Posted by: Bal Patil | August 30, 2010

EMLOYMENT GUARANTEE SCHEME

EMLPOYMENT GUARANTEE SCHEME  I

THE ECONOMIC TIMES, 4/4/75

By BAL PATIL

These two articles were published when the Bill was being debated in the Maharashtra State Assembly

First of a series of two articles

The Employment Guarantee, Scheme which the Government of Maharashtra is determined to implement at any cost has raised a hornet’s nest because of the manifestly iniquitous nature of the professional tax proposed to be levied in the 1975-76 State budget; there is a total outlay of Rs. 25 crores on district level.

During last year the Government spent Rs.15 crores on this scheme. I propose to discuss in this article the place of EGS in the overall agrarian situation in Maharashtra and examine if it can be really a worthwhile proposition to hope to create a viable employment potential through the operation of this scheme.

There can be no two opinions that the scheme is laudable in principle of providing gainful employment according to the constitutional directive on right to work. But the scheme threatens to run aground at the very outset because of the fundamentally misconceived mode of its financing, the major incidence of which falls heavily and inequitably on the fixed salary groups. This has evoked a sharp reaction because it is feared that this may be challenged on constitutional grounds. It is unjust and regressive because it will extract tax from the lowest group of salary earners who are exempt from income-tax and thus it is “practically an imposition of income-tax by the back door” as pointed out by The ET editorial “Iniquitous levy” (12-3-75).

Professional tax:

The finance Minister has declared in the State legislature that the incidence of the profession tax on the lowest salary group would be reduced from Rs.4 to Rs.2. But this does not mitigate in the least the regressive and patently harsh implications of the tax because fixed income earners have been grouped together with professional and self-employed people like doctors, architects, lawyers contractors, while the wealthy farmers are let off with a flea bite contribution of Rs.2.34 crores.

The Chief Minister, Mr. S. B. Chavan’s appeal to MLAs, MPs and office-bearers of Zilla Parishads to voluntarily come forward to contribute their mite in the professional levy is welcome. And now the Deputy Chairman and Chairman of the Legislative Council have done well to propose specifically that all the legislators should be brought within the purview of the profession tax. As a matter of fact this should have been done earlier because it is still not appreciated in our country that polities is a public profession par excellence oriented to public service and therefore, particularly the politicians holding a people’s mandate should be rigorously accountable for their charge on the public Exchequer. Besides their honorarium of Rs. 500 per month the legislators are entitled to Rs.22 allowance per day during the session, free telephone and free travel throughout the State.

However, I am concerned in commenting on a contention of the Chief Minister in his recent speech at Srirampur because it has a serious bearing on the iniquitous nature of the professional levy and its admittedly socially conscious orientation. Mr. Chavan contended what was wrong if an urban lowly salary earner who spent Rs.10 on film entertainment also contributed Rs.4 to provide livelihood to the rural poor. The sentiment is unexceptionable but I am afraid the reasoning does not bear any relationship either with the reality of urban living and film entertainment or the ultimate concatenation sought to he established with the livelihood of the miserable rural masses.

Hardships:

I shall briefly digress here on Indian films as a medium of mass entertainment. I wonder if the Chief Minister is aware of the blatantly exploitative nature of our film, entertainment. The masses both urban and rural are provided aplenty with ‘fillums’ cast into well-know formulae, produced at an enormous outlay of black money and shown in posh, air-conditioned theatres to extract box-office collections from this vast and seething mass of more than 400 millions with the presumption that that it is predominantly in need of the type of escape our ‘fillums’ alone can provide. If that is the raison d’etre of cinema entertainment I would b e constrained to say that nothing could be more fraudulent than this economic hardships of our millions.

Public is given what it wants cannot be obviously an argument in extenuation. As the eminent film director Ingmar Bergman summed it up: public demands “but one thing of the film: I’ve paid, I want to be distracted, swept off my troubles, my family, my work, I want to get away from myself. Here I am, seated in the darkness, and, like a woman seek deliverance.” But are the film producers, directors and writers giving a wholesome obstetric deliverance to the gullible public caught in this desperate escapist travail? Or are they just exploiting it and further sinking the public in the quagmire without attempting to give it a truly creative experience? And how can a truly creative experience be depicted and shown in a patently inegalitarian economic situation? Everything thus is caught in a vicious circle. As the Spanish film-maker J.A. Barden put it: “I believe that the present economic structure that supports the film industry in our countries transforms the true values of an author-film-audience relationship, dehumanizes reciprocal influence, and converts this relationship into one of mere merchandize-consumer.” (Film Makers on Film Making).

