Centre may foot jobs law bill

Employment guarantee act may contain provisions that will put little strain on states

The National Employment Guarantee Act is likely to contain provisions that will put minimal pressure on state finances. At a meeting on the issue, held by the Prime Minister's Office (PMO) today, the first draft of the Act, prepared by the Rural Development Ministry, was put up for discussion.

"The focus now is on ensuring that the Act can be placed in Parliament during the winter session," said Planning Commission Member Abhijit Sen.

The programme will begin in a few districts and then be extended gradually over a period of 4 to 5 years, to cover the entire country. States have been objecting to enactment of an Act, which could lead to a slew of litigations and to the cost the programme will impose on their exchequers.

One proposal being considered is that the Centre bears the entire wage cost and 75 per cent of the material cost under the National Employment Guarantee Act.

States will, however, be required to bear 25 per ent of the material cost, as they do under the existing food-for-work programme and the cost of the unemployment benefits, in case they are unable to provide employment.

Since the compensation specified in the Act is one-third of the wage, non-provision of employment would mean that the states would have to bear 22 per cent of the total cost as against a mere 8.25 per cent in case employment is provided.

Means of further easing the financial burden on states are also being discussed. One proposal under consideration is that in case the state can show that it is unable to create employment because of lack of money provided by the Centre, the unemployment benefit would have to be refunded by the Centre.

Any excess of state wage over the centrally determined rate would have to be borne by the state. Such a move would reduce the financial burden on the Centre.

In its response to the feasibility of introducing the Employment Guarantee Act, the Planning Commission had said that there were two possible routes which could be taken. The first was, that for now, existing schemes should be funded, food-for-work expanded, and the full fledged Employment Guarantee provided only when resources were available.

The other route was to enact the National Employment Guarantee Act immediately, even if provision of resources was not made.

There would be a pressure on the system to create resources.

Over a few years, with cut in subsidies, there would be enough available to go in for a full-fledged programme.

While this would be 'immediate implementation', the diversion of resources could have a negative effect on employment and growth in the long term, it had pointed out.