The
Common Minimum Programme did strongly foreground the
issue of employment generation and the necessity for
a pro-active public policy geared towards this all-important
objective. Yet the 2004-5 budget, the first budget
of the non-NDA coalition government reflecting its
actual macroeconomic priorities as against its own
popular rhetoric, has not addressed the issue of employment
generation at all.
Data
emerging at the end of the nineties showed the dismal
performance of the employment indicators over the
decade. Annual growth of rural employment was around
0.5 per cent per annum between 1993-94 and 1999-00
as compared to 1.7 per cent per annum between 1983
and 1993-94. The daily status unemployment rate in
rural areas increased from 5.63 per cent in 1993-94
to 7.21 per cent in 1999-00. (Dev, 2003) Growth of
agricultural employment which still accounts for more
than 60 percent of overall employment declined in
absolute terms over this period (see graph below).
Rural non-farm employment growth, where the large
number of residual workers from agriculture transit,
also showed slower employment growth (3.28 and 2.14
percent per annum during 1983-93 and 1994-2000 respectively).
The overall employment growth in the economy dropped
from 2.04 per cent during 1983-93 to 0.98 per cent
per annum during 1994-2000. Ostensibly, the strong
growth in the urban services sector failed to make
up for the tardy employment growth elsewhere in the
economy.
Chart
1 >> Click
to Enlarge
The deceleration in employment
growth was further reinforced by a sharp cutback in
public spending on rural employment programmes since
the mid-nineties. Dev (2002) notes the marked fall
in the share of rural employment programmes in center's
expenditure on social sector. As a percentage of GDP,
expenditure on both rural wage employment programmes
and special programmes for rural development, which
includes the traditional self-employment programme
Integrated Rural Development Programme and its new
incarnation Swarnajayanti Gram Swarojgar Yojana, declined
since the mid-1990s. Central Allocation on rural wage
employment programme came down from 0.40 percent of
GDP in 1995-6 to 0.13 percent of GDP in 2000-1, and
that on special programmes for rural development fell
from 0.08 to 0.03 percent of GDP. Official justification
for the cutback in public spending on these programmes
was sought in the shift in accepted paradigm among
the multilateral donors from traditional methods of
addressing poverty through employment generation to
basic needs intervention. Social sector expenditure
would henceforth be directed towards basic provisioning
of education, health, drinking water, while markets
could take care of employment generation. Of course,
the whole social sector would increasingly be treated
as residual that would absorb shocks on behalf of
fiscal disciplining.
The
initial three years of NDA rule were some of the worst
years to witness alarming declines in public outlay
on rural employment programmes in absolute terms (see
Table below). It was only in 2002-3 that the budgetary
allocation (BE) on wage employment programmes returned
to the 1998-9 level (crossed Rs 4,000 crore). The
severe all-India drought in 2002-3 and the natural
calamities affecting 12 states in 2003-4 forced a
revision of the budget for this head by substantial
amounts in both the years. This is reflected as adjustments
in foodgrain component and special component of Sampoorna
Gramin Rozgar Yojana in the revised statement of the
budget whereas the ex ante allocations (budget estimates)
did not respond to the increased demand for employment.[1]
Table
1 >> Click
to Enlarge
The
promise of 'assured 100 days employment to the breadwinner
in each family at the minimum wage' in the Common
Minimum Programme did raise expectations of reversal
of this regressive trend. But all that the budget
pronouncements have done is to promise to reify the
assurance through a formal legislation - the National
Employment Guarantee Act - in the future. The budget
has not made any extra allocations for 2004-5, over
what was announced in the interim budget. Even if
the entire sum of Rs.10,000 crores, the gross budgetary
support, be used in employment generation, it would
not be sufficient to guarantee 100 days of employment
to each family in need of employment in the country.[2]
And obviously, there are many many other assurances
in the budget that the sum of Rs 10,000 crore would
be expected to fulfill.
The 2004-5 budget has announced a new Food for Work
programme in 150 districts classified as most backward
and identified as areas in immediate need of such
a programme. This programme is to be funded by cutting
down allocations under the existing rural development
programmes. Targeting of public expenditure is a salient
feature of neo-liberal fiscal strategy, and the big
move towards this strategy in India was observed with
the transformation of public distribution system to
targeted public distribution system. The new Food
for Work programme without any budgetary provision
mirrors the same logic. Targeting spending towards
the poorest, a concept popularized by the World Bank
in the recent years, increases the benefit derived
from the same volume of public spending and therefore
maximizes the so-called efficiency of public spending.
More targeting then becomes consistent with less spending!
While the budget of 2004-5 proclaims an universal
employment guarantee, the present set of policies
on direct employment generation through public spending
forebodes an exactly opposite scenario with restricted
and targeted public spending. Let us not be mistaken
in thinking that this is the beginning of a major
turnaround.
References:
Dev, S. Mahendra and Jos Mooij (2002) ''Social Sector
Expenditures in the 1990s: Analysis of Central and
State Budgets'' Economic and Political Weekly, March
2.
Dev,
S. Mahendra (2003) ''Agriculture, Employment and Social
Sector Neglected, Economic and Political Weekly, April
5.
