Political India: Engaging America

From The Hindu


Photo: Bijoy Ghosh

CHENNAI: Venu Srinivasan, president of the Confederation of Indian Industry, on Monday said his “biggest concern today” is where India will derive future competitiveness from in world markets, especially vis-À-vis competitors such as China and Indonesia.

Speaking to The Hindu, Mr. Srinivasan emphasised the role of reform in several key areas of the economy, including the labour market and the tax code, if India is to retain and strengthen its competitive edge in industry.

Touching upon the growing labour supply in India, he said, “For India to become competitive we need to create 15 million jobs. This is the single point that we need to consider.”

“Ultimately we are competing for the same space as large population countries like China, Indonesia and Brazil,” Mr. Srinivasan pointed out, suggesting that failure to improve competitiveness may lead to more jobs going to these countries than India.

“With fiscal deficits being high, we will not have investment in infrastructure. Our social infrastructure is creaking. So is our education system. If you go to schools run by government or primary health centres and hospitals, they are terrible,” he said.

In some areas such as value-added manufacturing, however, India is more competitive than China, he added. “This is because our design inputs are higher than China’s. While China is the biggest manufacturer of cell phones and washing machines, their value addition on exports is as low as 10% on electronics and maybe 15-18% on manufactures. India is close to 25% and is much higher in IT,” he said.

Emphasising that India could compete and get a fair share of the world market, he said, “China does see India as a competitive threat, not a political or military threat. Certainly as a competing country they would like to ensure that you are not as competitive as them and you cannot blame them for it. It is for us to make ourselves competitive and not for China to give way.”

On the labour market, Mr. Srinivasan said that despite labour union activity being low during the last few years of rapid growth, India had still not touched labour reform. “We are not talking about hire and fire. In fact, I have always maintained the view that hire and fire will create too much of a social discord in a country like India. But you should have the ability to continuously improve productivity and settle disputes quickly.”

Regarding tax reform, Mr. Srinivasan argued for a reduction in “multiple levels of taxation accumulating and making industry uncomfortable.” Such laws hinder the free movement of goods and services even across States, he said.

The direct tax code is well intended and the tax rates have been reduced. Yet a minimum investment or wealth tax could be a disincentive, for example, to foreign investment in infrastructure, Mr. Srinivasan said. “This has to be debated further,” he said, adding it was still not quite clear why this tax on assets has been imposed.

Mr. Srinivasan underlined the overall concern of labour market disparities across States, saying that while conditions for rural labour have improved in Tamil Nadu, in part due to policies such as the National Rural Employment Guarantee Scheme, in States in eastern and northern India, there would appear to be stagnation.

Labels: Brazil, China, CII, Indonesia, labour market, labour unions, NREGS, tax code, Venu Srinivasan

From The Hindu

Assured livelihood: Recent audits have affirmed the contribution the NREGS has made to employment security. Photo: P. Goutham

CHENNAI: The National Rural Employment Guarantee Scheme (NREGS) has matured from its 2006 launch to the point where the concept of NREGS-II is now doing the rounds in policy circles. However, before this act of succession occurs, greater clarity is required on which features of the policy need to be refined to strengthen this lifeline for the rural poor.

M.S. Swaminathan, chairman of the M.S. Swaminathan Research Foundation, outlines some of the policy attributes that the history of the NREGS would suggest are important. The Maharashtra government was the first to introduce an Employment Guarantee Scheme (EGS) in the 1970s, which guaranteed work at slightly below the minimum wage, he points out.

In 1980, the national version of the EGS programme was named National Rural Employment Programme (NREP) without the guarantee element included.

“The NREGS has taken the initiative of the 6th Five Year Plan to its logical end, namely converting NREP into NREGA. The aim of all such programmes starting with the colonial era is the development of permanent assets. NREGA, for example, aims to promote water harvesting, watershed management, soil conservation, land reclamation, etc.,” says Professor Swaminathan.

With the monsoon failing this year, the scheme has attained even more importance as a source of off-farm work during months that would have otherwise seen workers employed in agriculture. Recent social audits, such as those led by Jean Dreze and his colleagues, have affirmed the contribution to employment security the scheme makes in districts such as Villupuram, while acknowledging that implementation problems exist, including “mass fudging of muster rolls,” and “institutionalised kickbacks to private contractors,” in some cases.

