came to around 227 crores person days. This is slightly higher than the person days of 219.72 crores created in 2013-2014. In terms of money, it required an allocation of 61,000 crores.

 

The higher expenditures are because the cost for creation per person day has gone up due to rising prices.

 

On June 27, the MORD in a letter to all the states, informed them in no unambiguous words that there was a shortage of funds. It was stated that whereas the labour budget would require an expenditure of 61,200 crores rupees, the actual budget estimate was just 33,350 crores.

 

Shockingly even after six months, the central government currently still owes around 3000 crores to the states as a backlog from last year’s allocations. Therefore labour budget for 2014-15 plus the central liability amounts to around 64,000 crores.

 

In other words, the Modi government was providing just 52 percentage of the funds it knew were required.

 

Instead of reconsidering its priorities in expenditures, the MORD has arbitrarily cut the allocations to each state signaling the death knell for the implementation of the law. The revised allocations state-wise have also been arbitrarily decided on a “pro-rata basis.”

 

Thus a peculiar anomaly exists which is that the labour budgets of the states remain the same, but the centre’s allocations to implement the mutually agreed labour budget has been reduced by an average of between 40 to 50 percent to states.

 

Every state has suffered a cut.

 

PUTTING A “CAP” ON

MGNREGA EXPENDITURES

 

The UPA had also successively reduced allocations to MGNREGA. The allocations were drastically reduced from Rs 40,000 crores in 2010-2011 and 2011-2012 to Rs 33,000 crores in 2012-2013 and in 2013-2014. Taking into account the inflation rate, the reduction is substantial. However even though there was such a reduction, fund transfers were delayed but there was no official ‘cap” put on the expenditure. This was to avoid violation of the legally backed demand-driven nature of the law. But in practice demand for work was not encouraged, impossibly hard work, high productivity norms and low piece rate wages were some of the instruments used. However, if there was a demand from any state, it could not be refused.

 

In contrast, the Modi government has virtually put a cap on allocations from the centre with disastrous effects.

 

IMPACT ON STATES:

EXAMPLE OF TRIPURA

Take the example of Tripura. Tripura has been the best performing state in the implementation of MGNREGA. Its record in creation of person days and giving work has been double that of the national average. In the last three years, i.e., 2011-2012, 2012-2013 and 2013-14, the average workdays per household in Tripura have been 86, 87 and 88 respectively.

 

In February of this year, the annual discussions on the labour budget projections for the FY 2014-2015 were held between MORD and the Tripura government. On the basis of past performance and projected demand, an allocation for the creation of 5.14 crore person days was decided which amounted to a central allocation of Rs 1406.96 crores for the year.

However, the projected amount was slashed by over 47 percent to Rs 660 crores.

Till  October 20, the government of Tripura had received only Rs 180 crore rupees  which is just  27 percent of its indicated allocation. This is the lowest in the entire country. Gujarat one of the worst performing states received 76 percent of its indicated allocation, Andhra Pradesh received 87 percent, Madhya Pradesh received 84 percent, Chhattisgarh received 82 percent, West Bengal received 75.6 percent and Kerala received 46.58 percent.

 

There was no criteria for releases, just the arbitrary use of power by the ministry. Thus the best performing state Tripura received the lowest percentage.

 

It is only after the strong objections and protests by the state government that another Rs 193 crores have been released, but the damage is already done.

 

The Tripura government had projected a creation of 2 crore person days between April and September but till now it could achieve the creation of 1.08 crore person days. This is a direct fallout of the cut in funds. This means that a large number of households who would have got work under MGNREGA are being deprived and denied their rights under the law.

 

As a result, the proud record of Tripura and the benefit to thousands of beneficiaries is being destroyed by the central government. Moreover, the lack of funds and the subsequent reduction in workdays created in the first six months will affect all subsequent allocations in a vicious cycle as it will be used as a lower average for subsequent allocations.

 

This is the case for almost all states although again in an arbitrary manner some states have got a bigger percentage of their reduced allocation in the first tranche as compared to Tripura.

 

OTHER

STATES

The Bihar government has also written several letters to the MORD citing the problem of shortage of funds. The centre at the time owed the Bihar government Rs 624 crores. In addition, the state government required Rs 532 crores between July to September to implement the labour budget. The state government thus asked for a release of Rs 1000 crores. Instead, the central government gave it just Rs 256 crores which did not even cover the arrears the centre owed the state leave alone fund the ongoing programmes.  In August, the Bihar government wrote to the ministry “It is evident that the implementation of MGNREGA has been severely impacted due to shortage of funds.”

