Mumbai: In the budget for 2018-19, the government allocated the largest sum for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), the world’s largest job-guarantee programme, since its launch in 2006. Yet, the allocation was no more than the 2017-18 revised estimate (that approximates actual requirement) of Rs 55,000 crore. In 2012-13, the share of MGNREGS was 55% of the rural development ministry’s allocation, and has since dropped seven percentage points to 48%, IndiaSpend reported on May 4, 2018.

Further, the wage payments to MGNREGS workers have been routinely delayed. Nearly 57% of wages due were unpaid at the end of April 2018, as per government data. The delays were “simply not acceptable", the Supreme Court said, warning that red-tape could not be "pedalled" as an excuse to deny payment, the Business Standard reported on May 18, 2018.

Jean Drèze, a development economist and activist who is one of the architects of MGNREGS, says stagnation of real wages and the government’s chronic inability to ensure timely and reliable wage payments is discouraging workers from taking up MGNREGS work, which will lead to a decline of the scheme.

Drèze is a visiting professor at Ranchi University. He has taught at the London School of Economics and the Delhi School of Economics, and has recently authored ‘Sense And Solidarity - Jholawala Economics for Everyone’, a collection of essays from opinion pages written between 2000-17, highlighting his action-oriented research. With Nobel laureate Amartya Sen, he has co-authored ‘Hunger and Public Action’ and ‘An Uncertain Glory: India and Its Contradictions.’ Dreze has travelled across rural India to work and research on social inequality, elementary education, child nutrition, health care and food security.

In an email interview with IndiaSpend, Jean Drèze speaks about the issues dogging MGNREGS, the use of Aadhaar-based biometric authentication in the public distribution system, and the idea of a quasi-universal income that would transfer a basic income to a target population.

There have been reports of starvation deaths in Jharkhand, some of which have been blamed on technical glitches in the process of linking bank accounts with beneficiaries’ Aadhaar numbers, leading to them being denied access to subsidised foodgrains through the public distribution system (PDS). In 2016, you wrote that “the main vulnerability today, at least in the states I am familiar with, is not identity fraud but quantity fraud”. Have the circumstances changed since 2016? Has Aadhaar linking improved or worsened the situation?

Two careful studies of the PDS in Jharkhand have recently emerged [only one has been released to the public as of now], and despite some differences, they agree on important points. First, there is little identity fraud, such as duplicates, in the lists of ration cards [through which beneficiaries access PDS]. The streamlining of ration-card lists, mainly using the Socio-Economic and Caste Census of 2011, happened soon after the National Food Security came into force, and before Aadhaar came into the picture.

Second, the principal vulnerability is indeed quantity fraud. Quantity fraud mainly takes the form of what is called katauti in Jharkhand. Katauti means that the PDS dealer gives everyone a little less than their due, say 32 kg of rice instead of 35 kg, for an Antyodaya [poorest of the poor] household. Both studies indicate that katauti remained much the same after Aadhaar-Based Biometric Authentication (ABBA) was made compulsory in most ration shops [PDS outlets]. That is what one might expect, since ABBA is powerless to prevent quantity fraud.

Third, these studies suggest that ABBA led to a new type of fraud, at least initially. Briefly, when someone fails the biometric test, his or her rations are often appropriated by the PDS dealer. The closing stocks are supposed to be adjusted against the next month’s allocation, but that did not happen for a long time.

Aside from this, the imposition of ABBA has caused significant exclusion problems, especially for vulnerable groups such as single women and the elderly. In short, the outcome of ABBA in Jharkhand can be summarised as “pain without gain”. This is not an appropriate technology for rural Jharkhand, where connectivity problems are rampant. Smart cards would be more appropriate there. Unlike ABBA, smart cards do not depend on internet connectivity or biometrics. They have been used with good effect in Himachal Pradesh and Tamil Nadu, why not Jharkhand?

In close to a decade until 2016-17, more than half the participants in MGNREGS have been women. Between 2016-17 and 2017-18, women person-days fell nearly 3 percentage points from 56.1% to 53.4%, as per government data. What are the reasons for the high participation of women and the present decline? Should the fall in total women person-days be a cause for concern?

The high participation of women is a very positive feature of MGNREGS. India has one of the lowest rates of female labour force participation in the world, an issue that received little attention until recently. Of course, Indian women do a huge amount of work at home and on the family farm, but that does not enhance their economic independence since most of it is unpaid. And the economic dependence of women on men is one of the main drivers of gender inequality in India. Only a woman who has nowhere to go would take the kind of oppression, humiliation and violence that so many Indian women endure within the household.

