reportage

NREGA’s Reality Check

Can India’s most ambitious legislation tackle poverty?

By MEHBOOB JEELANI | 1 May 2010

AS DAWN BROKE ON 7 AUGUST 2009, Rekha Rani, a diminutive 38-year-old wife of a farmer from Uttar Pradesh, learned that her husband had been hospitalised. Grabbing her four-year-old daughter, she quietly left her brother’s house and hurried toward the railway station. Two days before, India had been celebrating Rakshabandhan—the Hindu festival celebrating the brother-sister relationship—and Rani had come to Banda, 55 kilometres from her home, to tie a raakhi, a sacred thread, on her brother’s wrist. On the train, she began cursing herself for leaving her husband alone. Passengers comforted her until she reached Jaitpur, a Dalit village in UP’s Mahoba district, late in the afternoon. Her fellow villagers wore gloomy looks. On the roadside, a white ambulance was parked, its doors open. Policemen stood on the mud street, a sea of people in the alleys around them. She shivered; her feet gave way. She slowed down and collapsed.

“I opened my eyes and found him dead,” said Rani, when we met in Jaitpur in January 2010. She is the mother of two daughters and two sons. Sukhlal, her husband, didn’t die of disease. On the morning of 7 August, he returned from his mustard field and bathed at the hand pump. Then he entered his room and drank a bottle of pesticide. An hour later, he was dead.

When I asked Rani why Sukhlal had killed himself, she said, “Drought, a 16-year-old daughter, and 60,000 rupees of debt.”

POVERTY REMAINS INDIA’S MOST INTRACTABLE problem. Though the rate of absolute poverty has declined since Independence, there are still more than 488 million poor people in India today—more than the entire pre-Independence population. And that makes India home to one third of the world’s poor. Though India’s economic growth is most often compared to China, in terms of poverty, India has more in common with sub-Saharan Africa—languishing in the ranks of the United Nations’ human development index at 134th.

When the Congress party returned to power in 2004, after an eight-year gap, they promised to tackle poverty, again. But this time their plan had more substance. The government drafted a comprehensive law with input from economists and grassroots activists. The law aimed to help India’s most disadvantaged citizens: the unemployed, the underemployed, and those without access to credit; the ones who commit suicide over drought, unmarried daughters, and a few thousand rupees of debt. People like Sukhlal.

The National Rural Employment Guarantee Act, or NREGA, promised 100 days of guaranteed employment to one member of a rural household in every financial year. The law also mandates a daily wage of 100 rupees. The central government would fund 90 percent of the expenditure, including the wages and administrative costs. “This would soon lift millions out from poverty,” promised then Minister for Rural Development, Raghuvansh Prasad Singh.

Unlike previous poverty alleviation schemes, NREGA includes measures of accountability. The legislation encourages public auditing, centralising records on the ministry’s website and making administration transparent. There are also consequences. If local authorities fail to provide an applicant work within 15 days, an unemployment allowance of 25 rupees per day has to be paid by the state government.

Since its founding, massive public funding has been pumped into NREGA. In 2006, it was first implemented in India’s 200 most backward districts. To date, NREGA covers 619 of India’s 626 districts. As of 31 March 2010, the Ministry of Finance has released 784 billion rupees under NREGA, and if the 2010-11 budget is also included, the figure jumps to 1.185 trillion rupees, making it the world’s largest social welfare scheme.

The programme has provided employment to 44.1 million people, and this February, NREGA celebrated its fourth anniversary. The ultimate goal of poverty alleviation, however, is still incomplete. Until 2004, India had 456 million people living below the international poverty line. Yet after four years of NREGA, the number of poor, which was expected to decline, has increased from 456 to 488 million. So what went wrong? Why has this scheme failed Sukhlal and so many like him?

MAKE-WORK SCHEMES AREN’T NEW. After the New York Stock Exchange crashed in 1929, the United States plunged into the Great Depression. Some 13 million people joined the unemployment line and thousands died, from both suicide and starvation. Labourers protested almost every day, demanding employment. The Great Depression showed the world the pitfalls of the neoclassical economic model, which argued free markets would automatically provide full employment, and economies would thrive as long as the government didn’t over-regulate markets and workers were flexible in their wage demands. But British economist John Maynard Keynes disagreed. “The government should pay people to dig holes in the ground and then fill them up,” Keynes argued. “It doesn’t matter what they do as long as the government is creating jobs.”  Keynes’ economic policy was interventionist, saying governments should create jobs for the unemployed to increase their spending power, create a class of consumers and thus stimulate the economy. Through the New Deal, a series of make-work programmes, Washington implemented Keynesian ideas. Thanks to these schemes, the United States began its recovery by the mid-1930s.

Fast-forward to rural India in the early 2000s. Between 1997 and 2001, more than 80,000 farmers committed suicide. The number of in-debt farmers increased from 26 percent in 1991 (out of 575 million people dependent on agriculture) to 48.6 percent in 2001 (600 million dependent on agriculture). Eight million quit farming altogether. At the same time, urban India was showing remarkable growth, becoming the second fastest growing economy in the world. The ruling Bharatiya Janata Party (BJP) ignored the first, rural reality and in the 2004 election, flaunted the second one with the slogan, ‘India Shining.’ Convinced by activists and welfare economists, the Congress party campaigned on a platform of ‘guaranteed employment’ and other pro-poor promises. They won, and once in power, even after resistance from within—from its Oxford, Cambridge and Harvard-educated leaders who leaned towards neoclassical economics—the Congress party enacted NREGA.

