Terms of Trade: So long, employment guarantee…

WBiddy this author decided to opt for an undergrad point in economic science in 2001, political economic system was the last thing on his mind. Political economy happened to me in Jawaharlal Nehru University (JNU), partly because of the academic training in what was one of the best heterodox economics departments in the country, and partly the political grounding thanks to my partaking in student activism there.To be sure, it was also a historical accident of sorts. I took my JNU MA entrance exam on 13 May 2004, the day the Atal Bihari Vajpayee-led National Democratic Alliance (NDA) government suffered a shock defeat in the national elections. By the time I landed as a student in JNU, there was a new government in power which was critically dependent on the support of more than 60 Lok Sabha MPs from communist parties.The commentariat, especially but not exclusively the Left-leaning one, had almost unanimously dubbed the NDA’s shock defeat to the ‘India Shining’ campaign, which was seen as a vulgar celebration of economic reforms despite large-scale distress in the economy, especially its rural half. While part of this strict attribution could be dubbed as problematic – India had suffered a large drought in 2002 and economic growth had just started picking up in the post-reform phase – there can be little disagreement with the fact that 2004 was an important truth and reconciliation moment for the relationship between economic reforms and India’s larger political economy. The political class drew the lesson that aggressively pursuing neoliberal agenda, without offering a palliative to the poor, was a sure shot recipe for political suicide.It was this environment that empowered a wider alliance between people’s movements, economists, communist parties and, most importantly, a powerful faction of the Congress party to push the agenda on welfare in the country. The Mahatma Gandhi Rural Employment Guarantee Scheme (MGNREGS) and the National Food Security Act (NFSA) were the most important tangible achievements of this wider alliance. To be sure, the latter materialised under the second and not the first United Progressive Alliance (UPA) government, which did not need the support of the communists.The NFSA, in a way, was more than a retrospective course correction by the Indian state, which had truncated the universal Public Distribution System (PDS) into a targeted one in the late 1990s, restricting subsidised food to the population officially defined as poor. It was this decision that made poverty lines a matter of academic scrutiny and public ridicule. Whether or not you were poor was a matter of absurdly low levels of daily spending levels. I still remember a professor of mine in JNU telling us in class that all the academics defending low poverty levels in India needed to be told that the poverty line was as low as the price of one bottle of water they would buy while doing their field surveys!What led to significantly more excitement in civil society and academia, however, was the MGNREGS, for the simple reason that it promised an employment guarantee. A simple extrapolation of this promise would defang the very basis of capitalist power, where labour has always been considered free to not get exploited but also free to starve should it exercise that option.The de jure provisions of the MGNREGS notwithstanding, one can claim with a reasonable degree of confidence that the MGNREGS’s actual impact on the ground has been much smaller than the revolutionary rhetoric around it. To be sure, small does not mean insignificant here. There is good reason to believe that MGNREGS did give a boost and subsequently a floor to rural wages, providing a support system for the weakest section of India’s workers. Of course, the MGNREGS cushion and support-system varied across states in keeping with the local political economy, something both activists and the government have pointed out using data from the scheme.The debates around the implementation of MGNREGS have also seen one of the widest participation of the larger economics fraternity in India. Hundreds, perhaps, thousands of economics students, teachers, activists worked the fields along with the multimillion-strong MGNREGS workforce to assess the scheme’s efficacy or lack of it in the remotest and poorest parts of the country. Many such students, going by this author’s personal experience, have gone on to do things which have nothing to do with rural India or the poor who inhabit these places. However, they are bound to have taken those learnings with them in the opulent spaces they now work and live in. It would not be an exaggeration to argue that the MGNREGS also guaranteed a conscience to many students of economics along with its guarantee of blue-collar jobs on rural worksites.At a time when the Narendra Modi government has finally decided to significantly dilute; from demand side to supply side and central funded to state funded, the MGNREGS’s provisions by replacing it with the Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) – one can say that it perhaps took 11 years to bite the bullet – what is one to make of the decision?The answer that has found a large resonance in the cohort representing the larger alliance, which pushed for things such as MGNREGS and NFSA, suggests a neoliberalism and déjà vu moment in India’s history. After