Against this background, MGNREGS work is an important opportunity for Indian women. Evidently, it is an acceptable form of employment for many of them, perhaps because it is available close to their homes, at a public worksite where they can work with their husband or other women, if need be. MGNREGS worksites are also free of private contractors, who are a major source of harassment for female workers. Further, MGNREGS wages are higher than what most rural women would be able to earn elsewhere, and they are deposited in women’s own bank accounts. So it is not surprising that large numbers of rural women have participated in MGNREGS, not only as casual labourers but at all levels. This is a valuable development, for which MGNREGS gets too little credit.

The small decline in women’s share of MGNREGS person-days, from 56% in 2016-17 to 53% in 2017-18, is possibly a concern but I think it is too early to tell. If the decline persists, it will certainly be an issue.

The present government seems indifferent towards MGNREGS, with Prime Minister Narendra Modi having said that it is “a living monument” to the United Progressive Alliance’s (UPA) policy failures. What is the future for the jobs-creation programme as the government tries to increase employment and speed up growth?

I would not make too much of this passing remark of the Prime Minister. The central government’s actions are more important, but they happen to be consistent with the Prime Minister’s statement. The Modi government has grudgingly accepted that MGNREGS is here to stay, but it is preparing the ground for a decline in the programme by keeping the wages constant in real terms year after year. The stagnation of real wages, along with the government’s chronic inability to ensure timely and reliable wage payments, is discouraging rural workers from taking up MGNREGS work. Sooner or later, this is likely to translate into a decline in MGNREGS employment. In fact, I believe that it is already happening in some states, though it is hidden in official statistics because of a revival of fake work attendance.

When workers lose interest, corrupt middlemen step in and fudge the records to siphon off MGNREGS funds. There are also other reasons for growing corruption in MGNREGS, including misguided technological innovations that create new vulnerabilities such as the nexus between private contractors and data-entry operators. Between the wage-payments crisis and the revival of corruption, MGNREGS seems to be losing steam right now, in some states at least.

There has been criticism about the quality of work completed under MGNREGS. Do you believe this aspect is misunderstood? While MGNREGS is a crucial source of employment and social security, is there an alternative where skilling/re-skilling of workers could also be undertaken?

We know little about the quality of MGNREGS works, all the more so as it tends to vary a great deal across states and worksites. The best MGNREGS works have high rates of return, judging for instance from a recent study of MGNREGS wells in Jharkhand. [The study found that nearly 95% of completed wells were being utilised for irrigation, leading to a near tripling of agricultural income in the command area.] The worst are useless, as many other works in the same state illustrate. But how MGNREGS works are distributed between these two extremes is hard to guess.

My sense is that in the better-governed states, MGNREGS is reasonably productive on average. This is borne out, in the case of Maharashtra, by a recent study from the Indira Gandhi Institute of Development Research. But much remains to be done to achieve similar standards of work quality across the country.

As far as skill formation is concerned, one option would be to reinforce the skill formation component of MGNREGS itself. There is a perception that MGNREGS is just about unskilled work like digging, but in fact, it also includes a skill-formation component. Indeed, aside from casual labourers, MGNREGS employs a large number of people in different capacities--skilled workers, worksite supervisors, barefoot engineers, social auditors, data-entry operators, Gram Rozgar Sevaks [‘village employment assistants’, which are administrative positions], and so on.

Being contractual staff, most of them move to the private sector at some stage, with the benefit of the skills they have learnt under MGNREGS. This skill-formation aspect of MGNREGS could be strengthened, for instance through better training programmes for worksite supervisors and barefoot engineers. Perhaps some sort of skill ladder could also be built into MGNREGS, so that workers have a chance to become worksite supervisors, supervisors to become Gram Rozgar Sevaks, and so on. This is a little futuristic, but some steps could be taken in that direction at least.

The aspirational districts programme looks to improve the socio-economic indices of 115 backward districts in India, many of which fall in the so-called "BIMARU" states (Bihar, Madhya Pradesh, Rajasthan, Uttar Pradesh, considered laggards in terms of growth and development). Earlier there was the backward regions grant fund (BRGF). Why are some regions continuing to fail to develop? How much of it is cultural and institutional? What are the solutions?