Even though it was expected to form a majority government, the Congress was still vulnerable in 2004. It was short of 117 Parliamentarians, so left-leaning parties lent their support on the condition the government would implement a set of initiatives called the National Common Minimum Programme. The package included a scheme that promised guaranteed employment for the poor. Now the leadership needed a well-designed plan to take to Parliament, something both politically feasible and economically sensible. The bill was written by the National Advisory Council (NAC), which included ministers, bureaucrats, academics and activists. After the NAC approval, the bill was passed to the Planning Commission, where the commission’s deputy chairman, Montek Singh Ahluwalia, formerly a senior official with the World Bank and the International Monetary Fund, resisted the guaranteed employment clause, arguing it would make implementation of the programme too costly. The bill was introduced in Parliament on 21 December 2004—without the guaranteed employment clause.

Activists and welfare economists, some of them NAC members, felt betrayed by the exclusion. In rural India, grassroots activists enjoy large-scale public acceptance—often providing essential help that the government neglects. But in Delhi, they had only a small team that was led by Aruna Roy, a frail, sari-clad, Magsaysay award-winning social activist based in Rajasthan; and Jean Dreze, a blond, equally frail Belgian-born economist who helped draft the bill. Dreze, Roy and other activists protested the bill’s dilution by holding a signature campaign outside Parliament House as the bill was debated. The left-leaning parties joined them. Public pressure gradually mounted and things soon grew more heated. Kalyan Singh, a veteran BJP leader who vehemently criticised the bill in Parliament, chaired the Standing Committee on Rural Development that would decide its fate. He boycotted meetings on NREGA for six months.

To re-invigorate the NREGA debate, an activist group headed by Jean Dreze lobbied the BJP. They had several meetings with party leader Arun Jaitley, who convinced Singh to convene the meetings. In the first meeting, members reached a consensus to open the bill to public amendment. Once again, civil society spoke up. Activists demanded guaranteed employment at a minimum wage of 100 rupees per day, but they still faced resistance from within the Congress. The Planning Commission, the Finance Ministry, several members of the Cabinet, and even the Prime Minister’s Office had reservations about NREGA.

So one evening in April 2005, Dreze, Roy, and fellow activist Annie Raja, all members of NAC, met Defence Minister Pranab Mukherjee at his official residence. Mukherjee headed the Group of Ministers (GoM), which negotiates important deals for the Prime Minister. Convincing Mukherjee was crucial, but he had already made up his mind. Dreze explained the demand-driven employment model to Mukherjee. Shortly afterwards, recalls Raja, Mukherjee began berating Dreze: “This is not your country, this is India, an act like this is not possible here.”  The activists were sent back and told the model they’d put forward would be “a huge burden on the exchequer.” Before leaving Mukherjee’s residence, the activists were told that they must terminate the guaranteed employment clause and limit the scheme to poor households.

The activists had only one remaining option: to take their case to 10 Janpath. In May 2005, Dreze and Roy paid a visit to Congress President Sonia Gandhi’s residence. At the time, Gandhi enjoyed immense goodwill since she had declined the prime ministership after the 2004 Congress victory. Nevertheless, she still exerted power on the government from a comfortable distance. She could easily convince the Mukherjees, the Chidambarams, the Ahluwalias and the Singhs to alter the bill’s key provisions. With this hope, Dreze and Roy sat in Gandhi’s garden.

“Who is creating hurdles?” Gandhi asked them, before agreeing to take their case to the party’s decision-makers. They’d need someone that high up to get anything done, and according to Annie Raja, “except Sonia Gandhi no one in the Congress was willing to support the bill.”

Gandhi and the activists continued to meet over the next two months.

The bill was reintroduced in Parliament in August 2005 and a compromise was finally reached. NREGA would retain guaranteed employment for just 100 days, not a complete year, as promised earlier. Pranab Mukherjee and other opponents extracted another concession: confining NREGA to rural India, sidelining the urban poor.

On 23 August 2005, the bill was passed, and once it had the President’s approval, the law was enacted in February 2006.

NREGA can appear as a success. After all, some records show the government provided employment to 44.1 million people in the last four years. The Ministry of Rural Development believes it has rescued thousands of farmers from debt through cash payments. The scheme has decreased urban migration by 30 percent, according to a survey by the Centre for Civil Society, and has increased the bargaining power of unskilled labourers, forcing private contractors to pay as much as 130 rupees per day to compete with NREGA. Through the construction of shovel-ready projects, NREGA has also vastly improved rural infrastructure. If the 2009 election results are any indication, wrote Mainstream weekly, NREGA and the money it injected into rural India ensured the re-election of the Congress. Thus, Manmohan Singh became the first prime minister to return to power after completing a full five-year term since Jawaharlal Nehru.

But NREGA hasn’t been an unqualified success. Today, the same welfare economists and grassroots activists who championed NREGA openly criticise it. They contend the government is killing a good scheme. Dreze and Roy think the government, instead of ensuring NREGA’s proper implementation, is watering down the social welfare elements by converging it with other government programmes. Several studies, including governmental ones, acknowledge widespread corruption in NREGA—fabricating vouchers is just one method of diverting funds. Caste-based discrimination is widespread. There is also a lack of political coordination between the Centre and state and local bodies. Most importantly, the promise of 100 days of guaranteed employment hasn’t been fulfilled. This leads one to wonder, four years on, what’s gone wrong with India’s Keynesian scheme?

