Prominent Economists Voice Concern over Future of NREGA in Letter to Modi

Published: 15th October 2014 06:00 AM  |   Last Updated: 15th October 2014 08:55 PM   |  A+A-

NEW DELHI: Fearing that the National Rural Employment Guarantee Act is being diluted, over two dozen prominent economists have shot off a letter to Prime Minister Narendra Modi cautioning him against the move which they argue will have a negative impact on India’s rural economy.

A decade of unbridled economic liberalisation which made successive governments more attentive towards industry than farming, many economists felt led to rural impoverishment and lopsided growth. NREGA in a way came as a corrective measure born out of a political consensus, whereby the state decided that some of the gains of a reasonably good and sustained GDP growth could be shared with the below poverty line(BPL) population.

However, in the last few years, there have been murmurs of discontent from among the larger farm holders that NREGA has made labour, particularly farm labour scarce and expensive and agriculture unsustainable. Not to mention the reports of corruption in disbursal of the scheme. But prominent development economist--mostly professors teaching in Princeton, Berkley, Texas-Austin, LSE and IITs--writing to Modi have argued that the gains accrued from NREGA far outweighs the negatives and it would be disastrous to discontinue or dilute the scheme/Act so soon.

Belgium-born Jean Dreze, who participated in the formulating the job scheme, said the letter reflected the concerns of a wide spectrum of economists “without any political bias”. There have been a series of dilutions in the Act even before  Modi Government came to power, like the freezing of wages, the withdrawal of right to compensation, bringing back machines, proposal to restrict the scheme, he said.

The letter says, “We are writing to express our deep concern about the future of the National Rural Employment Guarantee Act for NREGA. It is alarming to hear of multiple moves (some of them going back to the previous government) to dilute or restrict the provisions of the Act. Wages have been frozen in real terms, and long delays in wage payments have further reduced their real value,” the economists wrote.

The job scheme was introduced in 2005 with cross-party support. Arguing that its benefits outweigh its shortcomings, the economists said about 50 million households are getting jobs each year at a relatively small cost, and there have been “wide-ranging social benefits”. They said it was worrying that the Centre appeared to be considering changing the law to confine the scheme to the 200  poorest districts.

A Hard Fought legislation

The NREGA which was passed during the erstwhile UPA’s Government first tenure and came to be treated by the Congress as a feather on its cap, was actually a hard fought legislation for which debate had started from the last days of  Atal Bihari Vajpayee-led NDA-I particularly when reports emerged from the rural hinterland of undivided Andhra Pradesh of deep deprivation and a famine-like situation.


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