Thus the apparently innocuous nature of film entertainment for which the lowest urban fixed-income earner supposedly does not mind spending Rs.10 and for which reason the Chief Minister would like him to make a further outlay of a few rupees for sustaining the jobless rural fraternity, is a mode of compulsive, almost heinous exploitation. I am aware that is would be rather unpleasant, even uncharitable to apply this analogy- to the chief spokesman of the Government-to EGS and its financing but I hope to show in the course of my article that the EGS in its inevitable implications and impact on the rural sector could not be anything better.

It is indeed a fiscal mystery why a substantial portion of the professional tax should not have been tapped from affluent farmers and why the Finance Minister thought it expedient to wield his fiscal axe on the poor urban employee so harshly. It is a common maxim that you can’t eat a cake and have it too. But there appears to be an extraordinary exception to this universal rule in the case of the Maharashtrian farmers under this fiscal fiat because of the cushy position he is placed into. Indeed, the affluent farmers are having the best of both the worlds. The tax on their agricultural income is already subject to a comfortable limit of an income of Rs.36000 per annum. But even this minuscule tax the Government has not exerted itself to collect diligently because there are arrears amounting to Rs.5crores which means that almost the whole of the tax dues since it s inception are in arrears.

That this is extraordinarily ridiculous and incongruous is borne out by the facts of the expenditures incurred during the last decade on agricultural schemes as also by the data on agricultural holdings. The Estimates Committee of the Maharashtra Legislature, 1973-74, eleventh report gives some figures: Rs.700 crores have been expended on various agricultural schemes between 1960-61 and 1970-71. In addition, the expenditure by farmers in land development programmes financed through loans from land development banks and other institutions, is placed at Rs. 500 crores during this period. Despite this rather large outlay of sums it is rather strange that the affluent farmers who have grown prosperous-the benefits of the schemes have accrued mainly to 10 per cent of the large holdings according for 40 per cent of the total land area and 5 per cent of medium holdings comprising of 47 per cent of land area- should be impervious to repay what they got from the State in the form of various subsidies and the State should be so hesitant to extract the same. To cap it all the Government, to all practical purpose has gone to the length of treating Government and cooperative loans as written off.

It is in this context inexplicable why the Finance Minister, should have let off the Farmers with a flea-bite of professional tax. The fiscal situation gets curiouser and curiouser in view of the fact that a resolution was passed earlier by the Government in the State legislature to impose a special employment guarantee tax on “irrigated farmers, organized industry, gainful profession, wealth and property holding, unearned incomes, secure employment etc.” In criticizing the tax on profession I do not mean to detract from the basic end of the EGS which is to provide gainful work to the miserably placed agricultural and rural labour. But the end, however laudable cannot justify means if they are not only contrary to equity but also self-defeating in character in their ultimate impact on the problem they are contrived to solve. As a matter of fact, the Finance Minister and the Government could have been justified if they had squarely placed the burden of financing this scheme on the shoulders of the rich farmers who have proved intractable to any realistic implementation of land reforms and thus any meaningful restructuring of the rural agrarian setup I would even say that the Government has lost a golden opportunity of giving an handsome earnest of its socialistic promises reiterated in Narora type resolutions by not disciplining the kulak community. And this would have been a matter of real justice because it is these farmers who will be again reaping benefits from the various works generated by the EGS.

But instead the Government has been rash enough to impose the professional tax and exposed it to an allegation that it has resorted to this Scheme mainly as a vote catching device in the pre-election year and casting a spell on the ignorant rural masses by dangling the carrot of jobs. The Finance Minister. Mr. M.D. Chaudhari, has optimistically stated in his budget speech that this scheme will not only provide 14.30 crores of man days of labour during the financial year but also “thousands of productive works would be taken in hand and thus a tremendous momentum will be imparted to the task of increasing production in rural areas.”