MAHOBA IS AT UTTAR PRADESH’S southeastern tip, near the border with Madhya Pradesh. The district features low granite hills spread over a large expanse of rice and mustard fields. Known for its magnificent forts and tranquil lakes, Mahoba is inhabited by 78,000 people, primarily dependent on agriculture—the feudal kind. Landlords carry guns and ride horses. In the last two years of drought, according to Arunday Sansthan—a non-governmental organisation (NGO) that provides relief assistance in drought-hit villages—60 farmers have committed suicide. As of December 2009, Sukhlal was the last one, a marginal farmer from Jaitpur on Mahoba’s easternmost flank.

Sukhlal shared an acre of land with four brothers. It was tilled in rotation—one brother cultivated the land each year. After four years, in spring 2009, Sukhlal’s turn came. He ploughed the land, separated it in rows, and then sowed mustard seeds. As his crop grew, he began thinking about his future. The plan was simple: earn some money from the land, clear his debts, marry off his oldest daughter, and leave for Delhi to work as an unskilled labourer. But the drought and the scorching August sun turned his crop to ashes. Seeing his crop dead, he surrendered.

In early 2006, when NREGA was implemented in Jaitpur, the village was filled with possibility. Sukhlal and his friends expected the welfare scheme to rescue their family. They filed job applications at their gram panchayat and in a week they received job cards—identity documents supposed to guarantee a labourer 100 days of employment. They thought they’d achieved a measure of financial security: a personal bank account that enables wages to be directly deposited without any administrative interference.

The scheme claimed it could eliminate every possible element of corruption. Contractors and machines were banned on manual labour worksites and politicians sidelined. NREGA was soon a point of conversation in every house and village. The people of Jaitpur, where a bicycle once marked wealth, began to dream of a healthy diet, new clothes, electricity, a fan, and if they were really ambitious, a television.

When Jaitpur’s first alleyways were paved, people celebrated and carried banners with pro-NREGA slogans. Their inscriptions, which had faded in the intervening four years, gave voice to the people’s expectations. The banners, once used for political rallies, exhorted, ‘our money, our accounts,’ ‘full pay for full works,’ and ‘work for every hand.’

For the eight days Sukhlal worked for NREGA, Rani helped him dig a well. “He dug and I carried the mud for dumping,” she said. The village, idle for decades, had grown vibrant with people harvesting rainwater, planting trees, digging canals, renovating traditional water bodies, and constructing drains and roads. NREGA’s intentions of building agricultural assets in rural India had seemed close to actualisation.

Dreams quickly faded, though. People like Sukhlal once again found themselves unemployed. The reasons seemed familiar: deep-rooted corruption, powerful caste hierarchies, and faulty implementation. In three years, Sukhlal earned just 800 rupees from the scheme—the equivalent of eight days’ work. His house stands witness to this. Water leaks in through its clay roof, and cold seeps in through its broken windows.

“Life was always difficult here,” said Rani, her round face lit by the orange flames of the firepot. “I would have died alongside Sukhlal. I am alive because my children are too young. Who will take care of them?”

Every day, Rani collects firewood and wild grass. She sells the firewood. She eats the grass. Of late, she has learned to carry a heavy load: ten kilograms of firewood and five of wild grass. But the end of winter also marks the end of the demand for firewood. This fear keeps her awake at night. To overcome it, she has applied for widow pension and suicide compensation. She has even applied for a job through NREGA.

Rani remembers the chain of events that led to all this. Sukhlal had realised their daughter was getting noticed in the village, and became preoccupied with her marriage. As she grew into a woman, seeing her in the one rumpled frock she owned constantly broke his heart. Trapped between poverty and custom, he pledged to make his daughter marriageable within a year. He pinned these hopes on 100 days of NREGA work, and 265 days of work at private construction sites. But, Rani recalled, sitting cross-legged in her 20-square metre mud house, “he wasn’t among the village head’s sycophants. His job card was snatched and he wasn’t given more work.”

Her husband was worried, unemployed, and starving, so he picked up a jhinka—a musical instrument with a wooden frame and copper bangles—and roamed the town playing it and singing bhajans. He hardly managed to earn 20 rupees a day—nowhere near enough for his family’s survival and his daughter’s marriage. He would share his sufferings with his only friend, Devinder Arjaria, the priest.

Thirty-five-year-old Arjaria shuns a priestly get-up for a well-cut shirt, pressed trousers and a pair of white sports shoes. He told me Sukhlal’s death was a murder committed by the state. Arjaria has a Masters degree in Political Science. He is well respected in the village. Besides performing pujas in the temple, he teaches at a primary school owned by his father. After the panchayat repeatedly denied him work, Sukhlal turned to Arjaria for advice. “Who else has been denied work in the village?” Arjaria asked Sukhlal. In the first year of the scheme, he discovered, 19 villagers were refused jobs and 70 weren’t offered enough work.

So Arjaria filed work applications for Sukhlal and 19 others in the panchayat. The scheme, which transfers bureaucratic power to panchayats, mandates that  pradhans, the village chiefs, should employ villagers within 15 days of job applications and pay them 100 rupees per day. If work is not available, unemployment allowance—one fourth of a day’s wage, or 25 rupees—has to be paid. But none of Jaitpur’s 19 applicants received any work or unemployment benefits.  In the last five years, according to the Ministry of Rural Development, among Mahoba’s 69,730 job card holders, only 463 people have completed their 100 days.

