53

Chapter-III

DEVELOPMENT GOALS OF INDIA AND ACHIEVEMENTS

Indian economy has emerged in recent years as one of the fastest growing

economies in the world. Tenth Plan period (2002-07) attained 7.2 per cent GDP against

the targeted 9 per cent and during Eleventh Plan period (2007-2011) the present rate of

achievement is 8.2 due to global recession.17 The main growth drive of India is its large

size population in the working age group (42.2%). However, this advantage has not

been exploited fully so far due obstacles like malnutrition, lack of employment

opportunities, illiteracy and poverty among the rural community. Further, India

continues to maintain the 119th rank out of 169 countries in terms of human

development for the third year in a row. 18 It has been ranked as the 12th largest

economy by the World Bank in terms of its Gross Domestic Product (GDP) at $785.47 bn

in 200519. The contrast is stark and warrants concerted action on the human

development front. The Millennium Development Goals (MDGs) serve as an effective

benchmark of the country’s performance on the human dimension front. The Planning

Commission aims to develop the plans to achieve the set goals. The Government of

India claims that the country is on the right track to meet the MDG targets by 2015.

The status development goals of India set by the Planning Commission and as a

part of Millennium Development is briefly discussed in this chapter. Further various

wage employment programmes that were implemented since independence are

reviewed to identify the challenges in implementation of those programmes and need

for MGNREGA is discussed in this chapter.

17 ABC live, “India aims at 9.5 per cent GDP growth at in 12th Five-Year Plan”, April 21, 2011 retrieved from http://abclive.in/national/national/239-india-gdp-12th-five-year-plan.html 18 UNDP, Human Development Report 2010:Real Wealth of Nations: Pathways to Human Development, 2010, Fact sheet retrieved from http://hdr.undp.org/en/media/HDR_2010_EN_Cover.pdf 19 http://mail.theindianamerican.com/america.php?start_from=920&ucat=&archive=&subaction=&id=&

54

3.1. GOALS OF DEVELOPMENT PLANNING AND MILLENNIUM DEVELOPMENT

Even before independence, the colonial government had established a Planning

Board that existed between 1944 and 1946. India's leaders adopted the principle of

formal economic planning soon after independence as an effective way to intervene in

the economy to foster growth and to achieve social justice. The Planning Commission

was established in 1950. The Planning Commission is responsible for preparation of

Five-Year Plan documents with set goals and getting approval of National Development

Council (NDC) and the Parliament for its operationalisation. Since independence, the

country witnessed Five Year Plans and Eleventh Five Year Plan is due to end by 2012.

The achievements of these plan periods can be judged in terms of reduction in poverty,

unemployment and underemployment.

3.1.1 Development planning for reduction of poverty, unemployment and

underemployment20

First Five-Year Plan (1951-56): At the time of independence in 1947, agriculture and

allied sectors provided well over 70 per cent of the country's employment and more

than 50 percent of the gross national product. The 1st FYP focused, mainly on the

agrarian sector, including investments on dams and irrigation works, land reclamation,

promotion of animal husbandry and other sectors and revival of rural industries. It laid

more thrust on utilising the available labour force productively to tackle the twin

problems of enhancing the supply of goods and services and rising the living standards

of people.

Second Five-Year plan (1956-61): The promotion of non-agricultural activities was

conceived as one of the measures for reduction in underemployment in the primary

sector. It is also to be noted that the first two FYPs laid sufficient emphasis on public

works programmes to create employment opportunities during the lean agriculture

seasons while creating and strengthening the capital stock in rural areas. Despite these

20 Extracts of various Five-Year Plan Documents, retrieved from http://www.planningcommission.nic.in/plans/fiveys/welcome.html and http://indiaonline.in/Profile/Economy/PlanningCommission/Five-Year-Plans.aspx

55

measures, the backlog of unemployment continued and in fact it had gone up rightly

addressed the issue of maximising the use of labour force through proper mobilization

of the existing resources at minimum social cost. It also attempted to increase the

labour productivity in order to offer employment at reasonable wage levels.

Third Five-Year Plan (1961-65): The third plan called for national income to grow at a

rate of more than 5 percent a year; self-sufficiency in food grains was anticipated in the

mid-1960s. The high rate of growth of population complicated the problem of

unemployment. Various studies show that the underemployment might be of the order

of 15 to 20 millions21. The Third FYP expected to generate employment for 3.5 and 10.5

million people in agriculture and non-agriculture sectors respectively. The development

strategy had three components viz., generation of employment, promotion of rural

industrialisation and effective use of rural works programmes. Rural electrification was

taken up to promote Rural Industries. Due to its limited scope and its various

organisational and administrative deficiencies, it did not make any significant impact on

the problem of unemployment in rural areas.

Fourth Five Year Plan (1969-1974): The strategy and policy of direct attack on poverty

by way of target approach for the rural poor came into being in this plan period.