 

LOWER REGISTRATION

OF DEMANDS

 

An indication of the impact is also seen in the lower registration of demand for work nationally. When state governments know they do not have the funds, they may resort to non registration of work demand to avoid paying unemployment allowances. It is significant that for the first time in the last three years the demand for work by households was 14 percent less in August-September 2014-15 than it was in the same period in 2013-2014 and 8 percent less than 2012-2013.

 

Work Demand: August & September, Households

 

August

September

2014-15

9884592

8491662

2013-14

10409017

10843120

2012-13

9935090

9935090

 

In September, the Programme Review Committee of the ministry was held. The minutes of the meeting noted the complaint in point 9: “States expressed their inability to continue the uninterrupted implementation of MGNREGA given the situation of an overall fund shortage.”

 

The decline has already begun.

 

MATERIAL: LABOUR

RATIO

Another step being planned is the change in the material-labour ratio. The ministry is in overdrive to get the required acquiescence from the finance ministry, the MORD minister has already publicly stated his commitment for a change in the present ratio of 60:40 in labour and material costs to 51:49 increasing the proportion of expenditure on materials.

This has serious implications for the very nature of the legislation:

Firstly, since the successive governments at the centre have utterly failed to control prices and in particular since the price index for agricultural workers has seen a relentless rise, the real wage of rural poor has been coming down. To ensure at least a modicum of protection against price rise, the MORD under      UPA- 2 had been forced to accept a linkage between wages paid under MGNREGA and the price index resulting in annual wage increase since the last two years. Thus even without the creation of any extra person days or even with a decrease, the comparative wage bill would increase. With the overall drastic cut in funds, any change in the material-labour ratio will have the effect of drastically cutting down days of work.

Second, the material ratio is sought to be changed without any indication of the kind of projects to be taken up. In the present framework of convergence with projects of other ministries, initiated by the UPA-2 government, there is already enough scope to increase the material component in the ongoing list of projects to be undertaken as the current ratio for materials is underutilised. According to the breakup of expenditures, the current expenditure on materials is just 23 percent much below the permissible 40 percent.

Thirdly, the ministry had, in June, changed the guidelines to include “at least 60 percent of the works to be taken up in a district in terms of cost shall be for the creation of productive assets linked to agriculture and allied activities through development of land, water and trees.”

Already between 65 to 70 percent of works under MGNREGA come under this category. In 2013-2014, over 78 percent of the works were on water conservation, on individual land development, land development and rural connectivity.  All this was done within the existing material- labour ratios.

In fact, experience at the grass root level, shows that it is necessary to include more livelihood options into MGNREGA such as collection of fodder and fuel, animal husbandry, collective work of SHG groups and so on. The ministry in September has prioritised the plantation of trees on PMSGY roads, since it was publicly announced by the minister. None of these projects, including the plantation project will require any change in the ratio.

Fourthly, such a change will directly undermine the most important aspect of MGNREGA which is the identification of projects through a consultation and decision making process at the gram sabha level. A change in the ratio will mean curtailing the rights of the village in the decision making process and the imposition of top-down projects regardless of the benefits accruing to the area.

In June, the ministry had already decided in the PRC to change the level at which to aggregate labour-material ratio from the block to the district level which itself was questionable. It could lead to accentuation of inequality within districts in durable asset creation.

Fifthly and critically, the increase in the ratio will automatically mean the entry of contractors and machines in much larger numbers into the MGNREGA projects. This in turn will mean the conversion of MGNREGA from a work guarantee legislation into a contractor commission guarantee Act.

Therefore any change in the ratio has to be strongly opposed.

 

INTRODUCTION

OF MACHINES

There is a specific clause in the Act Para 23 of Schedule 1, which very specifically states that "wherever practicable works executed by the programme implementing agencies shall be performed by using manual labour and  no labour displacing machines shall be used."

 

On August 25, 2014, the ministry issued a "clarification" to the states, which dilutes the prohibition on machines in the name of creating durable assets. It states “where use of machines becomes essential for maintaining the quality and durability of assets, machinery can be used.."

 

The clearance for use of machines to create durable assets is an invitation to push up the material ratio replacing labour and bringing in contractors. In specific cases, use of machines may be necessary but such circumstances are already covered in the said clause. True, the ministry has also issued a “suggested” reasonable list of when machines may be used. But this is only a suggested list.

 

There is a proviso added that this should not however deprive job card holders of their work. This is just a lip service. The commitment to contractors is strong in the present government.

 

This should be strongly opposed.

 

DELAYED FUNDS

DELAYED WAGE PAYMENT

Although the ministry in its September meeting minutes had “condemned” the continuing delayed wage payments, just like its predecessor UPA government has not changed the policy of delayed fund transfers to the states which is the major reason for delayed wage payments.

