Do not expect this government to muster the moral and political resolve required to undertake large redistributive expenditures for India’s poor masses
Villagers working at pond construction project under a NREGA at Niredh village in Latehar district. The seismic distress created by demonetisation is likely to result in a continuing surge for wage work in NREGA. (Manoj Patil/HT Photo)
This article was first published in the Hindustan Times on the 02nd February, 2017
Because of the massive devastation wrought by demonetisation of the already fragile and low-end livelihoods of informal workers, small farmers and petty businesses, many commentators anticipated that the budget would include some dramatic and high-visibility pro-poor declarations. The high-stake political elections in five state assemblies created further incentives for populist announcements, if not substantial budget transfers, to India’s impoverished workers and farmers.
However, there has been a consistent pattern with pro-farmer and pro-poor claims in past budgets of Finance Minister Arun Jaitley. Once these were scrutinised closely, we found that the promises were empty and misleading. I expected that this was what we would see again in the 2017 budget.
I was surprised that there were surprisingly no big-ticket redistributive budget declarations. One that did seem to carry some promise was what was touted to be the ‘highest ever’ allocation of 48,000 crore rupees for the Mahatma Gandhi NREGA. This was of course the programme which Prime Minister Modi had famously caricatured as a ‘living monument’ to decades of Congress misrule. But I was not wrong about the economising with truth about what the budget actually delivered to the poor.
Last year’s initial budget allocation for NREGA was Rs 38,500 crore. Against this there seems at first a significant 25 % rise. However, the reality is that after a series of severe raps from the Supreme Court, during the course of 2016-17, the total allocations were raised to Rs 47,500 crore. Therefore, it was a mere Rs 500 crore that was added over the previous year, a rise of just 1 %. And if we factor in inflation, this year’s allocation does not even match that of the previous year.
What is more, as activists of the People’s Action for Employment Guarantee calculate, 22 out of 34 states today have pending liabilities of pending wages, whereas this year’s allocations are almost exhausted. With two more peak months of work still remaining, they estimate that the new financial year would begin with pending liabilities of at least Rs 13,000 crore, reducing further the availability for next year.
The seismic distress created by demonetisation is likely to result in a continuing surge for wage work in NREGA, and the government is bound by the law to provision as many resources as is required to fulfil this demand. The truth of the government providing in real terms less than its expenditure in the past year leaves no scope for optimism. As impoverished rural Indians will struggle to survive recessionary conditions in the economy – comparable to a creeping famine – created by the policy of demonetisation, even the elementary social security extended by NREGA will be not be available in sufficient measure to provide them succour.
I am anguished, but not surprised. Even with its back to the wall, I don’t expect this government to muster the moral and political resolve required to undertake large redistributive expenditures for India’s poor masses. To do so would entail the government to tax big business more, with an inheritance tax, or higher corporate and wealth taxes, or to reduce significantly the many tax exemptions and subsidies to the rich. But to do so would run entirely against its ideological grain.