Labour market impact

Wider economic effects, including a labour market impact, are also being observed across States: the supply of farm labour has, in some cases, dwindled, and this has been attributed to the NREGS. However, such claims must be seen in the context of two issues. First, the NREGS is designed to improve the labour market prospects of those living on the subsistence margin, and if farm owners need to raise the daily wage rate to compete for more labour, that will be a positive outcome for farm workers. Second, labour supply in many areas, including the Cauvery Delta, is, in any case, falling due to rural-urban migration, especially of younger members of the workforce searching for better-paid and physically less strenuous opportunities.

Any deleterious effects of the NREGS on farm labour supply can be minimised if, as Mihir Shah of the Planning Commission has argued, the government tries to bring about a convergence between NREGS projects and farm-related asset-creation works. For example, the NREGS could achieve convergence and synergy among numerous ongoing programmes in the fields of watershed development, water harvesting and so on.

Emphasising the need to increase technical inputs for the next phase of the programme, Professor Swaminathan suggests creating a technical consortium of experts drawn from agricultural universities. Additionally, “small and marginal farmers should be allowed to work under this scheme to develop farm ponds in their own farms, in order to enrich the aquifer and give crop life saving irrigation when needed.”

“Gender sensitive”

The revised programme should also permit women labour to work as organisers of crèches, daycare centres etc. “The programme must be gender sensitive,” he says.
Although the Finance Minister recently announced that more than 100 days of employment will not be provided, the drought or drought-like conditions found in many districts this year may require extension of the scheme.

In this backdrop raising the wage rate from its present level of Rs.80 per day to Rs.100 or more and increasing the number of guaranteed days under NREGS-II will signal the continued commitment of the government to a meaningful pro-poor agenda.

Labels: Cauvery, delta, EGS, Finance Minister, Jean Dreze, M.S. Swaminathan, NREGA, NREGS, NREGS-II, NREP

From The Hindu

CHENNAI: The National Rural Employment Guarantee Scheme (NREGS) is of significant benefit to agriculture in the Cauvery delta area, according to sources in the Thanjavur district administration.

Speaking to The Hindu, Collector M.S. Shanmugham explained that until recently, work on A-class canals, the main ones connecting rivers directly to fields, was not included within the ambit of NREGS projects.

“However, after last year’s floods, I wrote to the government and managed to get a government order passed to permit NREGS de-silting projects to also take up A-class canals. The de-silting work and anti-flood operations have been of much benefit to agriculture in the district,” Mr. Shanmugham said. Additionally, this had significantly increased work opportunities in this district for NREGS workers.

In the Cauvery delta, canals make up the “nerve centre” of agriculture, which is highly dependent on the flow of water released from dams upstream, Mr. Shanmugham explained.

Given this “huge network of canals in Thanjavur the budgetary allocation to de-silt that entire network, if it were to be done by the Public Works Department, will be Rs.100 crore at least,” according to him.

However as the NREGS budget is effectively utilised for this purpose the financial burden is taken off the State government, creating a “win-win situation”.

Simultaneously, “Rs.1.4 crore in purchasing power is being pumped into the rural economy every week, in the form of wages for approximately 30,000 workers district-wide,” Mr. Shanmugham said.

Most workers tend to receive Rs.75-80 per day, and “there is usually no underpayment of wages as the schedule of rates clearly defines separate terms for hard soil, soft soil, jungle clearance work, and so on.”

Labour budget

According to data provided by the district administration, labour budget has been approved for 1440 canal, tank and road works projects for 2009-10 at an estimated cost of Rs.47.35 crore.

Funds to the tune of Rs.62.61 crore have been received by the district from Central and State governments for this year, of which 76 per cent has already been utilised.

Employment under the NREGS has been provided to 1,68,721 job cardholders in Thanjavur district thus far, generating 60 lakh mandays of work, according to the administration.

Labels: canals, Cauvery, delta, desilting, job card, NREGS, Public Works Department, Thanjavur

From The Hindu, with modifications

CHENNAI: Faced with a shortage of farm work and no recourse to alternatives, labourers in Tamil Nadu are demanding that the National Rural Employment Guarantee Scheme (NREGS) be extended to more than 100 days per year.

A. Lalitha, A. Rani and B. Papathi are landless labourers who live in Tirukanurpatti in Thanjavur. They work on a road formation project under the NREGS in the burning heat of the mid-day sun. Sheltering in the shade of a solitary tree in the vicinity, they explained why an extension of the policy is vital to sustaining their livelihoods.

