Macro Economy

From Modi To Sitharaman, The Total About-Turn On MNREGA

Praveen Chakravarty
February 15, 2021

In February 2015, Prime Minister Narendra Modi, in a speech in Parliament, ridiculed the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) program as a symbol of the policy failures of the previous United Progressive Alliance (UPA) government headed by Dr. Manmohan Singh and, in his typical coarse style, taunted that he would bleed the program to a slow death.

Exactly six years later, on February 12, 2021, Finance Minister Nirmala Sitharaman rose in Parliament and proudly proclaimed that the Modi government has implemented MGNREGA program the best and incurred the highest expenditure ever in its 15-year history. In her characteristic television debate panelist style, she mocked the Congress party for not being able to match such levels of spending for the program during its tenure in government. Even by the low standards of public rhetoric, the hypocrisy of the Finance Minister was stunning.

Politics apart, Sitharaman was right to be proud about her record MGNREGA expenditure. Under MGNREGA, every Indian is entitled to the right to toil and earn a paltry ₹ 200 a day. The program is designed to be self-selective and attract only those that are desperate for an income and have no other means to earn. During the Covid-19 lockdown, when hundreds of millions of workers were displaced and thrown in disarray, MGNREGA proved to be their bedrock of support. On average, on every single day of the year 2020, more than a million people queued up to ask for MGNREGA work across the country, the highest since the scheme came into existence in 2006. Soon after the lockdown was announced, the number of people asking for MGNREGA work jumped by 170%. 63 million people pleaded for work, just in the month of June 2020. To put that in context, it is 12 times more, than the total number of people employed by all the publicly-listed companies combined!

When millions of migrant workers were abandoned by Modi’s impulsive lockdown and forced to return to their villages, MGNREGA helped absorb this sudden surge in rural India by providing incomes to these expanding families. Despite the plethora of welfare schemes launched in the last decade, it was MGNREGA that the Modi government relied on for instant welfare support to the weaker sections during the pandemic. And the demand for MGNREGA work continues unabated, despite the re-opening of the economy after the Covid-19 lockdown. Boisterous claims of a “V-shaped” economic recovery apart, 35 million people asked for MGNREGA work just last month, a six-month high, signaling a lop-sided, unequal economic recovery.

If Modi had stuck to his 2015 bluster of bleeding MGNREGA to death, the nation may have experienced tremendous social strife and upheaval due to the lockdown. Tens of millions of people stranded suddenly with no work and income could have been a dangerous powder keg for social unrest and violence. MGNREGA proved to be a robust welfare safety net that also acted as a pressure valve during those trying times. It may be no exaggeration to claim that MGNREGA may have helped prevent riots and mutinies in our nation last year.

Yet, Modi was not alone in vilifying MGNREGA. Much before him, the program was reviled by much of the economic commentariat class and the stock market fraternity. Mint, the business news daily, in an editorial on February 6, 2014 claimed that “MGNREGA was a shoddy populist initiative of a myopic UPA leadership engaged in a clumsy effort to address rural discontent”. First, one should recall with fondness those glorious but now distant times when newspapers freely spewed strongly-worded, uninhibited editorials against the ruling government!

For nearly a decade after its launch, MGNREGA was incessantly pilloried by free market economists as a ‘dole’ for the poor that caused rural wages to rise without a commensurate increase in productivity. They castigated MGNREGA for turning India’s vast rural workforce indolent and lazy. Stock market analysts, egged on by corporates and investors, lampooned the program with exaggerated claims of rendering construction activities and other businesses unviable, due to rising labour costs. Economists that now serve in the Modi government recommended defunding the program in a discreet manner. Business Standard, another business daily, wrote reams of editorials blaming MGNREGA for rising inflation. I was an early sceptic too, primarily for the program’s seeming inefficiencies. But it is now evident that we were all wrong. MGNREGA serves an enormous social purpose in a highly unequal society such as India’s, something that most efficiency and productivity obsessed neo-liberal economists were blind to.

MGNREGA was conceptualised, designed and piloted in 2006 by the then National Advisory Council, a group created and led by Sonia Gandhi. Economist Jean Dreze, social activists Aruna Roy, Nikhil Dey and many others were the architects of the MGNREGA program, with support from the then UPA government. To be sure, debates such as the efficiency of a direct cash transfer program vis-a-vis MGNREGA are healthy discussions that are needed. But the manner in which the commentariat class derided and scoffed at MGNREGA as a social welfare idea now deserves a mea culpa.

If one accepts that MGNREGA proved to be the staunchest pillar of support for the nation during the lockdown, as Sitharaman herself acknowledges, and may have helped prevent Indian society from descending into utter chaos, then it is only appropriate that we doff our hat and pay gratitude to MGNREGA and its initial champions, regardless of one’s political preferences and biases. They are perhaps the true ‘nationalists’ for designing a program that helped hold the nation together in times of deep distress.

(Praveen Chakravarty is a political economist & a senior office bearer of the Congress party)

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