Land Reforms

This optimistic assumption would well have been justified had the agricultural situation been obliging enough. But unfortunately it is not so on account of various factors the most important of which is surely the agrarian structure which has proved impervious to land reforms and thrived instead by default of their thorough implementation spawning forth a rich harvest of glaring income disparities and economic conflicts. A very faint recognition of the magnitude of the problem is evident in the report of the Study Committee on Employment Condition of Agricultural Labour in Maharashtra State (With reference to minimum wages) under the chairmanship of Mr. V.S. Page, Chairman Legislative Council, which was presented to the State legislature in 1973. The report quotes with approval the Planning Commission in its Second Plan that agricultural workers constitute “a vast and complex problem which has far reaching implications not only for the rural economy but also in relation to the entire process of economic and social development in coring decade.”

The report states that the problems of farm labour are manifold and inextricably mingled with the problems of rural economy characterized by “low income, low productivity and a lack of continuous gainful employment.” It goes on to acknowledge the fact that agricultural labour being the oldest form of labour “constitutes the largest single sector in working labour force” and as such “should find a pivotal place in the scheme of development.”

A praiseworthy ideal no doubt but I wonder if it would be amenable to implementation with the best of intentions in the present agrarian set up marked by extreme disparities of holdings and income and where a large proportion of uneconomically small holding are impoverishing the cultivators and pushing them mercilessly into the nether region of agricultural labourers. Worse still the Report in its own recommendations has not shown the courage to follow its findings to their logical policy imperatives.

Prof. Gunnar Myrdal has very pertinently noted this plight of the small holders when he says: “the increase in the labour force tends all the time to push a larger part of it down into the poorer strata and to make the social and economic structure more in egalitarian and rigid. Farmers who own land but very little of it are broadly in the same situation, and are particularly vulnerable to the factors that tend to rob them of the little land they have. These groups are foredoomed to be passive and not in a position to experience incentives to increase their labour input and labour intensity.” And he goes on further to single out share cropping as the main vitiating factor and advocates: “what is broadly referred to as the problem of land reform” or ‘agrarian reform’ tenancy reform included has to be attacked in order to crate a situation where the labour force has the opportunities and feels the incentives. To exert itself very much more. And so we face an immensely important. Practical and concrete aspect of the equality issue.” (The Challenge of World Poverty.)

A major assumption of the Study Committee report on minimum wages is to emphasise agricultural development planning so as to reduce “the pressure on land and divert surplus manpower in agriculture to other gainful economic activities. The extent of success achieved” is shown from the data which reveals that the percentage of farm labour to total workers in Maharashtra State increased from 23.80 per cent in 1961 to 29.3 per cent. in 1971. Besides observing that the increasing proportion of farm labour force on an all India level shown ineffective man power planning the committee has not cared to probe in depth the underlying causes of this all important phenomenon. Had it done so it would have come face to face with the grim reality of the equality issue as posed by Prof. Myrdal and probably some extremely valuable pointers to the solution of this chronic rural problem. Instead it chose to concentrate on the secondary factors such as size of farm holdings, their employment potential, seasonal variations of farm labour requirements and last but not least the capacity of the farm employers to pay minimum wages because it is on this last factor that the Page Committee has based not only the strategy of its recommendations on minimum wages but also made it the pivotal point of the operation of the Employment Guarantee Scheme.

( To be concluded)

Part II

EMLPOYMENT GUARANTEE SCHEME IMPLEMENTATION HURDLES : EMPLOYMENT GUARANTEE SCHEME

By BAL PATIL

THE ECONOMIC TIMES, 5/4/75

It is not my intention to run down the EGS but I do feel compelled to show the pitfalls in the way of its implementation. Unfortunately the scheme cannot be expected to yield its potential impact because of formidable institutional obstacles and is sure to be blighted by the searing conflicts of economic interests.