all, here is a government which has notified the four labour codes and then diluted the rural employment guarantee scheme in less than a month.A more honest answer however, requires a deeper introspection. The existing economic regime in India could not be more different from what prevailed in the 1990s when governments were neither capable nor interested in protecting India’s welfare architecture outside a small clique of workers in the public sector. Not only is the food safety net much larger than what it was during the targeted PDS in the late 1990s, there are also other kinds of welfare provisions being offered by both the center as well as the states via myriad cash transfer and centrally sponsored schemes. In other words, the Indian state is more pragmatically than dogmatically neoliberal today where its offerings to capital are anything but oblivious to the concerns of preserving political capital. A lot of this spending has been made possible by the (revenue) fruits of so-called neoliberal growth.One will have to wait for how much money the center expects to save in MGNREGS when the budget is presented in February (or the revised estimates next February). But what should be striking is the fact that no spontaneous protests have erupted over the dilution of the MGNREGS unlike what was the case with say, the three farm laws proclaimed via an ordinance route in 2020. But then, lack of organic political traction, or shall one say, weaponized political traction, for the MGNREGS from below is not entirely new or surprising. While its moment dramatis came in the 2020 Bihar elections when an MGNREGS worker was put up as a candidate in the assembly elections and did very poorly, the larger truth is that MGNREGS workers have never been organised as a potent political force by either political parties, or civil society or interest groups such as say, farmers and trade unions.This lack of political strength of MGNREGS workers is not something very difficult to explain. They are among the most vulnerable in the society and also take up jobs under the scheme to seek relief from duress rather than make a fortune or even a living. MGNREGS in the rural economy is more an SOS medicine than an active nutrient in the diet. Unless there is a widespread trauma in the economy – as was the case during the pandemic – a large-scale revolt against a withdrawal of the pain killer’s availability is unlikely irrespective of the anxious commentary by the people, mostly civil society elite, who helped build it. What has made the protest even more unlikely is the fact that India’s poor now have a federal platter of palliatives than just an MGNREGS which is what was the case when the scheme was first enacted.Let me now circle back to the personal anecdote I began this column with. A young student beginning their engagement with political economy starting today would read the angry, anxious and alarmist commentary over the MGNREGS’s dilution but fail to see the corresponding political traction for it which is what my generation saw in the 2004 election results. In fact, the near political unanimity over handing out cash transfers before state elections is likely to convince the discernible political economy observer today that the political regime is more committed to welfare than ever in the transactional sense even if it is seen as weakening its promise of “employment guarantee” in the larger constitutional sense.Make no mistake. Even the increased welfare offerings do not offer what one of the best heterodox economists in India called “Development with Dignity” in a monograph which was published at the peak of debate during MGNREGS’s enactment. Unless India manages to catapult its growth to higher than current levels for a sustained period, it runs the risk of getting trapped in a lower-middle income trap which will make things much more difficult once our demographic dividend window crosses a critical point on the wrong side.In 2004, it was radical to tame the neoliberal economic policy horse and make sure that it did not run away without the cart of well-being, or rather survival, of the millions of have-nots. The horse which was tamed back then, has never been able to unbolt, as is evident from the centrality of economic palliatives in politics, notwithstanding some sort of rejigging of priorities.The more important question to ask today is, can this horse be made to run faster without it necessarily unbolting from the proverbial democratic cart. Answering this question effectively and honestly requires deploying a more critical lens on the post-2004 period in Indian political economy as a continuum in the dialectics between political legitimacy vis-à-vis capital and labour rather than a one-off coup d’état which happened in 2014 which is what a lot of the progressives often allege.In terms of political praxis, it will need casting the net wider than the proverbial wretched of earth which is what the universe of the MGNREGS workers captures. The challenge is intellectually and politically more difficult to solve. But solve it we must if India has to continue its forward march of history. The progressives, whether in academia or politics, must think about this challenge rather than staying wedded to the cause of, what I would call, an obsolete even if historically progressive moment in Indian political economy which is what the enactment of MGNREGS marked.