Towards this end, many wage employment programmes were being implemented in the

rural areas with the main objective of improving the asset base of the poor and to

involve the poor in the production and income generation processes. The Fourth Plan

reiterated its commitment to create gainful employment on a larger-scale and in the

process increased the tempo of agriculture development. A shift in the investment

pattern, from urban to rural and capital-intensive to labour–intensive sectors and sub-

sectors was contemplated. In that notion Crash Scheme for Rural Employment (CSRE)

envisaged.

Fifth Five-Year Plan (1974-1979): One of the objectives of this plan period was to create

employment opportunities on a large scale in agriculture and allied sectors, which were

21 George, P T, K N Raju (1980), “Rural Employment, Review of policies and programmes”, National Institute of Rural Development, Hyderabad, p.60.

56

more diversified and dispersed in nature. It recognised that the growing labour force

needs to be accommodated in agriculture and held the view that technological

breakthroughs could increase the scope for intensive agriculture. The various special

programmes under the framework of Integrated Rural Development (IRD) were

expected to generate voluminous employment. To utilise the buffer stocks of food

grains as wages, the Food for Work Programme was conceived in 1976-77. The

performance of these programmes was discussed in section 2.3.

Sixth Five-Year Plan (1980-85): The growth of labour force was found to be higher than

the growth rates of population and employment. About 108 millions were expected to

enter newly the labour market during 1980-85. The goals of employment policy were (a)

reducing open employment and (b) reducing underemployment by increasing rate of

growth of gainful employment. It identified agriculture, rural development, village and

small-scale industries and construction as key sectors for offering additional

employment. Agriculture and allied sectors estimated to generate about 50 percent of

employment. The sixth plan also marked the beginning of economic liberalisation. Price

controls were eliminated and ration shops were closed. This led to an increase in food

prices and an increase in the cost of living.

Seventh Five-Year Plan (1985-90): The Plan expected a growth in labour force of 39

million people and employment was expected to grow at the rate of 4 percent per year.

Keeping this in view, the employment strategy emphasised increased cropping intensity,

diffusion of technologies in rain-fed and low productive regions, promotion of labour–

intensive infrastructure activity etc. During the plan, 20 percent of the allocated funds

are to be earmarked for social forestry and 10 percent earmarked for the works directly

benefiting SCs and STs in backward areas with predominant population of unemployed

and landless labour. Jawahar Rozgar Yojana (JRY) was commenced to mitigate the

seasonal employment.

Eighth Five-Year Plan (1992–1997): The objectives of eight FYP included reduction in

population growth, poverty and unemployment. A shift from relief type of employment

to building up of durable productive assets was the employment generation strategy. It

57

aimed at generation of 10 million person years of employment every year during the

plan period. During this plan period JRY was again restructured in 1996. An average

annual growth rate of 6.7 per cent against the target 5.6 per cent was achieved.

Ninth Five Year Plan (1997-2002): The ninth FYP ran through 1997 to 2002 with the

main aim of attaining objectives like speedy industrialisation, agriculture and rural

development, human development, full-scale employment, poverty reduction, basic

infrastructural facilities like education for all, safe drinking water and primary health

care and self-reliance on domestic resources to prioritise agricultural sector and

emphasise on the rural development.

Tenth Five Year Plan (2002-2007): The main goals of this plan period were reduction of

poverty by 5 percentage points by 2007; Providing gainful and high-quality employment

at least to the additions to the labour force; Increase in wage rates by at least 50 per

cent by 2007 and attaining 8 per cent GDP growth per year.

Eleventh Five-Year Plan (2007–2012): The targets set during this period are acceleration

of GDP growth from 8 to 10 per cent in order to double per capita income by 2016-17;

Increase in agricultural GDP growth rate to 4 per cent per year to ensure a broader

spread of benefits; Creation of 70 million new work opportunities; Reduction of

educated unemployment to below 5 per cent; Raising real wage rate of unskilled

workers by 20 percent; and Reducing the headcount ratio of consumption poverty by 10

percentage points are some of the targets of Eleventh Five Year Plan. In addition to

these, the government has put some targets under Millennium Development Goals to

reduce the poverty and unemployment.

3.1.2 Targets and Achievements of Millennium Development Goals22

The First Country Report on the MDGs (Millennium Development Goals-India

Country Report, 2006) captured India's achievements, challenges and policies with

reference to the goals and targets and revealed that there had been substantial

improvements in the lives.

22 Jocob K S (2010), Millennium Development Goals and India, The Hindu, 20 October.

58

To achieve the ‘eradication of extreme poverty and hunger’ (Goal-1) in India, the

proportion of people below poverty line must be reduced from nearly 27.5 percent in

2004-05 to about 18.75 by 2015.