The Planning Commission’s ‘task force on agrarian relations (1973)” has stated that “ the implementation of the enacted laws has been half-hearted, halting and unsatisfactory in large parts of the country… In accordance with the policy laid down in the Second Five Year Plan the laws enacted by several States provided for the resumption within certain limits of tenanted lands by landowners for personal cultivation. The term ‘ personal cultivation’ was wide enough to cover all cases of cultivation under the landowners’ own supervision or the supervision of a member of his family…. Crop-sharing arrangements are oral and informal. Where tenancy is insecure, legal provisions regarding fair rent are useless and no tenant dares to take initiative action for getting rent fixed. This is so because the tenant who has the audacity to pray for fixation of fair rent faces the risk of instant ejectment. This the objective of ensuring fair rent and security of tenure tenure remains unattained in large parts of the country.”

These rural structural difficulties are aggravated by the conflict of economic interests in a caste ridden village society. As P.S. Appu shows in his article ‘Agrarian Structure and Rural Development” (Economic and Political Weekly, Review of Agriculture, Sept. 1974) that “the inhabitants of an Indian village have no social cohesion or common economic interests. The extremely inegalitarian character of the agrarian structure is clearly one of the root causes for the failure of the Community Development Programmes. The poor performance of the co-operative societies and the village panchayats (organs of local self-government) should also be attributed to the same cause.”

CD Programme

The deleterious operations of the CD programmes in which the real benefits are creamed off by the rich rural interests were pertinently noted by Daniel and Alice Thorner way back in 1960 in their paper to the XXVth International Congress of Orientalists held in Moscow: “To the extent that they have been promoting anything in the economic field, they have so far been promoting not socialism but capitalism.” (Land and Labour in India). Hence the Thorners put their finger precisely on the failure of all land reforms in India by saying: “ a land reform law which does not require the cultivator to till is patently more difficult to enforce than the one which requires him to take part in all the major field operations. Once you absolve the so-called cultivator from tilling, you leave the door open for all manner of subterfuge and for easy violation of land reform acts.”

These structural difficulties are formidable enough to stall meaningful implementation of job guarantee schemes, but psychological obstacles such as the reluctance to undertake manual labour in actual field operations would threaten to prove insuperable assuming that the other difficulties have been conquered by a superhuman effort of political will. It might appear strange but it is true that manual labour is stigmatized with degradation in social status. As Daniel Thorner states: “the fact is that in India there is an age old feeling that manual labour, physical work, is degrading: wherever possible such work should be left to the lowly, to inferior persons. In the village there is one sure sign by which successful cultivators tend to show that their economic condition is improving and that they now wish to raise their social standing: they and the members of their family stop doing he field work: instead they engage others to do it for them, or they give the land out to tenants or cropsharers.”

The Page Committee report recognizes this “it is the psychology of man to avoid hard manual labour. As soon as circumstances permit he passes on such work to others over whom he aquires political, social or economic control” But it does not pause to ask how to counter it and what is its casual relationship with the deep-rooted agrarian wet-up, nor does it show any inkling of an awareness that any employment guarantee scheme operated in such a hostile social and economic milieu is not only foredoomed to failure but also liable to accentuate rural tensions. The great fallacy of the report on minimum wages is that it takes for granted that the Indian agrarian set-up is ready for the take off stage of ensuring minimum wages which it is simply not, nor does it seem likely that it will be so in the foreseeable future.

It is well to heed here the warning of Prof. Myrdal who stresses “that genuine rural uplift of the masses of poor people in the villages cannot be accomplished unless the traditional distaste for diligent manual work and, in particular, for work as wage employees is weeded from the social system and from the minds of men” and that the “attempts in India to legislate minimum wages are, at least for the near future and with anything like the present underutilization of the labour force, even more inoperative than the land reform and tenancy legislation.”

