Report on SAHMAT Convention (10 October 2004)

Note: This note has been prepared by Smita Gupta, Fellow Institute of Human Development. This has been reprodued here with her permission.

The last decade is marked by the dominance of deflationary macroeconomic policies and falling public development expenditure. Because of this, an unparalleled and comprehensive crisis has taken firm root in rural India, resulting in impoverishment, food shortages and hunger. The per capita availability of foodgrains has fallen to levels that were seen last during the worst years of colonial rule and famines, an important reason for which is the declining agricultural growth rate. However, fall in production is only one reason, the other is the fall in purchasing power due to the contraction of the public works programmes and employment generation activities of the state. Farm incomes too have fallen due to rising input costs and a simultaneous fall in prices as well as withdrawal of the state from credit, extension services, procurement, price support and infrastructure. Indebtedness and land alienation has grown, particularly amongst small and marginal farmers.

Workforce participation rates in rural areas have declined, more for rural women than men. There is a growing gender-based dualism in rural labour, with feminisation of lowly paid menial and arduous work, accompanied by a faster overall decline in women’s employment in the post-reform phase, from 1.41 to a mere 0.15 per cent between 1983-1993 and 1994-2000. The Planning Commission reports a fall in employment growth from 2.04 per cent during 1983-94 to 0.98 per cent during 1994-2000 largely on account of agriculture and community social and personal services, which together account for seven-tenth of total employment. Even though this was accompanied by a deceleration in the rate of growth of labour force from 2.29 per cent in 1987-94, to 1.03 per cent in 1993-2000, unemployment has grown since labour force growth outstrips the growth of employment. The extreme manifestations of this distress are the unabated starvation deaths and peasant suicides.

The Lok Sabha elections earlier this year saw the people of this country overwhelmingly reject neo-liberal policies. Despite their commitment to liberalization-globalization-privatization, it has become clear to the Congress that an Employment Guarantee Act (EGA) and revival of agriculture are political necessities. Towards this, the central government has prepared a draft Employment Guarantee Bill that is expected to be tabled in Parliament next month. However, there are already voices in government and outside who are opposing an EGA. Additionally, there are a number of problems with the Draft itself. What is clear is that there are strong forces at work that will try to prevent the passage of the Act itself, or reduce it to a formality by diluting it substantially. Thus, even though the Common Minimum Programme has opened up the space for a reversal of some neo-liberal policies, there is little room for complacency.

With this in mind, SAHMAT organized a Convention to reaffirm the centrality of an EGA, and to outline the framework of an effective act, which promotes the interests of working men and women and ensures that state governments can implement the act without an additional financial burden. The political leaders, activists and academics who spoke included Jairam Ramesh, Sitaram Yechury, Sehba Farooqi, D.Raja, Prabhat Patnaik, Aruna Roy, Jean Drèze, Medha Patkar, Arundhati Roy, Suneet Chopra, Sukhdev Thorat, Dunu Roy and Jayati Ghosh. Brinda Karat chaired the meeting.

Speakers agreed that aside from protecting the rural population from hunger and destitution, an EGA would also contribute to many other social objectives, including the creation of durable assets, the protection of the environment, the empowerment of women, and the slowdown of rural-urban migration. In addition, there would be strong multiplier effects of such employment, which would therefore have a positive effect upon rural livelihoods, which would be much larger than the actual expenditure. SK Thorat argued that the Act was neither charity nor financially unviable, and in a demand-constrained system like ours, an increase in purchasing power will generate growth with equity.

There is an immense political significance of the EGA in the current regime of neo-liberal economic policies that have undermined employment opportunities for large sections of the population. The introduction of such an Act in the current climate is therefore an important avenue for mass mobilization and resistance against neo-liberal policies. As Aruna Roy put it, the Act is a recognition that the state cannot retreat from pro-poor development and is responsible to ensure livelihood security and employment. Medha Patkar too emphasized the conflict between different policies, which becomes stark when the EGA is discussed. In particular, she spoke of the possibility of the people fighting to regain control over common property and natural resources through decentralized planning, and land and water management through the EGA.

One of the biggest lacunae that remain in the Ministry of Rural Development’s Draft is that of sharing the expenditure between the states and the Centre. The finances of state governments are under severe strain largely on account of policies beyond their control, including interest rate policy, access to borrowings, etc. At the same time, most social and economic development activities and the provision of infrastructure is the responsibility of the states. Additionally, it is constitutionally not possible for the central government to impose a financial burden on the states without conformity Acts being passed in each state assembly, a procedure likely to cause long delays. In the interest of fiscal federalism, therefore, the Convention proposed the following: “The Act should not impose any additional financial burden on the state governments. The Employment Guarantee Programme should be fully financed by the Centre...The wage contribution of the centre must extend at least to a national norm initially fixed at no less than Rs 66 per day, and indexed to the All India CPI-AL for future revision. Additionally, the Centre should finance material costs in the ratio of 70:30 labour : material. When there is a delay in the devolution of funds to the state government from the Central Fund, the Central government must reimburse the state government for the associated unemployment allowance payments. To meet the administrative costs of the Programme, the funds devolved by the Centre to each state should include an additional component amounting to 5% of the total spending on wages and materials.”