“The sudden shortfall in the monsoon has left us with very few options in farm work,” Ms. Lalitha explained. “I have been without work for one whole month until I joined this NREGS project four days ago,” she said. Her husband and the husbands of Ms. Rani and Ms. Papathi are without work currently as they are looking for farm jobs that have all but vanished. “When they do find work, it pays something like Rs.20-30 per day,” Ms. Rani says, and this makes it difficult to make ends meet and feed the family. Their husbands also spend a large part of the household income on alcohol consumption, they admitted.

In this context of employment insecurity and monsoon-dependence in agriculture the NREGS is a lifeline for the landless poor. “We would like to ask the government for at least Rs.100 as the daily wage,” Ms. Lalitha said. “As for the work, what we need is a minimum of 150 days per year. Even with such an increase we would be without work for some months. Ideally we would like to be offered 300 days of work per year if possible,” she said.

The same theme is encountered across different NREGS sites. For example in Vanarangudi village near Thanjavur, R. Malika and V. Sakuntala, both landless labourers, worked on a nearby NREGS site for 70-80 days last year. They are less confident about getting enough work on farms this year, given that the monsoon failure has hit farm employment hard: “We’re finding it difficult to get work on farms nearby and have to travel farther to find employment. Our situation would be better if we were paid Rs.100 per day and had more days of work on [NREGS] sites,” Ms. Malika said.

At another roadwork project in Bodidasanpatti village in Theni district NREGS workers S. Vidiyammal and T. Veerama explained that last year they worked only 25 days on NREGS projects, far below the 100 days promised by the policy. “Most years we only find about four months of work in agriculture,” they said. Five days of work per week and a salary of Rs.100 per day would make a big difference to their livelihoods, according to Ms. Veerama.

District authorities corroborate the significant positive benefits of the NREGS for rural labour. “The right to employment is in effect being implemented via the NREGS,” argued M.S. Shanmugham, District Collector, Thanjavur. The “guaranteed” element of the scheme has been understood well by the workers and “they even complain directly to me sometimes when they have been provided fewer days of work than they have requested,” Mr. Shanmugham said.

The administration in Tiruchi district reports a similar situation: “A large number of labourers in the district are demanding more than 100 days of work. In most such cases the workers have already completed 100 days of work and desire further employment,” says J. Dhanashekharan, Project Officer responsible for the NREGS in the District Rural Development Agency.

Given the sharp drop in agricultural production resulting from monsoon failure this year, the voices of the rural poor in Tamil Nadu districts are a clarion call for extending the NREGS. With drought or drought-like conditions in many districts the Government of India needs to rapidly consolidate and build further from its initial efforts to provide employment security to the rural workforce. In this context the recent proclamations by the Finance Minister that more than 100 days of employment will not be provided is a regressive step that could undo the progress made thus far towards reducing the vulnerability of the landless poor.

Labels: 100 days, agriculture, employment security, monsoon failure, NREGS, Thanjavur, Tiruchi

From The Hindu

CHENNAI: Variations in taking up the National Rural Employment Guarantee Scheme (NREGS) are being observed at the district level in areas such as Theni.

Geographical variations within Theni correspond to differential rates of taking up the scheme. The southern parts of the district such as the Cumbum valley are well irrigated due to their proximity to the Periyar river. The lush farmlands of this region, with crops such as paddy and coconut and vineyards, stand in stark contrast to the dry tracts of Andipatti to the north-east.

Implementation of the NREGS in Cumbum has been low, according to District Collector P. Muthuveeran. “In areas such as Cumbum and parts of Uttamapalayam there is agricultural work available throughout the year. In these regions, agricultural workers are relatively well-off and some of them own land.”

On the other hand, in Andipatti the implementation has been much stronger. The district administration’s efforts to boost employment under the NREGS are yielding results. In 2008-09, 317 works were sanctioned in Theni, of which 89 were completed.

With an expense of Rs.129.37 lakh, 841,900 man-days were generated, according to statistics provided by the Collectorate.

A text message that the Collector receives at 11 a.m. each day updates him on the number of workers at NREGS sites in the district. Recently the figure has been around 14,700, up from about 8,000 workers in November 2008, when he assumed office. “Over 105,972 people in eight blocks have registered for a job card and every week we are spending approximately Rs.54 lakh on the NREGS projects,” Mr. Muthuveeran said.

According to official data, 1044 families completed 100 days of work in 2008-09 and this figure is expected to more than double in 2009-10. The list of projects includes laying of roads, de-silting of rural tanks, strengthening of side bunds and deepening and strengthening of irrigation supply channels.

