The UPA made a promise in its Common Minimum Programme (CMP) that states, “The UPA government will immediately enact a national Employment Guarantee (REG) Act”. Naturally, it must keep the promise and the left is pressing for it. What does it actually mean for a lay man? Every household in the rural areas of India shall have a right to at least 100 days of guaranteed employment every year for at least one adult member, for doing casual manual labour at the statutory minimum wage. However, the cost of the promise is worrying all but Mr. Sitaram Yachury.

Each person-day would cost Rs 100, of which Rs 60 would be wages and Rs 40 for materials and administration. The states would bear only 20 per cent of the costs but will be liable to provide unemployment allowance (at a minimum of one-third of the prevailing minimum wage) in case the administration fails to provide the necessary employment. For 100 days this would mean Rs 10,000 per poor rural household. Since there are approximately 4 crore rural households below the poverty line (BPL), the total annual cost of the guarantee would come to Rs 40,000 crore. That would be about 1.3 per cent of current GDP. In a 4-year phasing, it could start at 0.5 per cent of GDP and go up to 1 per cent by 2008-09.

\So is the estimate of Rs 40,000 crore correct? As Sunil Jain (Business Standard, October 25, 2004) has pointed out, the more relevant number for rural households eligible for the scheme is 15 crore, not the 4 crore assumed by the government. And the associated fiscal bill rises towards a huge Rs 150,000 crore per year, or about 5 per cent of GDP! Can the government bear this expenditure on this count? Will it be the biggest dole ever or a programme that will generate employment in the long run for India’s hungry millions?

And then should it be a Scheme or an Act? If it would have remained a scheme, it could have been scrapped or changed easily in case of financial difficulty. If passed by Parliament as act, the REG will become law which will make it binding on the government to provide employment. And the law would require the assent of Parliament to be withdrawn or even amended, if found so in interest of the country. A failure on the part of the government could flood it with legal cases. Is the government worried on this count? Perhaps, it is not. After all, why should it bother about the long term impact?

The scheme or act whatever it is, it is certainly a wonderful thing to happen in a country with huge a population that remain unemployed and poor, if executed effectively. But will it be so done? There are many questions that are to be answered. Who are the beneficiaries? Can’t more of undeserving members backing the ruling party take the advantage leaving back the really needy ones? Can those in the unorganised sector earning below the prescribed minimum wage, claim to be included? Are we having proper identification of BPL households? As understood as on the day, gram panchayats will issue the necessary “job cards” to applicants. The applicant fulfils the eligibility conditions of rural residence, adult age, and willingness to do casual manual labour at the state’s minimum wage for agricultural labour. As it appears, being a member of a BPL household is not an eligibility condition. And then a very serious question appears. How serious will be the scope for fake muster rolls and doctored job cards? Will ultimately the funds be eaten up by the “neta (politician), babu (bureaucrat), jhola (NGOs) and thaila (middlemen)”? This has been the concern of every one from Late Rajiv Gandhi to a commoner on road. The delivery mechanism must first be made effective so that this scheme benefits the intended group.

And then the prime minister declares that the rural poor will get the job in their own village. Is it possible to create jobs in every village worth creating some permanent national asset? Why should the beneficiary not move to the place where the work is needed? Is it just for reaping political benefits? Politics must not rule over logic and reality must not be overlooked.

Why do we go on talking about the big costs right at the initial stage? Will it not be good enough to start with the fund already available with Gram Sadak Yojana and the Food for Work programme and to see the effectiveness of the delivery system in a smaller area?

Some suggestions forwarded by many experts must be looked into seriously:
” Focus on improving existing programmes of food for work and rural employment generation and its delivery system..
” Involve the state government in more accountable manner. The incentive for leakage and abuse must be looked into seriously. The gap between the central government responsibility of funding and the predominantly state/local responsibility for its administration must be minimal possible..
” Let the legal guarantee for the scheme be the responsibility of the respective states, including the responsibility for bearing the unemployment allowance (in case a state fails to provide employment to eligible applicants).
” Ensure states’ commitment to the programme
” Implement in a phased manner over four or five years, allowing for modification from lessons learned.
” Make the scheme more visible locally and monitor regularly.
” Involve some IT majors such as Infosys and Wipro to make the scheme more transparent and effective.
” Let media keep a watch on the scheme.

Let the programme not bring a national fiscal crisis.