Launched six years ago nationwide, the National Rural Employment Guarantee Act has been credited with rescuing millions of people from destitute poverty by giving 100 days of work to any family that wants to work.
But critics say the program has made workers less productive, compounded a labor shortage in the farming and industrial sectors and thrown away money that could have been invested in activities that boost economic growth. They say India’s transition to an economic powerhouse will be slowed because many working-age Indians in rural areas won’t learn the skills needed for new employment opportunities.
“The jobs program was meant to be a measure of last resort for the poorest. Instead, it has become the preferred work because it is easy money and a little bit of digging here and there,” said S. Baskar Reddy, head of agriculture at the Federation of Indian Chambers of Commerce and Industry (FICCI) . “It is de-skilling our people at a time when we should be training them for new skills.”
Prime Minister Manmohan Singh’s Congress Party came to power twice on the campaign platform focused on helping the poor harness the benefits of India’s recent economic prosperity. The jobs plan, which promises 100 days of work in a year, is his flagship program and so far has created employment for 193 million families.
But as India also considers a $20 billion program that will guarantee millions of economically and socially vulnerable Indians access to food, some economists are questioning whether the country can continue footing the welfare bill. Between April and September this year, India’s fiscal deficit reached more than $58 billion, double the figure for the same period last year.
Farmers’ and business associations now say that industrial jobs and farm work should also be considered as part of the program. Last month, a FICCI survey said that almost 90 percent of respondents said they were unable to find workers and meet their production targets. India’s real estate developers association also blamed cost overruns on labor shortages caused by the program, and the agriculture ministry requested in July that the program be stopped during the farming season.
Not far from where Chinnasami was digging, Ravi Chandran, a turmeric farmer, stared at his weed-ridden farm. “I have been pleading with the women laborers to come and remove the weeds that are eating up my turmeric plants. They want me to pay them $5 a day. That is too much; I cannot afford it,” he said. “My crop has gone to waste this year because laborers could dig ditches during peak farming season.”
India’s rural development minister, Jairam Ramesh, told reporters last week that the concerns about labor shortages were a deliberate attempt to discredit the jobs program because employers are unwilling to pay more, according to the Press Trust of India.
In a recent column in the Economic Times, Arvind Panagariya, a Columbia University professor, wrote that the fruits of India’s economic growth must help the common man make a decent living and become less dependent on government handouts: “Only in India does redistribution, which keeps the poor and marginalised out of the mainstream of the economy, pass for inclusive growth. In much of the rest of the world, inclusive growth would mean . . . making them true participants and partners in the growth process.”
Government audits have found that corrupt officials siphon money from the program in some states by filling rolls with fake names and delaying payments. In some villages, people have used the right-to-information law to expose corruption in the jobs program.
In spite of the problems, advocates say the program has empowered the poor to speak up against unjust wages and even ended bonded labor in some impoverished districts.
“The program has dealt a definitive blow to the feudal attitude towards laborers,” said Nikhil Dey, an activist with a farm and industrial laborers’ group. “The industry and farmers are crying because they were used to getting laborers at menial, exploitative wages for too long.”
Wages across rural India have risen since the program began, and migration from villages has been reduced, according to a study by Kaustav Banerjee, an economist in the Center for Studies in Science Policy at the Jawaharlal Nehru University in New Delhi.
“Factories and farmers have to sit down with the village councils at the local level to work out arrangements to avoid a clash with the public works program,’’ Banerjee said. “Laborers and employers have to understand each other’s needs.”
In the T-shirt exporting town of Tiruppur in Tamil Nadu, businesses that sell to manufacturers and retailers such as Tommy Hilfiger, Target and Wal-Mart have offered their own employment guarantee scheme — each factory will pledge 280 days of work to 50 laborers at a wage higher than the government’s — if the competing public works program is canceled in their district.
“We spend time and money training the laborers. But when they go home for holidays, they do not return on time. They stay back and do the digging work in the village, where the cost of living is lower than in this industrial town,” said Arumugam Sakthivel, president of the Tiruppur Exporters Association. “And we have to go looking for new laborers all over again.”