Surjit S Bhalla: Ten Lies and an Act: I

CALLING THE BLUFF

The motto of the EGA faith: "What I believe is true, the facts are problematic".

This (and the next two articles) will analyse the process of thinking that seems to have gone into the major policy initiative of the Congress-led government, the Employment Guarantee Act (EGA).

This policy initiative is deeply flawed, and smacks overwhelmingly of a "take no prisoners" or "don't confuse me with facts" ideology.

So much so, that barely no aspect of the programme is not driven by either lies, near lies, or falsehoods (hereafter LNLFs). And if ideology is not the false god, then the only other possible cause behind the pursuit of the Act is pursuit of corruption, i.e. the Act is being advocated because it will enrich the political parties involved in the making of the Act, and those it will choose to anoint as the receivers of its munificence.

Unfortunately, we have not been able to identify which of the two forces is more forceful--yet. But readers are invited to supply methods, and or reasoning, to identify the real culprit. We (at present), however, presume too much. It first needs to be established that the Act is full of LNLFs.

This accusation is not lightly made. The roster of individuals, thinkers, and economists who have doubled as policymakers (hereafter POMs) of the Act is frightfully distinguished.

The four leaders in this ostensibly path-breaking law-making campaign are Jairam Ramesh, Rajya Sabha MP, former aide to Finance Minister P C Chidambaram, and alleged author of the Congress election manifesto; Dr Jean Dreze, member, National Advisory Council, and co-author of several books on social policy with Nobel Laureate Amartya Sen; Aruna Roy, leading social activist and the author of the highly desirable Right to Information Act; and Dr Abhijit Sen, author of several reports on poverty and Member, Planning Commission. Add to this the full weight of the National Advisory Council and you get the picture of the intellectual baggage this Act comes with.

The first LNLF is that the government is pursuing the EGA because of pressure from the Left. Normally, this accusation would be convincing except for the following quote from the Congress party election 2004 manifesto (released long before it was known that Congress would form the next government): "A national Employment Guarantee Act will be enacted immediately. This will provide a legal guarantee for at least 100 days of employment on asset-creating public works programmes every year at minimum wage, for every rural household."

This is not very different from the statement in the present draft of the Act: "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, and to receive the wages thereof within 7 days of the week during which work has been done". So, please, members of the Congress party, don't accuse others of instigating what you, yourself, so proudly initiated.

The second lie is that regardless of the fatherhood of the Act (i.e. the Left or the left Congress), such a job guarantee programme is actually needed by the Indian economy and especially needed by the Indian poor. In the previous article ("Corruption with a Human Face," Business Standard, December 12), I had documented that an employment guarantee was not needed by the poor.

This seemingly heartless conclusion was based on the observation that according to the very large unemployment surveys (more than 6 lakh individuals) conducted by the National Sample Surveys (NSS), poor agricultural workers had an unemployment rate of only 1 per cent!

In other words, the poor were not poor because they had no work--the poor were poor because they had little human capital and therefore received low wages, and therefore had low incomes.

So how will a job guarantee programme (and that too with wages below "market" wages) help the poor with additional employment or additional income? They can be helped if either you provide them with a job when they don't have one, or provide them with higher wages.

The latter option the POMs rule out because they want to target the really poor and, in order to do so, want to offer low, below "market" wages. The first option is ruled out by NSS data on employment for not just 1999-00 but also the earlier surveys in 1993-94 and 1983!

When the deans of this Act (Messrs Dreze and Abhijit Sen) were confronted with these realities, their response was "NSS data on employment is problematical". Why it is problematical was presumably beneath their intellectual dignity to explain.

But it should be emphasised that Mr Sen, in particular, has been at the forefront of defending NSS survey data against all criticism: "The much maligned NSSO emerges rather well, at least compared to its users" (with Himanshu, "Poverty and Inequality in India," Economic and Political Weekly, September 2004).

It seems rather disingenuous to claim that the much more difficult to survey NSS consumer expenditure data are okay (at least compared to the users!) but the relatively easy to gather NSS employment data are deeply "problematical".

What supports the accusation that the second Lie is a lie with a capital L, is the behaviour of Mr Dreze in his public defence of the EGA. He made it a point to bring to seminars, TV shows, etc. people who had actually worked on "food for work" type government programmes.

Not only brought them, but emphasised that their presence, and their views, confirmed that the Employment Guarantee Act was a major, positive feature of anti-poverty policy. I guess next time Mr Dreze will bring a unionised teacher from West Bengal to support further public expenditures on education (he must have already done that since we are all paying the education cess to support corruption in the name of the uneducated).

While doing so, he should note that even Prof Amartya Sen feels that unionised teachers don't show up to teach students but invariably are available to tutor these very same students at home for a fee!

Now obviously a small fraction of the poor do receive jobs working on government projects--but for every such person, there may be five others who are receiving pay for no work. Just like there are unionised teachers in Left-dominated West Bengal who teach in schools.

While on the issue of lies and facts, it needs exposure that Mr Sen, a senior functionary of the Planning Commission, publicly stated that he was requesting World Bank poverty experts, specifically Mr Martin Ravallion, to provide the Planning Commission with information and analysis of the "good" employment-generating capacities of the EGA.

I have nothing against hiring foreign experts to inform us about what policies India should follow and the World Bank, as an institution, houses many credible experts.

But I am wondering what happened to the Left's patriotic and heartfelt concern for sovereignty? Or is it the case that, as suspected, the Left's view of the world is what its senior leader, also a non-Indian, Mr Nikita Khruschev, once accused the capitalist West of possessing: "What is mine is mine, what is yours is negotiable".

The remaining eight lies are blowing in the wind and forthcoming.

ssbhalla@oxusresearch.com