One thing that India lacks badly is a strong sense of universal minimum standards. For instance, every school should meet some minimum standards in terms of facilities, teacher-pupil ratio and so on, wherever it is located. Of course, the Right to Education Act does set some standards. But in practice, it is still considered alright for schools in deprived areas to lack the basics. You don’t have to go to the country’s backward or aspirational districts, as they are called, to see this. You can see it in any small town, by comparing public facilities in privileged areas and deprived neighbourhoods.

I mention this because it seems to me that the district is not necessarily the best unit to think about when it comes to spatial disparities. In the most advanced districts, there are backward pockets, and in the most backward districts, there are prosperous areas. This struck me when I visited Mewat, one of the poorest areas in the country, at a time when it was still in Gurgaon district, one of the country’s most prosperous districts. When special grants are allocated to the backward districts, there is a risk that they will end up doing little for the deprived areas of these districts. A different approach would be to ensure minimum standards across the country, such as RTE norms for every school, an all-weather approach road for every gram panchayat [cluster of villages], electricity for every village, and so on.

In this approach, the poorer districts would still get most of the resources, since they have the largest shortfalls from minimum standards, but the resources would go where they are really needed, including deprived areas in other districts. All this, of course, is easier said than done. But the Backward Regions Grant Fund did not achieve much and the aspirational districts programme does not even seem to have a budget. So it is worth considering an alternative approach.

It has been close to two years since demonetisation. Has the rural economy recovered or is it still battling the after-effects?

I doubt that anyone really knows. If you believe the official statistics, the crisis was short-lived and the old trends are back. These trends are bleak as far as the rural economy is concerned. The growth rate of agriculture is sluggish, certainly compared with the rest of the economy, and real agricultural wages are barely rising.

Having said this, the official statistics have lost some credibility. For one thing, the Modi government is a bit of a public-relations agency, and it is hard to believe that economic statistics are not being massaged here and there. For another, there is little direct evidence on the informal sector, which accounts for a large part of the rural economy.

Annual economic statistics for the informal sector are largely based on economic modelling, using formal-sector data and whatever little information is available on the informal sector from periodic surveys. This approach may be good enough for estimating medium-term trends, but it is not geared to measuring the short-term impact of a shock like demonetisation. It is, thus, quite possible that the rural economy is faring worse, or rather even worse, than official statistics suggest. But we are in the dark on this.

As agrarian distress rises, the government is attempting to double farmer income by 2022. Could you share your views on universal basic income (UBI) or quasi-UBI to farmers and agriculture labourers as advocated by Arvind Subramanian, the former chief economic adviser to the government of India?

The promise to double farmers’ incomes by 2022 is meaningless. For one thing, it would require a growth rate of 20% per year in real terms for four years in a row. That’s just a pipedream. For another, we have no reliable data on farmers’ incomes, so this promise does not commit the government to anything tangible.

As far as income-transfer proposals are concerned, the term UBI is inappropriate. The idea of basic income is that it covers the basic costs of subsistence. None of the current proposals for India meet that criterion. There are various proposals for a quasi-universal income top-up (QUIT), in the sense of modest income transfers aimed at a large majority of the population. I am not at all opposed to the idea of a QUIT for rural areas, but the modalities pose difficult questions. For instance, who is eligible, how much is to be given to different categories of eligible households, and should it be in cash or kind?

In the Rythu Bandhu scheme [farmer investment support scheme launched by the government of Telangana] projected by Arvind Subramanian as a quasi-UBI, the modalities look far from ideal. Only landowners are eligible, and the transfers are proportional to the amount of land owned. That sounds very regressive.

On the other hand, these modalities may be less regressive and more rational than the current structure of power and fertilizer subsidies, and indeed, Subramanian’s proposal is to replace the latter with the former. But in practice, it is not happening, and the Rythu Bandhu transfers, as I understand it, are supplements and not substitutes for other subsidies. So this does not look like a good model at all.

My view is that the poorer Indian states already have a QUIT scheme in the form of the PDS, though it is in kind rather than cash. Unlike Rythu Bandhu, the PDS is progressive, and not restricted to landowners. In these states at least, it would be better to consolidate the PDS than to introduce ill-designed cash-transfer schemes. The disastrous consequences of the recent experiment with “DBT for food subsidy” in Nagri Block of Jharkhand is an important warning in this regard.

(Paliath is an analyst with IndiaSpend.)

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Shreehari Paliath

    Shreehari has reported on public policy around labour and employment, agriculture, water, and elections. He received a special mention at the 2019 Red Ink Awards. He has a post-graduate diploma from the Asian College of Journalism, Chennai, and a master's degree in development from Azim Premji University.