The government draft guarantees 100 days of manual unskilled labour per rural household that registers. A failure to do so within 15 days of application would make the applicant eligible for an unemployment allowance of at least a third to half of the wage rate. The second set of problems relate to the entitlement itself and its restriction to 100 days per family instead of being available to all rural adults. Brinda Karat (AIDWA) pointed to this and other lacunae in the MoRD draft where it defines work and household. She argued that ‘manual’ work often meant that women would be excluded from it, which was dangerous in the context of abysmally low levels of poorly paid employment of women in rural areas surveyed by AIDWA. Furthermore, there should be individual entitlements, because otherwise women would be excluded. In any case, she argued that the definition of a household was fraught with difficulties since the absence of homesteads meant that a number of families shared the same roof and kitchen. Sehba Farooqi (NFIW) said that every possible care should be taken to ensure that female-headed households are given primacy and women are not excluded from the scheme. Towards this, the Convention proposed that: “The Act should safeguard the interests of women and give full attention to their concerns with regard to availability, location, type and organization of work. In the unfortunate event where the employment guarantee is restricted to a specified number of days per household (as proposed in the Common Minimum Programme), it should be ensured that at least 40 per cent of workers employed in a particular Block are women, so that women are not pushed disproportionately on to the unemployment allowance or out of the scheme.”

Most speakers contested the view expressed by Jairam Ramesh (Congress I), that there was no contradiction between the policies of liberalization, privatization and globalization on the one hand and the guarantee of employment on the other. He in fact argued that the real conflict was between the interests of the unorganized rural workers and the small section of organized government employees. He said that the Sixth Pay Commission would erode the very possibility of an EGA since the government had a financial constraint. In this way, he posed a choice between government employment and universal employment guarantee.
The EGA is a matter of political will rather than finances. Sitaram Yechury (CPI-M) argued that the EGA was a non-negotiable and the attempt to pose the argument in terms of organized versus unorganized was a red herring. He gave a call to tax the rich, which was the best route to pursue a pro-poor and growth-oriented development policy. A failure to do this would erode the legitimacy of the UPA government to remain in power because it would undermine their mandate. He gave a call to simultaneously extend the universal guarantee to urban areas. D Raja (CPI) too wanted the UPA government to recognize the gravity of the situation on the ground, based on which the Left Parties had originally asked for a universal guarantee of at least 180 days to be included in the CMP. He said the issue was not one of finances or requirement but of the political will to take the EGA forward, so that it does not remain a mere formality and becomes an effective livelihood guarantee. Furthermore, the schizophrenic commitment to both deflationary fiscal policies and an EGA is not sustainable, and Suneet Chopra called for mobilization to resolve this contradiction in the interest of the working people.
Jayati Ghosh (JNU) refuted claims that this Act was unaffordable. The different estimates range between 0.7 and 1.4 per cent of GDP. The mainstream media and those sections who directly benefited from the policies of neo-liberalism are playing upon the insecurities of the middle class by stating that a universal rural employment guarantee will pose an inordinate tax burden on the middle classes, already burdened by high consumer price inflation. She pointed to the “gift” of Rs. 5000 crores to a handful of traders at the stock exchange as a result of the dilution of the turnover tax, which was a simple measure for raising revenue which should be reinforced. Removal of the capital gains tax was justified on the basis of the higher turnover tax, but even after retracting on the turnover tax front, the capital gains tax has not been reintroduced. So the issue of finding resources is really a political one. She argued that if the tax-GDP ratio was restored to the 1991 level, there would be enough money not only for a universal urban and rural employment guarantee but also enough left over for mid-day meal schemes. Increasing it slightly would also pay for free universal primary education, etc. She said that the Fiscal Responsibility and Budget Management Bill was a dangerous act that ties the hands of the government. She argued that there was no harm in printing money to finance development schemes, since this is not inflationary in the current context, with wage goods and excess foreign exchange reserves available in the system.
The Convention gave a call for the EGA to cover urban areas since the crisis of livelihoods is large here too. Dunu Roy (Sanjha Manch) argued that employment opportunities in urban areas are decreasing, subject to the same forces of liberalisation and globalisation that are ruining rural economies. Firstly, jobs in the formal sector are not growing as the emphasis shifts from manufacturing to the services sector. Secondly, workers are getting thrown out of the formal into the informal sector through mechanisms of closure, privatisation, voluntary retirement schemes, and retrenchment. And thirdly, the informal sector is becoming illegalised through efforts to “clean” the “global” city.
The Draft Act is mired in all kinds of myths and misunderstandings, and is even called a ‘crackpot’ Act, by some of its adversaries. Jean Drèze presented the main features of the draft Act and tried to dispel various misgivings surrounding it. He said that the Employment Guarantee Act is a very practical piece of legislation with potentially far-reaching economic, social and political implications. He stressed the need for an Act, and not just a scheme, as a legally enforceable right to work would give bargaining power to the workers and make the state accountable. He warned against impending attempts to dilute or sabotage the draft Act and argued for the immediate enactment of a full-fledged employment guarantee.
Arundhati Roy put the struggle for an Employment Guarantee Act in the larger context of resistance against global imperialism. She pointed out that there was strong opposition to the Employment Guarantee Act from the corporate media and other privileged interests, because the Act threatens their game plan for the Indian economy. She reminded the audience that electoral politics in India was a “history of broken promises” and stressed the need for intensified mobilization.
Prabhat Patnaik (JNU) warned against the forces that militate in different ways against the provision of an effective EGA. He said that finance capital stood in direct conflict with any such policy that was non-deflationary in nature and had the potential of reviving the rural economy and increasing public expenditure. This he said could happen in three different ways: one was, openly thwarting the exercise in the name of inadequate funds, etc. The second was manipulations and machinations that put one group against another by creating false vested interests like organized versus unorganized workers, tax payers versus the rural poor, etc. The third was by the Bretton Woods institutions like the World Bank appropriating the scheme by offering to fund it against all kinds of conditionalities. He argued that these attempts should be resisted, a timely warning since it is already evident that the government is trying to kill the spirit of the Act by enacting a targeted scheme restricted to a 150 poor districts without any commitment to expand it.