Draft National Rural Employment Guarantee Act, 2004

Key Features*

Many comments on the draft National Rural Employment Guarantee Act 2004 have been received. This is a positive indication of public interest in this issue, and in the process of framing an effective law for guaranteed employment.

Some comments have already been incorporated in the draft Act. Others express diverse viewpoints which call for further thought and discussion. A summary of these unresolved issues is presented below.

1. Coverage of urban areas: The present draft Act only covers rural areas (including “B and C Class municipalities”). The extension of guaranteed employment to large cities could either be incorporated in this Act or become the object of a separate “National Urban Employment Guarantee Act”.

2. Number of days of guaranteed employment: The draft Act provides guaranteed employment throughout the year. In this respect it goes beyond the “100 days” guarantee proposed in the Common Mimimum Programme (CMP). Some commentators have proposed an intermediate benchmark, e.g. 180 days.

3. Further entitlements: Various types of additional entitlements have been proposed, such as maternity benefits, advance wages, health insurance, social security, etc.

4. Extent and nature of decentralization: Some commentators are in favour of complete devolution of the “employment guarantee programme” to the Gram Panchayats. Others feel that the involvement and accountability of the Block and/or District administration are essential. As things stand, the draft Act is somewhat flexible on this. It takes into account the Panchayati Raj structure without diluting the accountability of the district administration. Regular social audits by the Gram Sabhas are mandatory.

5. Are “State Acts” also needed? This draft Act builds on the fact that labour and employment issues are on the “concurrent list”, so that the central government is competent to pass an all-India law. It dispenses with the need for state-specific Acts.

6. Labour-material ratios: As of now there is no specific norm for labour-material ratios in the draft Act.

7. Avoiding contractors: The draft Act rules out private contractors, except in specific circumstances and with case-by-base permission. Some commentators favour a total ban.

8. Level of the unemployment allowance: There is no obvious benchmark for the “unemployment allowance”. The draft Act states that the allowance should be no less than one third of the statutory minimum wage for agricultural labourers. Other benchmarks have been suggested, all the way up to the full minimum wage.

9. Timely wage payments: The draft Act states that wages must be paid weekly, in consonance with the provisions of the Payment of Wages Act. A provision could be added for an “advance” to be paid after the first day of work.

10. Wage deductions for social security: The draft Act provides for up to 5 per cent of the wages to be set aside for social security entitlements, e.g. health insurance or old-age pensions. Some commentators are opposed to these deductions.

11. Distance norms: The draft Act follows the Maharashtra norm of providing work “within five kilometres if possible”, and in any case within the Block. Transport and daily allowances are to be paid if work is provided beyond 5 kilometres.

12. Disqualification: There are diverse views on the appropriate “penalty” that should be imposed, if any, when an applicant fails to turn up for work within the requisite number of days (as of now, 15 days), without applying for exemption, after being called for work. The draft Act states that such applicants are disqualified from applying for work, or from receiving the unemployment allowance, for a period of 15 days.

13. Skilled labour: The draft Act gives guaranteed access to “casual manual labour” (as opposed to “unskilled manual labour”, as in the initial draft). This opens the possibility of bringing certain categories of skilled labour within the scope of the “employment guarantee programme”.  Some commentators feel that “casual manual labour” is too restrictive and other terms have been proposed, e.g. “casual labour”, “manual labour”, etc.

14. Disabled persons: It has been suggested that the clause regarding special provisions for the employment of disabled persons, or other persons who are unable to do ordinary unskilled manual work on account of illness etc., should be strengthened.

15. Cash and kind: The draft Act allows for wage payments in both cash and kind. Some commentators suggest that part payment in kind should be made mandatory.  Another suggestion is that at least 25% of the wages should be paid in cash.

16. Nature of works: 19. Many suggestions have been made regarding the nature of works to be taken up under the Employment Guarantee Programme. These include minor irrigation works, development of wastelands, walking children to school, etc. Another concern is the process through which works are selected.

17. Penalties: 22. Another concern relates to the government finding loopholes or escape routes to fulfil its obligations under this Act, especially in the payment of the unemployment allowances, or letting funds remain unused, diverting funds for other uses, etc. Penalties in such cases should also be spelt out more clearly.

18. Finance: The sections on funding are provisional, and need further attention.  Some commentators favour 100% funding by the central government.  Others advocate some contribution from state governments, e.g. 25% of the cost of materials.