The MNREGA started as a ‘pro poor’ scheme during the UPA era and was supposed to have done away with poverty or at least account for a substantial reduction in poverty by now. Instead the act has become a hotbed for corruption and has only made negligible contribution to poverty reduction.
Modi Government came in power on the promise of big bang reforms and sustained economic prudence. PM Modi has made his intentions of overhauling MNREGA clear both before and after the Lok Sabha Elections. Thus, it is both politically and economically obligatory incumbent upon the Modi Government to carry out this reform.
We therefore list down the evils and anomalies within MNREGA, what the Modi Government has done/ proposed to be done and what it should do in order to bring about a complete overhaul in MNREGA.
Ghost workdays and payments:
The biggest anomaly with the MNREGA is that it ends up creating a host of ghost workdays, i.e. days which are unaccounted for by the poor households themselves. In 2009-10 the Ministry of Rural Development (MoRD) stated that the first full year of MNREGA created 2.84 billion workdays. Fortunately, the NSS the apex Survey Organization of India conducted a household survey and explicitly asked the BPL households about the number of days of MNREGA work the households obtained. According to the field survey thus conducted, 1.47 billion workdays, almost half of MoRD data. Thus, 48 percent of the days are clearly ghost workdays, the result being that the poor does not benefit and the government coffers incur heavy loss. While 1.37 billion workdays are still there in Government documents they have never actually been availed by the target population.
The rest of 52% workdays which both the MoRD data and the NSS agreed has actually happened does not tell a sweet story either. When we consider the payments actually made to the poor. According to the Tendulkar Poverty Line, 42% of those who received payments out of MNREGA are BPL. Thus, 58% of the payments were made to the non-poor. The average poverty gap and the funds sanctioned per poor expose the lacunae of MNREGA more clearly. The average poverty gap in India according to the latest data available is Rs. 1,700 as on 2011-12 but the funds sanctioned per BPL person were Rs. 32,500. The Government as a result ends up spending (32,500/1,700) around 19 times of what it needs to spend in order to make a BPL person non-poor. Therefore, the Government ends up spending a sum of around Rs. 47,000 Crores annually on MREGA alone- nearly a sum that if utilized in the most proper manner is sufficient in itself to end poverty in India.
Use of Banking Infrastructure:
Modi Government though has proposed several initiatives and reforms on this front. Actual work has also taken off as far as covering leakages in MNREGA is concerned. In fact the revolution of financial inclusion which kicked off in the initial stages of Pradhan Mantri Jan Dhan Yojana can be linked with MNREGA. Therefore, those who are supposed to be paid under MNREGA can be registered along with their bank accounts so that there is greater transparency and greater accountability.
No Asset Creation:
No prudent Government would sanction such large scale funds without any asset creation or to put it in technical sense spending around half a lakh crore on non-development expenditure annually even as the Government struggles to achieve its fiscal deficit target is the greatest form of fiscal indiscipline. This can be illustrated clearly in Modi’s speech in the Lok Sabha last year during the Monsoon Session that MNREGA is a clear example of Congress’ failures and that even after 60 years of Independence MNREGA forced us to send people to dig potholes.
Linking MNREGA with development activities:
Modi Government is thus satisfied about lack of asset creation. Modi Government has started several initiatives like Swachh Bharat and Deendyal Upadhayay Gram Jyoti Yojana among others. Several old Government schemes like the Pradhan Mantri Gram Sadak Yojana are still highly active. It doesn’t make sense to employ daily labourers for these schemes and at the same time make payments under MNREGA. The Government thus can take a momentous and much awaited step of linking MNREGA with the Developmental Schemes of the Government. This would make the MNREGA two fold, a poverty reduction scheme and labour supply for developmental activities of the Central Government. Such a step if taken would entail transformation of the MNREGA from a scheme creating potholes to a scheme contributing heavily towards electrification and road construction among several other development activities.
No Skill Development:
‘Give a man a fish and feed him for a day, teach him how to fish and you feed him for a lifetime’. The cardinal defect in MNREGA is that it believes in giving fish to the poor rather than teaching the poor how to fish. MNREGA is reflector of the typical disguised communist culture of doing nothing and surviving wholly on Government subsidies.
Modi Government has realized that if India has to develop it has to be skilled. Therefore, MNREGA in itself poses a tough question in the endeavor of skilling the masses. Its solution too is the most intricate and the Modi Government should at least consider linking MNREGA with the skill India campaign and forge an inspection method to make sure that the attempt to inculcate skill development within MNREGA beneficiaries becomes successful. Without this step the attempt of reforming MNREGA would remain incomplete. The rationale behind this step is clear we cannot indefinitely supply funds to end poverty. The beneficiaries should not be made to indefinitely survive their life purely on subsidies but they should be made capable of earning on their own.
The MNREGA is definitely a huge blockade towards fiscal discipline for the Modi Government especially when the Finance Minister has time and again clarified that financial prudence is his topmost priority. The good news though is that the Government has the financial infrastructure ready for ensuring that discretionary power and subsequent leakages arising out of cash payments can be minimized if not altogether eliminated. A lot though still needs to be done. The Government has to devise methods to make sure that MNREGA no longer only means a fancy name for bad subsidies but is actually used in an innovative manner towards asset creation.
Any change in MNREGA no matter how innovative and how progressive it maybe will evoke strong responses by the Opposition and the Mainstream Media along with the Opposition will start projecting the Government’s moves as an attempt to subjugate MNREGA as they did in the case of amendment of the Land Acquisition Act. The Modi Government though should not be wary of such hallow criticism and move ahead with its poll promises of fast paced reforms. The economic reforms promised by Finance Minister Jaitley would be unfulfilled if the biggest reform desperately needed, i.e. overhaul of MNREGA is not carried out.