- By 2020, India may face the problem of high growth, higher unemployment
- Manufacturing has lost over 3% jobs in the past decade; the overall decline is 0.6%
- Formal employment in services comprises less than 0.5% of total labour force
- Unviable remuneration and inconsistent growth has pushed people from farming
- NREGA is riddled with bureaucratic problems and lack of resources
- NREGA can only be a short-term solution to a long-term issue, experts feel
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Don’t laugh off the idea yet, because it’s in the realm of possibility. Picture this: by 2020, India’s unemployment rate is estimated at 30 per cent, or over 200 million people. This implies a fifteen-fold rise from the existing level of just over 13 million. Ninety per cent of the unemployed in 2020 will be in the 15-29 age group. Imagine, if this group of frustrated and angry men and women decides to react against the state in the next decade. The reason why TeamLease Services, which arrived at the above figures, thinks India has the potential to experience an ‘unemployment explosion’.
According to some studies, over 3 per cent jobs were lost in the manufacturing sector in the past decade or so. The figure for the country was a 0.6 per cent reduction in jobs, despite the booming service sector (including IT and business process outsourcing). What’s crucial to know is that services, which accounts for 55 per cent of India’s GDP, formally employs just 2 million people, or less than 0.5 per cent of the country’s labour force of over 400 million.
True, there are 190 million self-employed, primarily in the service sector. It’s also a fact that there has been an expansion in the labour market in the past few years. But the pace is too slow. Rajiv Kumar, director and chief executive, Indian Council for Research on International Economic Relations (ICRIER), believes that while high growth is generating employment, it is far below what we need and what the economy is capable of. Even Ashok Lahiri, chief economic advisor to the finance ministry, accepts the fact that while jobs have grown, "the labour force has grown even faster".
It’s easy to pinpoint the reasons for this phenomenon. Manufacturing doesn’t need too many people; technology allows a 1,000-MW power plant to be manned by 50-100 people. Services segments like IT and BPO can, at best, employ educated classes. Says Ashima Goyal, professor, Indira Gandhi Institute for Development Research, "The problem in the services growth is that it has been for the elite." Adds CPI(M) leader Nilotpal Basu: "Economic growth is happening sans economic development."
Thanks to low productivity and inconsistent growth, agriculture is no longer a viable livelihood for the 70 per cent of the rural population. Farmers who migrate to the cities find it impossible to find work because they are not required in manufacturing, and cannot join services. Highlighting this crisis, economist B.B. Bhattacharya says that "in agriculture where productivity is extremely low, wages have hit rock bottom. This is discouraging rural labourers from staying in agriculture". Agrees former cabinet minister Y.K. Alagh, "There is a crisis that’s emerging at the village level."
Most governments, including the UPA, have realised this. This is why it announced the National Rural Employment Guarantee (NREG) scheme, which aimed to offer a minimum 100 days employment per rural household. It was enacted into law as (NREGA) and had to be taken seriously by the Centre and the states. Social economist Jean Dreze agrees that not only does the act empower, feed and clothe the poorest of the poor, it adds quality rural infrastructure. "It has served many social goals: preventing hunger, reducing migration, empowering women, and reviving the panchayats, among others. There are enough positive experiences so far to show that NREGA has great potential not only as an anti-poverty programme but also as a means of bringing about economic, social and political change in rural areas," feels Dreze. Agrees Amitendu Palit,ICRIER: "If unemployment in the rural sector is addressed, it means more opportunities."
Senior officials in the rural development ministry argue that the NREGA will eventually make good on the promise of higher and competitive wages in the labour market. "With the minimum wage set by the state, private contractors will be forced to better their rates to attract labour," says one of them. Adds Dreze, "One positive lesson is that the doomsday predictions about NREGA have been proved wrong. The claim that a legal entitlement to work would lead to bankruptcy of the government has not been borne out."
Unfortunately, like most welfare schemes, this one suffers from lack of awareness, false muster rolls, payment problems, diversion of funds, minimal accountability and, of course, lack of resources. When the act was legislated in August 2005, the finance ministry’s annual allocation was Rs 11,300 crore for 200 districts. This Budget, Union finance minister P. Chidambaram added another 130 districts, an impressive 40 per cent increase in coverage. But he hiked the funds by just Rs 700 crore, or a mere 6 per cent.