As regards the classification of farm labour into two categories of ‘attached’ and ‘casual’ the criteria of the Page report are superficial and vague. It simply lays down that ‘ agricultural labour household may be classified as (i) attached if the principal means of livelihood was attached agricultural labour and (ii) others who may be called casual labourers”. This vagueness is a common feature of all agricultural labour inquiries beginning with the one of Government of India, Ministry of Labour, “Agricultural Labour Inquiry: Agricultural Wages in India, 1952” Daniel and Alice Thorner emphasise that ‘this is the most fundamental distinction in the enquiry”. Acknowledging that in the Indian agricultural context the term ‘attached labourer’ has a connotation of unfreedom the Thorners point out that “no single test such as liberty to take up another job, steady employment or the existence of a contract will suffice to separate out the genuinely ‘attached’ workers. When a labourer is described as not ‘free to seek employment elsewhere’, it may simply be the case that he has freely agreed to remain in a particular job. On the other hand a labourer committed to a particular employer by reason of debt or land allotment may be employed only ‘from time to time according to exigencies of work” Thus an attached worker may be employed on a casual basis while a completely free worker may be employed continuously on a long term contract. ‘Therefore Thorner concludes: “ to construct proper rubrics under which to separate out these various short and long term workers with differing degrees of job mobility and a wide variation in bargaining strength would be admittedly a difficult task. It is a task the agricultural labour enquiry has declined.” (Land and Labour in India).

The Page Committee on minimum wages has not related the question of the customarily ‘attached’ casual labour and its likely impact on the mobility of farm labour in the context of employment guarantee scheme and the new outlets sought to be created for gainful work. From these loose strands of findings of agricultural labour one cannot make out therefore, what it is that the Minimum Wages Committee is driving at. If it is concerned in finding and devising ways of alternate gainful employment for agricultural labour force at a living wage so as to reduce pressure on land it would be rather a vague strategic aim because that would be contingent on industrialization and the whole paraphernalia of educating the labour force in technical skills and its assimilation not to say of its long-range consequences on the economy it’s a whole. But if it is meant to find a short term solution of providing a semblance of livelihood to farm labour by absorbing them in the employment potential of farms by ensuring minimum wages so as to set a pattern for rural wages as a whole (which is what the committee explicitly avows) its viability can be questioned on the basis of the guiding assumptions of the Page Committee itself.

Socialistic Deal

It is my contention that the job guarantee scheme is basically a socialistic deal which cannot take root and assured of healthy growth because the rest of the developmental line whether in rural or urban areas is predominantly capitalist and does not take into account the rural realities of India. The question is not one of providing work on a piecemeal ad hoc basis to those unemployed and paying them a living wage.

Would it induce in them a motivation to do their best in the existing milieu? The problem of creating and exploiting employment potential in the rural areas is essentially a problem of ensuring a fair deal to the millions of rural masses and not one of merely throwing ‘casual crumbs’ of gainful work out of a sense of charity and human compassion as appears to be contemplated under the EGS. The problem at bottom is a peasants’ problem par excellence and can be only tackled by tackling first thing first starting with a thorough implementation of land reforms and altering drastically the rural land-owning and cultivation pattern by seeing that land goes to the tiller. It is no use to blunt the edge of this withering rural realism and mask it with anodynes of doleful expedients. It may give an impression of alleviating the more painful symptoms but is bound to aggravate the disease.

The seeds of potential conflict and how the EGS will flounder on the obdurate rocks of powerful peasant interests, not to say anything of the unpredictable monsoon, are already clear in the insistence of the farmer-employers that the approach to minimum wages should take account of depressed agricultural conditions and fix remunerative prices for jowar, cotton, etc, to enable them to bear the increased wage burden. The argument is that the economic capacity of employers should be the guiding criterion for determining the quantum of minimum wage and that they could bear only an increase of 10 to 20 per cent in their present situation and further “if monopoly purchase price was increased by 50 to 100 per cent there would be economic capacity to give reasonable wage” (The Page Committee minimum wages report) already gives a foretaste of the confrontation to ensure. As against this the workers’ representatives insisted on part payment of wages in kind, e.g., Jowar having regard to the prices of consumption articles.

Instead of adjudicating on this thorny matter in the context of the realities of rural milieu the Page Committee has adopted an approach with the starting point that the question of minimum wages should be considered on a par with industrial labour. What is remarkable is its reasoning by which it goes on to contend: “if the labourers receive less than what they deserve farmers are also receiving less. Both come from the same socio -economic stratum and they suffer because the whole rural economy is itself depressed by reason of underutilization of all resources including human resources.” Therefore it concludes: “to break the vicious circle there is an imperative need to invest more in the rural areas in a productive manner.”