Arjaria wanted to hold someone accountable. Through NREGA, it’s possible to follow the chain of command—from a pradhan, to the village-level secretary, the block development officer, the chief development officer, to the joint secretary of the department of rural development—and actually discover where the fraud is taking place.

For this, Arjaria needed some support. So he enlisted Abhishekh Mishra, the chairman of Arunday Sansthan, the local NGO. After several meetings, they began a signature campaign. They gathered 600 complaints against the pradhan, fixed an appointment with the Chief Development Officer (CDO)—who oversees the scheme at the district level—and handed over the complaints. Within two months, the CDO ordered a probe.

“A bunch of fake job cards were recovered from the pradhan’s possession,” said Arjaria. Two cards, numbers 147 and 678, bore Sukhlal’s name.

Swindling labour wages through the use of fake job cards has been reported countrywide. The Comptroller and Auditor General (CAG) report of 2009 says thousands of counterfeit job cards have been issued. It also casts doubt on official NREGA figures, as fake entries were pointed out in monthly progress reports. The probe ordered by Mahoba’s CDO exposed similar frauds: inflated numbers of employed people, the misuse of funds, and fictitious expenditures.

The exposed Jaitpur pradhan, however, wasn’t even questioned. No action was taken. Arjaria tamed his anger for months and kept visiting the families who were denied work. He waited for an appropriate time, and on the afternoon of 27 December 2007, Jai Ram Lal Verma, the CDO, came to Belataal—a neighbouring village—to inspect the NREGA worksite. His motorcade reached the village, and Arjaria stood on a dusty incline with several hundred protesters chanting, “This is just an awakening, further there will be a tough fight. In this darkened town, there is no justice, no justice.” Verma panicked and slid back into his white Ambassador. The protesters formed a human chain and pleaded with Verma to listen to their complaints, but he took off.

A CDO in NREGA has the power to investigate complaints against the pradhan. When it comes to redressing grievances, the pradhan also plays a vital role, as the only official with the power to issue job cards and formulate village-level plans.

But Jaitpur’s pradhan seems unaware of her powers. Shrimati Beti Bai is 65. Her features are a compliment to her age, though she quivers when she walks. The village folk chose her as pradhan in the 2005 Panchayati Raj elections. Since then, she has run the village with the help of her five sons. Her eldest, Ravi Kumar, was waiting for me in the vast courtyard. When I told him I wanted to meet his mother, he said, “Talk to me.” His mother, he explained, was illiterate and doesn’t know about village affairs. “We take care of everything.”

Ravi pointed towards a newly constructed drain and bragged about the work he completed in a week. “And now we are fencing the village swamps,” he said proudly.

Since Ravi had bitter experiences with other welfare schemes, he doubted NREGA initially. But as soon as he became familiar with its procedures, his opinion changed. He joined the training classes organised by the government and switched over from being a B-class contractor to a self-styled pradhan.

“It is a first class scheme,” he said. “It has a lot of money.”

I waited for the moment to ask him about Sukhlal’s suicide. After a few desultory questions about the village’s social conditions, I tentatively began, “Sukhlal’s wife says that her husband wasn’t given more work because he wasn’t among your men. Is that…”

“His wife is a psycho,” Ravi interrupted. “She says whatever nonsense comes into her mind.” He let his already drooping shoulders sink a little further, and scratched his unshaved face. Then he gave a tired look and added, “This scheme is a headache.”

Ravi told me his panchayat hadn’t received any money from the CDO’s office for the last six months, and I asked whether he knew about why funds weren’t allotted to him. “We have no idea,” he said. “Now our own people accuse us of being thieves, they look down on us as if we have stolen from them. We can’t even dress up properly. If we do, they say, ‘Look where our money has gone.’ They don’t believe that money could be with the CDO because they don’t understand the role of the CDO and they are illiterate.”

In Mahoba, the office of the CDO, a concrete, oval-shaped structure, is perched on a small hill. I walked up to meet him as the greyish light of the winter sun fell on the dense town. Near the main entrance, some orderlies were huddled around the firepot, smoking beedis and sipping tea. Some hours later, a three-car motorcade emerged from the bend in the steep road. It was Mahoba’s CDO heading toward his office. The beedis kept burning, empty cups lay scattered, and the gossip continued. The CDO, a plump, bespectacled man in his late 50s, slid out of the car and ascended the stairs quietly.

But it wasn’t Jai Ram Lal Verma; it was Ravi Kumar, the new CDO of Mahoba, who shares his name with the pradhan’s son. Verma, I discovered, had been transferred to another district after being found guilty of misusing Mahoba’s NREGA funds. A multibillion rupee scam surfaced in UP when the Central Employment Guarantee Council (CEGC), a supervisory agency, submitted a report to New Delhi’s Department of Rural Development on 1 October 2009. The report found serious implementation irregularities—8.5 billion rupees had been “siphoned off by state officials.” According to the report, in Mahoba, some ‘privileged’ cardholders were given more employment than the act allowed. Instead of 100 days, they were paid wages for 200. The investigation into one particular case revealed that of 959 days recorded from five job cards, 689 days’ wages, or 68,900 rupees, were drawn illegally.