Though the daily wage rate under the NREGS has been fixed at Rs.80, on an average workers were paid in the range of Rs.61-75 per day, Mr. Muthuveeran admitted. The shortfall would, in most cases, be due to a lower level of work completed than that prescribed by the guidelines.

With the wage rate likely to rise to Rs.100 in the next few months, the implementation in areas such as Andipatti may be expected to rise further, according to Mr. Muthuveeran.

However in the Cumbum valley, where the wage rate could be as much as Rs.130 according to farmers in Theni, agriculture would probably continue to remain the primary area of employment for workers.

Labels: agriculture, Andipatti, Cumbum Valley, NREGS, rural labour, Theni

From The Hindu, with minor changes

CHENNAI: Labour migration from rural to urban centres and employment-focussed government policies such as the National Rural Employment Guarantee Scheme (NREGS) are having a noticeable effect on the supply of agricultural workers in farms across Tamil Nadu.

Districts such as Theni exemplify some of the complexities of these labour market effects. In the relatively dry Andipatti taluk, sugarcane farms and the attendant agri-business of sugar production in mills have until recently thrived. At Rajshree Sugars and Chemicals, the only sugar mill in Theni district, the annual quantum of sugarcane crushed grew at an average rate of 27.49 per cent between 1990 and 2005. Since 2006, however, it has on average fallen by 27.51 per cent annually. Why is this happening?

O. Ramaswamy, secretary of the Sugarcane Production Farmers Association in Periyakulam taluk, argues that labour migration from farms to NREGS sites has gained significant momentum. “Before the NREGS was implemented I had 25 workers on my farm, now only three workers turn up daily,” he said.

An important aspect of this phenomenon is that the workforce is predominantly female. Women are employed because they are more effective than men at jobs such as detrashing (removal of dry stalks and leaves from the main stalk), and men are twice as costly, according to Mr. Ramaswamy.

The unfortunate coincidence for sugarcane farmers and other cultivators is that the uptake of the NREGS schemes is also predominantly by women: approximately 90 per cent of the workforce on two sites that this correspondent visited in Theni comprised of women.

Mechanisation could be an alternative, according to G. Sathiyamoorthi, General Manager at Rajshree Sugars. Yet, progress in this regard has been modest given the small size of farm holdings and inertia with respect to traditional cultivation techniques.

As a result, the farmers face the choice of switching to less labour-intensive crops such as coconuts (not always feasible given the low irrigation levels) or ceasing farming altogether. Farmers in the region have been petitioning the government to either run NREGS works during their off-season months or include farm work within the scope of NREGS (albeit paying the workers directly as is the current practice).

P. Rani, the head of a self-help group in Lakshmipuram village and a worker on an NREGS irrigation tank project, argued that detrashing is a difficult job. Mr. Sathiyamoorthi concurred, admitting that sugarcane detrashing could be a back-straining eight-hours-a-day effort.
Given that the daily wage on the farms is the same as that at the NREGS site (Rs. 80), workers prefer the latter. District Collector P. Muthuveeran says that within Theni there is likely to be an increase in the daily wage rate under the NREGS to Rs. 100 in the next few months.

However, wage differentials go well beyond the NREGS and encourage, for example, migration within the region. District officials explained that in the better-irrigated Cumbum Valley, for example, it would be common for workers to get up to Rs.130 a day and to have work opportunities throughout the year. There are fewer opportunities available through the year in dry tracts such as Andipatti, and daily wages here rarely rise above Rs. 80.

K. Prahbakaran, a sugarcane farmer in Theni taluk, said farms were also losing out to textile mills. Textile mills in Tirupur are taking large numbers of women in buses from Theni villages daily to mill-sites.

Though they are paid low daily wages, after around three years of such work they are paid a sum in the range of Rs. 25,000 to 50,000. In urban centres such as Madurai, hotel waiters can earn between Rs.2,000 and Rs.2,500 a month besides about Rs.200 a day as tips.

Taken together, these factors generate a powerful labour displacement effect from (and where feasible, a wage-rise effect in) agricultural lands.

Labour migration is a consequence of economic opportunities emerging in urban centres, and the NREGS is a much needed poverty alleviating initiative that has almost directly put money into poor rural households. However the externalities associated with these factors have increased the risk of a fall in agricultural production and consequent inflation.

An interim subsidy for farm production and support towards mechanisation in the affected areas may be the best option at this juncture.

Labels: agriculture, migration, mills, NREGA, NREGS, rural labour, sugar, Theni, wage differentials