 

Contrast these delays to the energy being spent by the Modi government in clearing all the issues that supposedly hamper a good investment climate in India.

 

In 2013-2014, under the UPA government, a shocking 60 percent of the wages were not paid within the maximum of 15 days stipulated by the law. In monetary terms this means that around Rs 16,000 crore of wages were delayed. The extent of the delay in wage payment ranges from 21 days to six months and sometimes even more.

In social terms, this means huge suffering for workers and their families dependent for their survival on a daily wage, in the absence of which they are forced into debt. 

However, instead of addressing this critical issue, the present government has decided that the best way would be to use technology to deprive the workers of their due in delayed wage payment compensation.

 The Programme Review Committee has also decided that “provision has to be made in NREGA Soft to allow generation of FTOs (fund transfer order) even if there is no fund available in the banks/Pos. This will enable queuing of FTOs and stoppage of calculation of delay compensation.”

In other words, a fund transfer order, even without payment of wages into the workers account, is sufficient to stop calculation of payment of wages, since it can be shown that the order was made, even if the money was not given. This is unethical and violation of the worker’s right for compensation due to delayed payment of earnings.

In 2014-2015, the compensation till now for delayed payments from April to October is calculated at Rs 116 crores. This is a much lower calculation.  However, the ministry has rejected the claims on false grounds  and sanctioned payment of just Rs 4.71 crores.

We should demand that the entire compensation due is paid.

 

UNEMPLOYMENT

ALLOWANCE

 

If the government does not provide jobs within the stipulated 15 days, it has to pay unemployment allowance. Whereas it adds up to about Rs 1300 crores this FY, not a single paisa has been paid.

In 2013-2014, payable unemployment allowance was Rs 2923.80 crores. But even by the end of the financial year, not a single rupee was paid to any worker anywhere in the country.

                        One of the listed reasons or rather excuses decided arbitrarily by the UPA government  for rejecting compensatory allowance claim was lack of funds. This self-serving clause completely undermines legal rights of workers. It is obvious that the worker cannot be held responsible if there is a lack of funds to pay wages in a central government sponsored programme mandated by law.

                         

Thus important benefits accruing to the workers due to delays in wage payment or non provision of work are being subverted by this government in the same mould as the previous one.

Recently, the central government has prescribed a more bureaucratic course of fund allocation in the name of state’s autonomy! The MGNREGA fund which used to go directly to the department in the state for distribution, will now go the state consolidated fund through the RBI. Thus the first delay will occur there. The RBI will send the money to the consolidated fund. Any release will have to be monitored by the state finance department, this will be another delay. The central government has stipulated that if the funds from the state consolidated fund are not paid to the rural department within three days then the state government will have to pay 12 percent interest.

Why does the central government not apply this wisdom to itself? Since it is the central government which is primarily responsible for delay in transfers to the states, building up large amounts of money in backlogs, it is the central government in fact that should pay interest to the states for every delay in transfers.

 

                        THE REFORMS

                        REQUIRED

 

The main reform required is to ensure adequate funds to retain the main aspect of MGNREGA as a demand driven programme.

 

Reforms to ensure timely payment for wages, for unemployment allowance are urgently required.

 

Within the framework of the law, there are reforms which are required. There is an urgent need for more flexibility in the projects to be proposed within the 60:40 material-labour ratio. The list should be open ended and states given the rights to add to the present list. It should be linked to livelihood needs of the people.

 

There is no doubt that in vast parts of the country where there are dysfunctional panchayat systems, the training required for suggesting projects at the gram sabha level is critical. It is true that there has hardly been any thought to how to train functionaries at the village level to plan projects. The help forthcoming from the block development office has been woefully inadequate in most states. This is also a cause for delay in planning and implementing projects. Thus the usual earth work for tanks is the most favoured project. However there is a limit to these kinds of projects. Thus a closer coordination between block level and the gram panchayat and much better monitoring is essential.

 

A most dangerous trend has started in some states where the sarpanches who have substantial power in the decision making process on MGNREGA projects and disbursal of money, have misused their positions. There are serious complaints of job cards being held by the sarpanches as in some districts of West Bengal for political and monetary benefit. Some oversight on the role of the main functionary at the village level should be part of the Rules.

 

Demands

 

The clock is already ticking for the dilution of MGNREGA. The urgent requirement for worksite mobilisations, for local, state level and national level agitations cannot be overemphasised.

 

We demand:

 

·        Reforms in favour of workers not contractors

·        greater allocation of funds for MGNREGA

·        the labour-material ratio should not be changed

·        there should be no dilution on the prohibition of contractors and machines

·        wages be paid on time and full payment of compensation

·        unemployment allowance should be given