Now it was Kumar, the new CDO, who was accountable for such queries. His office looked like a classroom, with a dozen chairs facing him. His pudgy fingers tapped the bell.Turning his bulky frame in his seat, he asked an orderly to bring his office files. He spoke in intervals—the office files preoccupied his mind. I asked him about the status of NREGA. “People are working,” he said.

Kumar said that every day he held a public hearing between two and five pm. “I’ve directed my staff to accept complaints whether they are on a road, in a barber shop, or at home.” In the last two months he has received over 1,000 complaints, most of them against the pradhans of Mahoba.

“Any action?” I asked.

“Not yet,” he said, squaring his shoulders, preparing himself to continue. “First of all, let me tell you that the problem here is the people,” he said. “For a ten rupee note, they lie, they backstab each other.” From there, he launched into a treatise on capitalism, referencing Marx and the pro-poor ideology of Dr BR Ambedkar. “By empowering panchayats with schemes like NREGA, we have given birth to another era of feudalism,” he said, looking me over a second longer.

When I asked him about where the money went, he bluntly replied, “I don’t know.” For a few seconds, he went silent. While his head was down, eyes fixed on his office files, his cheek muscles pulsated.

“I’ve nothing to do with money,” he continued after a long pause. “The central government directly transfers the money to panchayats. Where am I responsible?” This didn’t square with reality. In practice, the CDO transfers the money to the accounts of pradhans. In the 2009-10 fiscal year alone, the district administration released 500 million rupees for Mahoba’s 247 villages.  It is very hard to trace how the funds were used—so much for the transparency clauses built into NREGA. The records maintained by the Department of Rural Development suggest that in the past three years in Mahoba, a single asset—a stone fence—has been created under work order number 3179001037/WH/1. And that project incurred an expenditure of 32,100 rupees. For the rest of the money, the district administration had no records.

I began to sense a crowd. Almost a dozen people had gathered outside Kumar’s office. They came inside in ones and twos. Slowly, the room filled up. I heard reluctant whispers. People shared common complaints: non-payment of wages, non-issuance of job cards, underemployment, and so on. This talk brought Kumar back to the subject. “Thousands of complaints we receive every day,” he said, “and it is impossible to investigate all [of them].” Glancing round at the people, he pitched a question, “Aren’t we helping you out?” Some heads nodded with reluctance, some remained still.

There was a good reason for the cold response. The previous CDO, Verma, had recently been forced out. The man behind Verma’s ouster is Sanjay Dixit, a 44-year-old former activist hired by the CEGC to scrutinise NREGA. He had travelled non-stop, mostly across UP, for four years.

I met Dixit in his south Delhi hotel room, two months after visiting Mahoba. “I am tired now,” he said, as he lay on the bed. The job was wearing on him. He’d exposed four scams in the previous six months. In Rahul Gandhi’s constituency, 8.8 million rupees was siphoned off by an unregistered NGO. The second scam involved officers in Gonda district showing that they bought toys  worth 10 million rupees for the children of the labourers. The third was in Mahoba, where money earmarked for reforestation was misappropriated, and the fourth was again in Gonda where the officers spent disproportionately on notice boards (4.9 million rupees for a few boards), shelves (2.4 million rupees), etc. At the time of my meeting with Dixit in early March, there’d been no action in any of these cases.

The federal structure of India doesn’t permit the central government to take action against state-recruited officers. At most, the Centre can block funds to a district where fraud is proven. “Then it becomes a political decision,” Dixit explained, “because a blockade of funds impacts people directly and that could lead to an agitation.”

The report he filed against Verma and other UP CDOs encouraged India’s Department of Rural Development to send a letter to Atul Gupta, UP’s top bureaucrat, who asked Manoj Kumar Singh, the Joint Commissioner of UP, to investigate the matter. Singh, after conducting a probe, recommended the suspension of Verma and other guilty officers.

On 22 February 2010, Dixit raised this issue at the 11th meeting of the CEGC, held at Krishi Bhavan in Delhi. In the meeting, he questioned CP Joshi, the Minister for Rural Development, about the UP government’s lax attitude towards corruption. But Joshi, instead of responding to his query, stressed the importance of expanding the programme by converging it with other ministries and constructing mini-secretariats to ensure the effectiveness of Indian panchayats—an idea that Jean Dreze, a CEGC member also at the meeting, vehemently opposed.

“The meeting was more of the Joshi vs Dreze kind,” said Dixit.

On 31 March, more than two weeks after I met Dixit, the news splashed across the front pages of Delhi’s English dailies: UP Chief Minister Kumari Mayawati had suspended 72 CDOs. Verma was mentioned by name in Mail Today. He’d been found guilty of misappropriating funds.

“Suspension is no punishment,” said Dixit. “The amount of money bungled should be recovered, and an FIR should be lodged against the officials.”

I called Verma to ask him about the charges. “Please, don’t disturb me!” Verma shouted, then hung up.

1979. DROUGHT STRUCK INDIA. Belgian-born economist Jean Dreze landed on the subcontinent as a 20-year-old student. He planned to earn his PhD in economics. But the poverty he encountered shook him so deeply that he decided to take a closer look. Travelling by bicycle and on foot, he journeyed to India’s hinterlands to observe the causes and effects of poverty. At that time, Nobel Prize winner Amartya Sen’s book, Poverty and Famines, was on the stands. Dreze read the book and decided that famine prevention through public intervention deserved attention. He wrote to Sen about his ideas, and their collaboration began. Since then, he has co-authored three books with Sen on poverty.

