NEW DELHI: India’s government is moving to keep a risky promise of guaranteed jobs for millions of rural poor despite warnings that it can’t afford a multibillion-dollar welfare programme.
A national rural employment bill, which guarantees at least one worker in each household at least 100 days of manual labour a year, passed the lower house of Parliament. The upper house is expected to approve it in the coming weeks.
Economists estimate that Prime Minister Manmohan Singh’s government will have to spend $9 billion annually on wages, materials and oversight of the programme; India’s budget this year is $120 billion.
The jobs bill promises rural workers a minimum wage of around $1.40 a day for work on development projects, such as building roads, planting trees or digging irrigation canals. The government says it will pay the same amount in welfare to any of the workers who can’t find employment.
It plans to employ up to 25 million people in the programme, which will start in about 200 districts and expand to the remainder of the nation’s 600 districts within five years.
Previous governments have tried similar make-work projects at least four times since independence from Britain in 1947, and each effort got bogged down in corruption and bureaucratic mismanagement.
D. H. Pai Panandiker is one of many Indian economists who doubt things will be different this time. “They have not spelled out where the money is going to come from,” said Panandiker, who heads the RPG Foundation, a private think-tank in India. “I have a fear that if the money is coming out of the [current] budget, it could lead to inflation. The deficit will be too high.
“And the second problem is whether the delivery system will be effective enough to ensure the money goes to the right people.”
In a nation of more than 1 billion people, the number who live in the countryside tops 700 million. Roughly 350 million live in severe poverty.
The government has promised to cut that number with its work programme, although paying employees $1.40 for 100 days won’t push participants above the $365 yearly income mark widely regarded as the poverty line in many developing nations.
“I cannot say that rural areas will turn into heaven,” said Rural Development Minister Raghuvansh Prasad Singh. “But I can assure that the standard of living will definitely improve and our effort will be that no one should be below the poverty line.”
The government will soon introduce another bill to guarantee jobs for millions of workers in cities, the minister told Parliament.
The prime minister has set the ambitious goal of eradicating poverty in India by 2020. Economists can’t see how he’ll pay for it. The federal government is already running a huge budget deficit, estimated at 4.5 per cent of the gross domestic product. By comparison, the US budget deficit is around 3.5 per cent of GDP.
Over the next three years, the World Bank will lend India up to $3 billion to help improve rural infrastructure.
Most of the money will go to state governments. Manmohan Singh’s government says it needs $100 billion in public and private investment over the next seven years to upgrade decrepit power grids and transportation infrastructure.—Dawn/LAT-WP News Service
