In industrial countries , with several times higher per capita incomes than India, an 'unemployment benefit' or dole is given to unemployed citizens. In India, the unemployed are supposed to fall back on their own means for survival. The Employment Guarantee Scheme Act that has been introduced in the Parliament recently is meant to address the basic human need for a job ( though it may be only for 100 days). It would increase a family's welfare unequivocally because of the income earned by one of the family members. According to the EGS, one member of a below poverty line (BPL) family would be offered a job and till he or she gets it, a third of the minimum wage will be given.
The unemployed person who will be given a job can contribute to the rural economy in various meaningful ways. Critics point out that there would be rampant corruption and a huge addition to government expenditure. Should that pose a new problem? To counter corruption, governance can be improved and people can be made accountable. A detailed planning mechanism can be evolved which would prevent leakages from taking place. There could be some mechanism for social audit control also. In any case, the government as well as most poor often know where the leakages are taking place. These can be stopped easily.
The other alternative, as pointed out by many economists is to raise the rate of economic growth and agricultural productivity and that would take care of the jobs for the poor through the'trickle down' process. Through more open policies and liberalisation, and by inviting foreign investment in infrastructure, an enabling environment for investment in rural areas could indeed be created that would raise productivity and incomes. Everyone agrees that more investment is needed which could raise agricultural productivity that would reduce poverty in the long run but what is to be done about the 260 million people who are very poor and who are vulnerable to all kinds of natural calamities and disasters because they have no income, no assets and no skills? It will take a long time before the GDP growth of less than 8 per cent percolates down to them.
The Rural Employment Guarantee Scheme could give them some hope and dignity by giving jobs to them right away. By giving hundred days of guaranteed work at Rs 60 day, a person who has been unemployed for months would get some work experience even though temporarily, and this would help in raising his or her bargaining power in the future.
There will be many hidden gains also because agricultural casual labour would not migrate to towns in search of jobs and end up living in squalid conditions, adding to urban poverty and environmental degradation. In villages, environmental damage by the poor who cut down forests for fuel wood, could also be reduced.
Questions can be asked about what sort of work will these BPL workers be doing. They could be employed for asset creation and rural works programme and EGS could replace other poverty alleviation schemes. Currently, the EGS has been given select coverage and only 150 poorest districts would be covered because the older data on BPL population covers only 150 really poor districts. Covering 150 districts would cost Rs 9000 crore yearly and if it is extended to all 600 districts, the cost would be Rs 36,000 a year. If 2002 BPL census is used, a different set of calculations would have to be undertaken. Because according to the 2002 census , only 26 per cent of the population are below poverty line.
Some calculations have shown that providing one day of employment per person would cost the government Rs 100 per day and of this, 60 per cent would be wage component and 40 per cent would be material costs with which the worker would work. Around 40 per cent of the jobs could go to women. The proposed Bill could specify the kind of productive works that are to be taken up under the programme and the states could prepare a list of preferred works which would provide jobs at the minimum wage.
Basically, giving 100 days of employment guarantee is not going to cost the government a huge amount of money and it is not something that the government cannot afford and there is little need to dilute it unnecessarily.
Whether the center should bear 75 per cent of the material cost or whether the states should bear more than 25 per cent is immaterial as this could be sorted out easily. If the central government wants to save money, it can do so by cutting a myriad wasteful expenditure. It could raise money through additional taxes and by bringing in more people into the tax net.
The objections so far are all based on past failures of the government's delivery system when much of subsidized food grains, kerosene and sugar meant for the poor disappeared in large quantities and appeared in the open market.
There have been a number of failures no doubt in the delivery system but to ignore the current plight of millions is going to prove injudicious when promises have been made under the Common Minimum Programme. EGS will be a boon for the poor in current hard times when agricultural growth is barely 1 to 2 percent and there is a rise in inflationary pressure.
May be the government's EGS cannot be sustained over a longer period unless training is also included and people taking advantage of it can find jobs later. It could however give the much needed relief to workers who are willing to work but cannot find jobs anywhere right now and specially the young will benefit because due to poverty, they are often forced to drop out of school, remain semi literate and unskilled. They could build their futures on the basis the first jobs that the government offers to them.
* Views expressed in this article are those of the author and do not necessarily reflect those of Observer Research Foundation.
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