Thus coming to the right conclusion for wrong reasons and incorrect logic the minimum wages report goes on to link the question of minimum wages to Employment Guarantee Scheme through an extraordinary effort at rationalization because “in the opinion of the committee the Employment Guarantee Scheme is also the guarantee of genuine employment at minimum wages to the willing to the willing workers.”

From this it was but a small step to link questions of “monopoly purchase and the consequent compulsion of allround public distribution system” and thus recommend: “white fixing the prices of procurement, the Government will have to take into considerations the cost of production and the wages of the labourers will have to be considered as a factor in cost of production” by the process of reductio ad absurdum, quod erat demonstrendum Eucledean air, But this embodies a big fallacy because it begs a big question and from the beginning it is dictated by an anxiety in provide a cover for the employer farmers under a wrong assumption that the farmers affected by remunerative prices form the major chunk which is not a fact by the committee’s own finding that 80 per cent of the land is owned by 33 per cent of big holders of 4 hectares and above and that the potential of small holders with 2 hectares was of no consequence as they themselves were hovering on the brink of agricultural labourership. Thus the committee has by an elaborate process of skewed rural ratiocination succumbed to the plea of big landholders and given an indirect, almost statutory protection to their vested agricultural interests.

Thus the sheer confusion and contradiction in the aims envisaged and methods adopted is clear. The Employment Guarantee Scheme aims at providing employment but resorts to such means as lead to the opposite results making the rich richer and poor poorer. It the employment opportunities are created in the agricultural sphere the EGS will turn out to be most ill conceived and if it is meant to channelise the farm labour in urban industries the prospect cannot be promising. As Mrs. Judith Hart, Overseas Development Minister. United Kingdom warned FAO General Conference in 1969:P “Development must not result in prosperous farmers growing richer while peasants grow poorer: those displaced by agricultural development must not become the new urban unemployed…” Therefore, assuming that the parameters of the agricultural system- the size of the farm and the basis of tenure or owner ship- are altered, a sensible alternative strategic thrust for employing rural labour meaningfully could be provided by engaging them in schemes of comprehensive rural development. The proper remedy for rural ills is neither to make stop gap arrangement of casual employment nor provoking the farm labour migration to towns. The countryside alone can be true basis for new job opportunities and revitalization of rural life. And this can be done by shifting the industrial locus into the countryside by orienting production in a variety of labour intensive techniques.

But I am aware that this is a starryeyed vision in the existing set-up in which the EGS is sought to be worked. The structural barriers in the way of its implementation are intractable given the socio-economic rural syndrome. But one doubts if the EGS could be provided at least with a functional and operational credibility if past performance of Maharashtra State in agricultural schemes of increasing production, or fighting is taken as an index, As in an astute analysis of recurring droughts in Maharashtra pointed out in his article ‘Recurring Drought in Maharashtra: Total Lack of Rational Planning (The Economic Times. 20.3.73): “A common observation in informed quarters is Delhi is that Maharashtra is always in the forefront in coining progressive and impressive slogans and is mostly in the last row in translating the slogans into concrete programmes,” The salient points of Observer’s criticism which are relevant to present discussion are (i) the yardstick for judging plan performance is the ‘level of expenditure attained’ rather than the level of ‘physical results achieved’ in a given period. (ii) of the 12 major irrigation projects completed during the last two decades actual utilization does not exceed 40 to 50 per cent in most cases. (iii) absence of a State level ‘thinking cell’ to carry out economic studies in depth and investigate huge investments in irrigations, (iv) a propensity to tax urban areas for major proportion of revenue and (v) an illusory appearance that Maharashtra has the highest per capita income. A most telling and cumulative effect of all these factors is the rate of growth in agricultural production the disastrous performance of which evoked sharp reaction from Prime Minister Indira Gandhi last year at Poona.

One is reluctantly led to conclude, therefore, that since the Employment Guarantee Scheme has already threatened to become a prestigious issue it might run the predictable course unless the Government by a most unpredictable show of political will turns the tables on agricultural cassandras.

(concluded)

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