One needs to just travel to the picturesque, but backward, Naugarh block in Chandauli district, Uttar Pradesh, to find out how even these funds have made little difference to the lives of the people, who still survive on rice gruel eaten with a pinch of salt, the local weed and dried mahua seeds. Many of them do have job cards, given out under the NREG scheme. Yes, they have heard the government assurances of guaranteed work. But they still go to bed hungry, a year after they were supposed to be gainfully employed and made an integral part of the 9 per cent plus growth engine.
Mouli of Pathror village in Chandauli was asked to pay up Rs Rs 25 for her photograph that’s mandatory on the job card. She doesn’t know that the Centre has set aside 4 per cent of the Rs 2.3 crore allocated to the district for "administrative costs", including photographs. After coughing up Rs 25 a month ago, she’s still waiting for the card as the village pradhan asked her to traverse 27 km on foot to Naugarh to get it. Like her, others are yet to get their job cards.
The NREGA, supposedly designed to be free of bureaucratic flaws, falls prey just to them. Pathror’s Surendra Kumar did get his job card and also found work. But to get the promised minimum wage of Rs 58 per day is an uphill task. Reason: the state has decreed that each person must dig a 10x10x1 ft trench, on tough terrain, which qualifies as a day’s work. Kumar says it can only be accomplished in a day if four healthy men work at least nine hours continuously. The end result: the daily wage of Rs 58 is equally divided among the four workers, leaving each one with Rs 14.50.
Nearly 50 km away from Pathror, in Sonbhadra district’s Nagwa block, Baniari villagers were working under an NREG scheme. Shivnath, a potter by profession, who used to make Rs 100 in a "good" month, hopes to take home at least Rs 800 for two weeks of work. But his job card is with the village woman pradhan. Her husband Lal Mani says all the job cards are with his wife for "administrative reasons". He adds that the block development officer (BDO) hasn’t disbursed the money to his wife. There were no muster rolls at the work site as the BDO had taken them home for "calculating payments". All these are illegal under NREGA, which mandates that workers should have a job card, the funds have to be directly given to the gram panchayats, and that muster rolls should be available for inspection at any given moment.
Across the road from Baniari is Raipur village, dominated by Dalits, who did possess their job cards issued a year ago. But most of the nearly 70 households are yet to get any work, and have to travel nearly 6 km to other villages in search of the guaranteed work. Says Ramraj, who found only a week’s work and earned Rs 500, "If I earn Rs 6,000 for 100 days, it can actually help me eat two meals a day." That is, if it happens.
The Act states that a job card-holder has to be given work within 15 days, or the state has to pay an allowance. But out of the 200 districts pinpointed last year, Barwani (Madhya Pradesh) is the only one where 1,574 tribals managed to get nearly Rs 4.7 lakh as unemployment allowance. "It came at a price as we were repeatedly arrested and attacked by the state machinery. We were only demanding what was our right under the law," says Madhuri Krishnaswamy of the Jagrut Adivasi Dalit Sanghatan.
But few states have led by example. While the National Advisory Council had envisaged Rs 100 crore per district, only Rajasthan spent Rs 600 crore in its six districts, and Andhra Pradesh was close with Rs 70 crore per district. Says Dreze, "The first year is best seen as a learning phase. It has been very slow, the implementation of the programme leaves much to be desired in most states. But, there is also good news."
A critical part of the success stories has been the proper implementation of social audits, which have helped stave off chronic corruption. In Rajasthan, such audits, forced by the Mazdoor Kisan Shakti Sanghatan (MKSS), has brought in a quiet revolution. Says Sowmya Kidambi of the MKSS: "In most cases, corrupt programme officers have voluntarily returned the money to the state." K. Raju, Andhra Pradesh’s rural development secretary, asked Tata Consultancy Services to develop a software to monitor NREGA. "We put thnigs online to ensure transparency and an effective monitoring system." Manju Rajpal, district magistrate, Dungarpur, Rajasthan, is following suit. "We also began computerisation of our records. The system does not allow people to divert funds for their pet projects," she says.
One hopes that the NREGA successes can spread across the country. One hopes the government will initiate policies to grow labour-intensive sectors to generate employment. One hopes the policymakers usher in a second green revolution to ensure viable farming and lower migration from the villages. One hopes that both the manufacturing and the service sectors grow at existing rates. In short, one hopes the India Shining story spreads to the poor regions.
But this will depend on the political will. Concludes Basu, "This year, the government had a great opportunity to boost employment. There was a 27 per cent growth in government revenues in 2006-07, and this could have been allocated for such measures. Unfortunately, this wasn’t done. If the government does not spend on socio-economic measures, who will do it?"