In 2004, Dreze, in association with Aruna Roy, another activist, drafted the blueprint for NREGA. An honorary professor at the Delhi School of Economics, where Prime Minister Manmohan Singh once taught, Dreze was a member of a support group for the Right to Information Act and also helped implement Mid-Day Meals countrywide. Every day, 170 million poor children depend on this government programme.

On a sunny afternoon, I met Dreze in the garden of the Delhi School of Economics. Dreze is 50, tall, with shoulder-length blond hair, and deep blue eyes set in a bony face.

“NREGA is a pro-people law implemented by an anti-people system,” said Dreze, kneading the seam of his khadi kurta.

As a former member of the National Advisory Council, Dreze has interacted closely with politicians from crucial ministries like finance and rural development, and formed relationships with important politicians from different parties. He went from office to office advocating for the welfare clauses in the NREGA bill, blurring the lines between academics and activism.

Dreze has also battled the corporate position on NREGA. The Confederation of Indian Industry, the most powerful trade body of Indian companies, objected to the scheme from the outset. They cited two main reasons for their opposition: heavy expenditure and corruption. Dreze argued, “Expenses are dependent on tax revenue, which has nothing to do with inflation.” He also maintained that “corruption can be fought through transparency safeguards.”

But Dreze is disillusioned now. He resigned from the NAC before it was disbanded on 31 March 2008. He felt as if no one was listening to him. This led to a major ideological difference between Dreze and the administration. And one year later, on 21 August 2009, in the UPA’s second term, the Congress announced its idea of convergence, nicknamed NREGA-II by the Rural Development Ministry. The premise is that NREGA-II should be expanded through converging it with programmes implemented by other ministries. Dreze finally broke his silence. “This would be a dangerous step,” he told the dailies.

Dreze doesn’t subscribe to NREGA-II’s ideas for the simple reason that NREGA-I’s goals have yet to be achieved. “Where is work for all, minimum wages, timely payment, and so on?” He believes NREGA-II’s proposed inclusion of contractors would encourage graft and labour exploitation. The scheme allows 32 percent of the money to be spent on solid construction. The rest of the 68 percent is spent on kuccha (mud) work, which involves unskilled labourers. With convergence, Dreze believes that the share of labourers is likely to decrease, and the benefits will go to contractors, local businessmen and middlemen—people who don’t require a Keynesian push from the government. Also, he questions the Minister of Rural Development, CP Joshi, for not involving grassroots activists before finalising the new amendment. Dreze suspects the public consultation is being marginalised deliberately.

“Now it is between Congress and its friends,” said Dreze, “and because of this attitude, the central and state governments are least interested in making themselves accountable.”

Four years after NREGA’s founding, Dreze still visits villages. He interacts with villagers and facilitates social audits—a practice which compels pradhans to produce records publicly. In this process, he lost his activist colleague, Lalit Mehta. On 15 May 2008, a mutilated body, eyes gouged out and face bruised, was found in the woods of Palamu district in Jharkhand. It was 36-year-old Mehta who was helping Dreze to conduct audits in Palamu, his home district. Village folk there termed the murder ‘an intimidation not to conduct an audit,’ which was scheduled on 26 May.

“Why convergence, when we are yet to achieve our primary targets?” Dreze asked, referring to the Congress’ proposed expansion. “I wish our political leaders, instead of floating ideas like convergence, take more interest in ensuring 100 days of work to every labourer—the original and primary promise.”

Dreze stood up and walked back toward a wing of classrooms. He seemed upset.

BEFORE I MET JEAN DREZE, the NREGA activists, or travelled to Mahoba, I met the Minister of Rural Development CP Joshi in December 2009. Joshi helms NREGA. At our first meeting, he seemed like a seasoned politician, sticking to his party’s talking points. It was a pleasant winter day, and Joshi, wearing a white kurta pyjama, was relaxing on the lawn of his Ashok Road residence. An orderly approached with a document, and Joshi quickly signed and dismissed his subordinate saying, “Get this work done. Now.” He was clearly in charge, of both his house and NREGA, describing the scheme as, “a major success.” “The credit goes to Sonia madamji,” he added.

The son of a primary school teacher in the Nathdwara district of Rajasthan, Joshi joined politics in his college days and followed in the footsteps of Mohan Lal Sukhadia, the veteran Congress leader of Rajasthan. After finishing his two Masters degrees, one in physics and the other in psychology, he became a college lecturer in 1975. Five years later, he fought assembly elections and became a Member of the Legislative Assembly (MLA) for Nathdwara at the age of 30. And 30 years later, on 20 March 2010, he was sworn in as Rural Development Minister.

On 20 August 2009, just five months after taking up the cabinet position, he became a man journalists wanted to interview. His proposal to converge NREGA with other ministries and informing the people about his plan to construct 250,000 panchayat ghars (mini-secretariats) triggered a backlash from activists.

“We are open to criticism,” said Joshi. Three months after we first met, I met him for a second time at his office in Krishi Bhawan. It was March, and he was a changed man. When I pressed him about the differences between NREGA-I and II, he grew agitated. The 60-year-old’s demeanour changed from calm to angry at the mention of activists. He began striking the palm of his right hand against his left fist. “I am a minister, my role is in NREGA, my party commitment is there, and my party says we will go for convergence. Do I have to go by the mandate of my party or by Jean Dreze?” Joshi’s voice was filled with rage.

