The
debate should, therefore, focus on the best ways of reducing
the burden of poverty. The supporters of the Bill have argued
that employment guarantee is the most direct and effective
assault on pov-erty. As the programme envisages manual labour,
employment seekers are self-selecting and poor. As 90% funds
come from the Union, work can be provided to all those who
seek it. The wages earned over 100 days at Rs 60 a day will
at least provide basic sustenance during seasonal unemployment.
With panchayats actively involved, there will be community
acc-ountability. If we assume 40 million rural households
below the poverty line, and 40% non-wage component of rural
works under the programme , the total cost of the guarantee
would be about Rs 40,000 crore per annum. The proponents
argue that while this is a large sum, it is only about 1.3%
of GDP (at current prices), and is worth investing to reduce
poverty.
The
sceptics argue, with Union government tax revenues in the
range of 10% of GDP, 1.3% is a lot, and we should make sure
the money is well spent. In this day and age, earthwork,
removing boulders and filling pits cannot constitute gainful
employment. The real causes of poverty lie in inadequate
skills, denying opportunities to participate in wealth creation
in a modern economy, and poor health access and the crushing
burden of costs of ill health. When resources are limited,
we must get the best value for every rupee spent. A lot
more investment in education and hea-lth care is needed.
If the bulk of the reso-urces go towards employment guarantee
in the form of drudgerous work, it may divert scarce resources
from the truly empowering sectors. And, of course, there
is real danger of bulk of the funds being misappropriated
by rent-seekers.
Both
sides have strong arguments. But, for a reasoned public
debate and a productive outcome, the intentions of both
sides should be respected. Now that the Bill in the current
form will certainly be the law soon, we should focus on
creative and meaningful responses to promote maximum public
good. Who knows, the employment guarantee may well have
positive unanticipated consequences, if genuinely implemented
without leakages. Witness the impact of the mid-day meal
scheme on female literacy, population stabilisation, skills
and investment in Tamil Nadu. And the positive fallout of
subsidised rice on public awareness, fertility rates and
poverty reduction in Andhra Pradesh. This was possible because
both schemes were well implemented, and the parties in power
regarded these as their political lifelines.
If
the employment guarantee law is here to stay, what can be
done to maximise its gains and accelerate economic growth
at the same time? First, the programme must substantially
be dove- tailed with soil conservation, watershed development,
and drought-proofing. Rural poverty, degraded soils, drought,
and low productivity go together. All other beneficiary-oriented
rural development schemes should be scrapped and employment
guarantee works must be almost wholly land-based. We can
review the impact of the programme on land productivity
and poverty after five years and then chalk out a fresh
course of action.
The
fiscal challenge the programme poses is real. The past few
years have witnessed low inflation and moderately high growth
rates. With the rising burden of global oil prices, if retail
prices are not enhanced, the oil companies will lose about
Rs 40,000 crore. This, coupled with employment guarantee
allocations, will seriously undermine our fiscal health,
fueling inflation. If fuel prices are raised, it will add
to inflationary pressures, hurting the poor disproportionately.
Fiscal prudence and low inflation must be recognised as
important anti-poverty and pro-poor measures. Therefore,
everything possible should be done to eliminate unnecessary
or unviable subsidies.
Finally,
real reduction of poverty in the long-term will be possible
only by providing good quality school education (not mere
enrolment and retention in under-staffed schools), improving
skills to enable productive participation in wealth creation
and creating a decent, accessible and accountable healthcare
system. Employment guarantee is merely a palliative. The
real cure lies in skills, productivity and good health.
Any deviation of focus from these areas will cause immense
harm to the poor, and to the economy.
We
must remember that good intentions are no substitute to
sensible action. The challenge lies in maintaining the required
balance in our policies and their implementation.We would
do well to recognise that there is no single silver bullet
to combat poverty. We need to evolve a package of practices
and policies to enhance productivity and skills, reduce
disease burden, and improve economic opportunities. The
current euphoria and cynicism are both unwarranted. Healthy
scepticism, a multi-pronged strategy to help the poor help
themselves, a capacity to rise above dogmas and the ability
to apply mid-course corrections based on evidence and logic
are all vital in the next few years.
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