Why Reforming MNREGA is a Must…..

With spectacular performances in both Maharashtra and Haryana under the kitty, one can be rest assured that

has not only vindicated once more his invincibility for the time being but has paved the way for some tough economic reforms, some of which have already been initiated.

Even when the mainstream media was busy with analysis of the assembly polls, the Modi Government quietly decontrolled the diesel price which instantly brought down the prices of diesel by a few rupees and also set a new natural gas price. Both were key economic reforms.

This was followed by an ordinance to take over the land of the coal blocks cancelled by the Supreme Court order and then e-auctioning of the same as well as paving the way for commercial mining of coal by private operators.

This invariably is a great step towards ending the monopoly of Coal India and ushering an era of competition in the coal sector. Before this, some key initiatives were taken towards labour reforms, an indispensable one if India has to fulfill the dream of ‘Make in India'.

While these reforms would invariably have positive impacts and would continue, one area where reforms are badly needed is that in the realm of social sector expenditures. During the UPA regime, several populist social sector schemes were initiated with massive fiscal impact on the economy but with questionable benefits in the long run.

NREGA- Guaranteeing Unproductive Work

One such populist policy is the National Rural Employment Guarantee Scheme. Over the last few years a stupendous amount of money has been allocated to this scheme which unfortunately has only resulted in the creation of disguised unemployment and is now considered one of the biggest avenues for swindling of money.

Skewed from the Start...

Time since the MNREGA scheme was initiated by UPA, the prime objective of the scheme, rather shockingly, was never the creation of viable and sustainable assets in villages of India with the help of rural workforce. Instead, the objective was always just about creating employment even if that employment did not lead to anything productive. The 60:40 ratio of labour to material made sure that in most cases permanent concrete structures could not be created as cost of material then would breach the 40% of the total cost, mark.

Can Jobs be created without Sustainable Assets being produced in return?

Thus the ridiculous MNREGA continued for years with rural workforce made to dig earth, make brick roads galvanized not by cement but by mud thereby making sure that in a flood-prone nation like India, every year the rural earthen roads and earthen embankments would be washed away and every year the same road would be built which would create a false sense employment for rural folks without any viable assets being made in return.

The Change Proposed by NDA

Now Rural Development Minister has rightly stated that he intends to change the ratio of labour to material and make it 51:49 and no prize for guessing that all hell has broken loose on the left leaning economists and populists who are vociferously against it. Yet the fact of the matter is that even after several years of running the rural employment guarantee scheme, the skewed policy made sure that India's villages continue to be as impoverished and devoid of sustainable assets as it was before.

Had the rural workforce been used to create permanent structures like a village school, a village dispensary, a village community centre, check dams made of concrete, village skill development centers, concrete village roads and even if the NREGA been used to create small units of business by leveraging the skills of the rural work force, then today most of the Indian villages would have become self sustainable.

But that was not to be since the objective was never to create viable assets and make India villages self sufficient but to perpetually keep them dependent on central fund for sustenance. As a result of rural employment guarantee scheme and the associated malpractices involved in it, including the political interference at the local level and to get paid without any work, has created massive shortage of labour in many other industries and also in farm activities.

The Way Forward Has to be Creation of Self Sufficient Villages

Integrating NREGA with real time developmental work in villages as well as developing skills among rural folks is the way forward. Had merely digging of earth and filling the pits again been productive work, as NREGA often makes people do, then there would have been no poverty in India.

Indian villages need concrete roads, permanent structures for schools, clinics as well as concrete housing and electricity and rural workforce should ideally be used to build them.

It is time to replace obnoxious and self defeating policies with pragmatic and viable ones. Eventually the objective should be to make villages self sustaining and productive. If NREGA is failing in that then reforming the same is a necessity.