As his ministry has faced severe criticism over the last six months for sidelining activists, staying silent about corruption, and delaying wage payments, Joshi has started pulling rank.

“We are in power, we have our own ideas, and we will go by our way, but I have never seen an expert compelling the government to go by his way,” Joshi continued.

He had his own ideas about the function of grassroots activists.

“Let them play the role of watchdogs,” he said. “We will be very happy.”

He seemed engaged in the conversation now, intent on discrediting Dreze’s argument. But as soon as he began to talk about corruption, his voice weakened. Instead of ‘corruption,’ he prefers the word ‘malpractice.’ He also believes that given India’s huge population that mistakes are inevitable. “If an individual will not use his right [to 100 days of guaranteed labour], who is responsible?” Joshi asked. “We are just facilitators. We have given them the rights. Now it’s them who must stand against all the odds.”

His statement, however, can’t stand against the data of his ministry. Out of 44.1 million registrations, only 50 percent have received work, averaging 45 days against the promised 100, and Joshi refused to comment on the recent scams exposed by CEGC member Sanjay Dixit. He seemed annoyed, as if I shouldn’t be troubling a top-profile minister with such details.

But hundreds of miles away, in the other India, where NREGA is still riddled with corruption, these are issues of life and death. NREGA was supposed to be scam-proof. But the pages on the ministry website meant to show Mahoba’s 2007-08 labour attendance are empty. Ditto for the social audit reports page, which is supposed to track the money given to each labourer by name, date and amount.

Joshi’s plans for convergence are meaningless for people like Rani, who lost her husband. When I left Jaitpur, the village was quiet. Only women were visible, sitting idle, in ones and twos, on the pavement. But Rani wasn’t idle at all. She was stitching a mattress and had already unloaded a heap of wild grass and a cluster of firewood. Like her husband Sukhlal, she too had planned, to work as an unskilled labourer at private construction sites, go to the woods every morning, and, if possible, work under NREGA.

“When he (Sukhlal) died,” said Rani, “the pradhan promised me a job.”

NREGA still means a lot in rural India. People like Rani know it is a good scheme handcuffed by corruption. At least, NREGA brings money to the villages, and that is a model very different from the country’s previous welfare schemes. Earlier, corruption was the domain of top bureaucrats,  politicians and contractors. With NREGA’s money trail reaching the grassroots, corruption is also becoming decentralised—to the pradhans, the powerful castes, and the local officials. However, the poor believe that NREGA is meant for them; something that will put cash into their newly opened bank accounts.

After three months, I called Arjaria, the priest, Sukhlal’s friend in Jaitpur. He seemed happy that Verma had been driven away, but when I asked whether Rani had received any work, his tone lowered. “Nahi mila—no, she hasn’t.”

AS DAWN BROKE ON 7 AUGUST 2009, Rekha Rani, a diminutive 38-year-old wife of a farmer from Uttar Pradesh, learned that her husband had been hospitalised. Grabbing her four-year-old daughter, she quietly left her brother’s house and hurried toward the railway station. Two days before, India had been celebrating Rakshabandhan—the Hindu festival celebrating the brother-sister relationship—and Rani had come to Banda, 55 kilometres from her home, to tie a raakhi, a sacred thread, on her brother’s wrist. On the train, she began cursing herself for leaving her husband alone. Passengers comforted her until she reached Jaitpur, a Dalit village in UP’s Mahoba district, late in the afternoon. Her fellow villagers wore gloomy looks. On the roadside, a white ambulance was parked, its doors open. Policemen stood on the mud street, a sea of people in the alleys around them. She shivered; her feet gave way. She slowed down and collapsed.

“I opened my eyes and found him dead,” said Rani, when we met in Jaitpur in January 2010. She is the mother of two daughters and two sons. Sukhlal, her husband, didn’t die of disease. On the morning of 7 August, he returned from his mustard field and bathed at the hand pump. Then he entered his room and drank a bottle of pesticide. An hour later, he was dead.

When I asked Rani why Sukhlal had killed himself, she said, “Drought, a 16-year-old daughter, and 60,000 rupees of debt.”

POVERTY REMAINS INDIA’S MOST INTRACTABLE problem. Though the rate of absolute poverty has declined since Independence, there are still more than 488 million poor people in India today—more than the entire pre-Independence population. And that makes India home to one third of the world’s poor. Though India’s economic growth is most often compared to China, in terms of poverty, India has more in common with sub-Saharan Africa—languishing in the ranks of the United Nations’ human development index at 134th.

When the Congress party returned to power in 2004, after an eight-year gap, they promised to tackle poverty, again. But this time their plan had more substance. The government drafted a comprehensive law with input from economists and grassroots activists. The law aimed to help India’s most disadvantaged citizens: the unemployed, the underemployed, and those without access to credit; the ones who commit suicide over drought, unmarried daughters, and a few thousand rupees of debt. People like Sukhlal.

The National Rural Employment Guarantee Act, or NREGA, promised 100 days of guaranteed employment to one member of a rural household in every financial year. The law also mandates a daily wage of 100 rupees. The central government would fund 90 percent of the expenditure, including the wages and administrative costs. “This would soon lift millions out from poverty,” promised then Minister for Rural Development, Raghuvansh Prasad Singh.

Unlike previous poverty alleviation schemes, NREGA includes measures of accountability. The legislation encourages public auditing, centralising records on the ministry’s website and making administration transparent. There are also consequences. If local authorities fail to provide an applicant work within 15 days, an unemployment allowance of 25 rupees per day has to be paid by the state government.

