A Different Tale About NREGA

nrega1Good intentions may not turn out be good outcome. This is mostly true in government sponsored programmes. The rural employment guarantee scheme NREGA has cheer leaders and doomsayers. But definitely this scheme is not cent percent success. On the other hand it can be abandoned as it provides little cooling effect to the rural folks who are suffering from the heat of poverty and unemployment. Now it is up to the state governments and local administration to make effective use of the scheme to help the poor. This scheme should be implemented in the lean agricultural season. during peak harvest season if this is carried out, agriculture will suffer as the labourers prefer to go to NREGA scheme as this is no work pay method.

Shankar Raghuraman writes in The Times of India (12 July 2009)
The National Rural Employment Guarantee Act (NREGA) is seen by those who pushed most vigorously for its enactment as a piece of legislation that can

potentially transform the picture of rural poverty. It is not difficult to understand why this perception should exist.

The Act guarantees at least 100 days of employment as unskilled labour to at least one adult member of any rural household that registers for employment under it. Finance minister Pranab Mukherjee has promised in his budget speech that the real wage rate paid under NREGA will be Rs 100 per day. Put those two things together and what it amounts to is that if the Act is perfectly implemented, any rural household availing of the scheme should be able to earn at least Rs 10,000 a year from it.

The rural poverty line, which is now in the region of Rs 400 per capita per day, means that an average household that is below the poverty line (BPL) will have an income of something in the range of Rs 24,000 per annum or less, assuming a five-member household.

In other words, if a BPL family were to get the full promised benefit of NREGA they could earn the equivalent of more than 40% of their annual income from this one scheme alone. That should be enough to see why NREGA should not be seen as just another of the plethora of poverty alleviation schemes that India has had since Independence.

But how much of this potential has actually been realized? Data for the three years during which NREGA has been in operation, 2006-07, 2007-08 and 2008-09 shows that on average only 50% of the households that registered under the scheme actually got employment. Further, the average number of days each household got employment was only 45 against the promised 100. In short, at best a quarter of what was promised has been delivered. It’s a beginning but a long way from meeting the objective.

What’s more, the all-India figures do not reveal the true picture. The reality is that there is a wide variation of performance across states. In terms of the percentage of registered households provided work, Maharashtra has averaged an abysmal 13% over the three years while Rajasthan at the other end of the spectrum has averaged 73%.

In terms of the average number of person-days of employment per household too, the variation is quite wide — from 22 in West Bengal to 79 in Rajasthan. If we take both parameters together, states like Rajasthan, Chhattisgarh and Assam are above the national average, others like Gujarat, West Bengal, Bihar, Karnataka and Kerala are below the average on both counts and most others have performed well on one of the two counts but not so well on the other.

The average wage rate paid is now a touch over Rs 85, but again that varies from around Rs 70 per person per day in states like Gujarat and Meghalaya to double that amount in Haryana. For many states including Uttar Pradesh, therefore, the promise of Rs 100 per day will not add anything to what is available. Nevertheless, the fact that the government is willing to stipulate a minimum floor across the country rather than leaving it to minimum wage criteria in the states is a welcome development.

What the disaggregated picture shows, thus, is that there is considerable scope for improving the implementation of the scheme, more so in some states. Making the NREGA work well could become particularly crucial in the current year if the apprehensions about drought in some areas turn out to be well-founded.

A study of the seasonal pattern in the demand for work under NREGA shows that the July-October period is the lean season while May-June is the peak period. While there may be other factors, the monsoon and the kharif crop would seem to have a major role to play in providing farm employment opportunities during this period and hence reducing the demand for employment under NREGA.

A drought could change that and raise the demand for work during these lean months. Will the system be able to cope with that increased demand? Finding the money to fund it is the relatively easy part. Streamlining the delivery mechanism might be much tougher.

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1 Comment

  1. Tammy said,

    +00002009-07-13T11:19:25+00:00312009bUTCMon, 13 Jul 2009 11:19:25 +0000 2, 2008 at 7.27 p07

    We really admit that NREGA scheme, since its implementation has not yielded what it was supposed to. What is needed from the Government’s end is a proper administration system that enables the reach of NREGA and other government schemes to the rural poor. Also, structural entities that work as an intermediary between the government and the customers can be put to work. One such company I just came to know about is FINO, helps in the reach and spread of NREGA & other financial services to the rural folks.


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