When he came to power, Prime Minister Narendra Modi had made it clear that he had little time for the United Progressive Alliance's flagship Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), the world's largest rural jobs programme. On the 10th anniversary of MGNREGS last year, he derisively told Parliament that sending people to "dig ditches" only reflected 60 years of misrule mainly under the Congress party. But despite this entertaining rhetoric, the two quarters ending September and December last year saw consecutive five-year highs in terms of the number of person-days of employment generated under the scheme. By February, Mr Modi was describing MGNREGS as a "cause of national pride and celebration". The scheme ended the financial year 2015-16 generating employment of 2,313 million person-days (97 per cent of the labour budget) against 1,662 million person-days (75 per cent) in the previous financial year - spending Rs 41,271 crore, a provisional figure that could finally exceed Rs 50,000 crore when arrears are accounted for. Certainly, given that India had been suffering through a second consecutive drought year, this boost in spending was understandable. So it is almost contrarian that with half of India's districts still struggling with the effects of drought the government should have approved an MGNREGS labour budget for 2016-17 that at 2,170 million person-days is about nine per cent lower than what was approved last year. This is also a huge 980 million person-days below the states' demand. The labour budget under the rural jobs scheme is an estimate of how much work it will generate in the financial year. The ministry of rural development has said these numbers were open to a mid-year review and could even go up depending on the eventual need. In terms of policy signals, however, such moves could create uncertainty at the field level - because, despite being demand-driven in design, MGNREGS's agenda is set by the Centre's labour budget in practice.
In principle, the government's initial antipathy for the scheme can be sympathised with. It urgently needs to rein in expenditure and commitment to a jobs programme of this magnitude and with variable results can certainly be viewed as ultimately unsustainable. But there is a compelling counter-argument. Though the central machinery's drought response mechanism has improved considerably - its management of one of the worst droughts of the century in 2009 is a case in point - the past two years have seen rural distress on an unprecedented scale, demanding exceptional levels of intervention. In the absence of an alternative plan of action, MGNREGS is the only game in town, so to speak. Thus, it is to be hoped that the government would be able to sustain the programme in the current year.
In the longer run, it would stand the government in better stead if it were to focus on a more durable programme to "drought-proof" the economy instead of focusing on programmes that take up scarce administrative resources and do not reach all the needy. For example, more than half of India's agricultural land is rain-fed and the country is becoming increasingly water-starved. So investment in the kind of drip irrigation networks that made Gujarat bloom is a good start. Speeding up already commendable efforts to remove decades-old structural blocks in markets and supply chains is another. These solutions are scarcely new nor, given this government's stated commitment on this score, so hard to implement.