Since its founding, massive public funding has been pumped into NREGA. In 2006, it was first implemented in India’s 200 most backward districts. To date, NREGA covers 619 of India’s 626 districts. As of 31 March 2010, the Ministry of Finance has released 784 billion rupees under NREGA, and if the 2010-11 budget is also included, the figure jumps to 1.185 trillion rupees, making it the world’s largest social welfare scheme.

The programme has provided employment to 44.1 million people, and this February, NREGA celebrated its fourth anniversary. The ultimate goal of poverty alleviation, however, is still incomplete. Until 2004, India had 456 million people living below the international poverty line. Yet after four years of NREGA, the number of poor, which was expected to decline, has increased from 456 to 488 million. So what went wrong? Why has this scheme failed Sukhlal and so many like him?

MAKE-WORK SCHEMES AREN’T NEW. After the New York Stock Exchange crashed in 1929, the United States plunged into the Great Depression. Some 13 million people joined the unemployment line and thousands died, from both suicide and starvation. Labourers protested almost every day, demanding employment. The Great Depression showed the world the pitfalls of the neoclassical economic model, which argued free markets would automatically provide full employment, and economies would thrive as long as the government didn’t over-regulate markets and workers were flexible in their wage demands. But British economist John Maynard Keynes disagreed. “The government should pay people to dig holes in the ground and then fill them up,” Keynes argued. “It doesn’t matter what they do as long as the government is creating jobs.”  Keynes’ economic policy was interventionist, saying governments should create jobs for the unemployed to increase their spending power, create a class of consumers and thus stimulate the economy. Through the New Deal, a series of make-work programmes, Washington implemented Keynesian ideas. Thanks to these schemes, the United States began its recovery by the mid-1930s.

Fast-forward to rural India in the early 2000s. Between 1997 and 2001, more than 80,000 farmers committed suicide. The number of in-debt farmers increased from 26 percent in 1991 (out of 575 million people dependent on agriculture) to 48.6 percent in 2001 (600 million dependent on agriculture). Eight million quit farming altogether. At the same time, urban India was showing remarkable growth, becoming the second fastest growing economy in the world. The ruling Bharatiya Janata Party (BJP) ignored the first, rural reality and in the 2004 election, flaunted the second one with the slogan, ‘India Shining.’ Convinced by activists and welfare economists, the Congress party campaigned on a platform of ‘guaranteed employment’ and other pro-poor promises. They won, and once in power, even after resistance from within—from its Oxford, Cambridge and Harvard-educated leaders who leaned towards neoclassical economics—the Congress party enacted NREGA.

Even though it was expected to form a majority government, the Congress was still vulnerable in 2004. It was short of 117 Parliamentarians, so left-leaning parties lent their support on the condition the government would implement a set of initiatives called the National Common Minimum Programme. The package included a scheme that promised guaranteed employment for the poor. Now the leadership needed a well-designed plan to take to Parliament, something both politically feasible and economically sensible. The bill was written by the National Advisory Council (NAC), which included ministers, bureaucrats, academics and activists. After the NAC approval, the bill was passed to the Planning Commission, where the commission’s deputy chairman, Montek Singh Ahluwalia, formerly a senior official with the World Bank and the International Monetary Fund, resisted the guaranteed employment clause, arguing it would make implementation of the programme too costly. The bill was introduced in Parliament on 21 December 2004—without the guaranteed employment clause.

Activists and welfare economists, some of them NAC members, felt betrayed by the exclusion. In rural India, grassroots activists enjoy large-scale public acceptance—often providing essential help that the government neglects. But in Delhi, they had only a small team that was led by Aruna Roy, a frail, sari-clad, Magsaysay award-winning social activist based in Rajasthan; and Jean Dreze, a blond, equally frail Belgian-born economist who helped draft the bill. Dreze, Roy and other activists protested the bill’s dilution by holding a signature campaign outside Parliament House as the bill was debated. The left-leaning parties joined them. Public pressure gradually mounted and things soon grew more heated. Kalyan Singh, a veteran BJP leader who vehemently criticised the bill in Parliament, chaired the Standing Committee on Rural Development that would decide its fate. He boycotted meetings on NREGA for six months.

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Mehboob Jeelani is a former staff writer at The Caravan. He is currently studying for an MA in journalism at Columbia University. He has extensively covered the Kashmir conflict, and has contributed to the leading English dailies of Jammu and Kashmir.

READER'S COMMENTS

152 thoughts on “NREGA’s Reality Check”

NREGA Scheme is a great fraud on the nation, Heavily bureaucracy driven, with corruption happening at the Panchayat’s level, gave this (Goonda’s) lot more money and power to control the impoverished.

Scheme might be well meaning. Did nation get the benefit for the 10,000 of crores of rupees spent for this scheme.

Now with the cash transfer being mooted all of these just more corruption and keeping the nation and masses ignorant with no real reform.
Let us try and provide decent education for all, Clean up the mess in the PDS system, Clean up the other welfare schemes.
In india it not the lack of money which is keeping us impoverished. it is the Money which is being diverted in the name of Welfare schemes and other schemes which keeps us impoverished.
Indra Gandhi started with “Garibi Hatoa in 70s with more to win elections and todate all of these schemes and programmes are implemented only from New Delhi with no real change happening.
We have democratized corruption.

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