Goal-7 aims at ensuring environmental sustainability. As per assessment made in

2003, total land area covered under different forests was 20.64 per cent due to

Government's persistent efforts to preserve the natural resources. The reserved and

protected forests together accounted for 19 per cent of the total land area to maintain

biological diversity. The proportion of population without sustainable access to safe

drinking water and sanitation is to be halved by 2015 and India is on track to achieve

this target. Hence, it is important to know the status of poverty and unemployment

during different plan period at national and state level.

3.2 STATUS OF POVERTY AND UNEMPLOYMENT IN INDIA AND ANDHRA PRADESH

Poverty in India is not merely an economic phenomenon but a social one as well.

The recent body of literature highlights the multidimensionality of poverty and the

heterogeneity of the poor. It also highlights the need to go beyond income poverty by

using indices of human development and overall welfare. While defining poverty, it

needs to take into account other aspects of life, employment, wages, assets, health,

education and other basic needs, which are essential for a quality of life.

3.2.1: Poverty status in India and Andhra Pradesh

Table 3.2.1: Number of Persons Below Poverty Line in India (1973-2004) (In millions)

S.No Years Andhra Pradesh* All India

Rural Urban Combined Rural Urban Combined

1 1973-74 176.21 (48.41)

49.48 (50.61)

225.69 (48.86)

2612.9 (56.4)

600.5 (49.0)

32134 (54.9)

2 1983-84 114.34 (27.31)

50.24 (37.49)

50.24 (29.75)

2519.6 (45.76)

709.4 (42.27)

3228.9 (44.93)

3 1993-94 79.49 (16.64)

74.47 (37.63)

153.97 (22.30)

2440.3 (37.26)

763.4 (32.56)

320.37 (36.02)

4 2004-2005 64.70 (11.2)

61.40 (28.0)

126.10 (15.8)

2209.2 (28.3)

807.9 (25.7)

3017.2 (27.5)

Source: * Human Development Report (2007), Andhra Pradesh, Table No.4.5, pp 40 ** Planning Commission, Eleventh Five-Year Plan Volume III, Table 4.2 Reports,

Figures in parentheses are in percentages

59

For the study purpose, the data pertinent to Rural India and Rural Andhra

Pradesh is considered. The incidence of poverty is measured by the head count ratio

(hcr). From the Table 3.2.1 it is clear that during the 11 years period ending with 2004-

05 rural poverty declined at the rate of 0.8 per cent per annum. Overall, the number of

the poor in rural areas in the country as a whole declined from 2613 million in 1973-74

to 2209 millions in 2004-05 i.e. by just 40.4 million people over a 31 year period. That

means the rate of decline in the number of the poor was 1.3 million per year. There was

deceleration in poverty decline in early 90s. Andhra Pradesh shows that there was a

remarkable reduction in rural poverty which reduced from 48.4 per cent during 73-74 to

11.2 per cent in 2004-05. On the other hand, urban poverty declined from 37 per cent

to 28 per cent during the same period. As in the rest of the country, poverty in the state

significantly dropped from over 30 percent in 1990 to 21.8 per cent in 2004. The World

Bank's (2005)23 estimates show that 80 per cent of India's population lives below the

international poverty line of $2 a day. According to Suresh Tendulker Committee,24

report about 37.2 per cent (40.71 crore) people live below poverty line in India.

About half of the poor are chronic poor in rural and urban India (1999-00). The

poverty and chronic poverty estimates are 28.7 and 13.6 per cent respectively in rural

India. In Andhra Pradesh, these ratios are 11.2 and 4.8 respectively. Nearly 19 per cent

of agricultural labourers, 13.6 per cent non-agricultural labourers and 9.3 per cent of

cultivators are

chronic poor at

national level

where as in Andhra

Pradesh 5.5 per

cent of agriculture

labourers, 7.5 per

23 Retrieved from http://en.wikipedia.org/wki/Poverty-in-India 24 GoI (2009), “Report of the expert group to review the methodology for estimation of poverty”, Planning Commission, Government of India, November.

60

cent of non-agriculture labourers and 2.1 per cent of cultivators are chronic poor. This

suggests that economic instruments may not be sufficient for eradicating poverty and

their efficacy tends to reduce with poverty reduction in the states with high incidence of

poverty among social groups (Radhakrishna et al. 2007)25.

Table 3.2.2: Social group wise and occupation wise distribution of poor (2004-05)

Occupation

Rural India (in %) Rural Andhra Pradesh (in %)

ST SC Others All ST SC OBC Others All

Self-Employed in non-Agriculture

5.3 14.1 17.1 14.4 4.6 10.7 12.9 13.0 10.2

Agricultural Labour

40.9 50.6 30.4 37.6 44.3 55.4 39.9 42.9 45.9

Other Labour 13.1 15.4 10.3 12.1 9.3 12.2 9.9 9.2 10.3

Self-Employed in Agriculture

38.0 16.5 36.6 31.4 32.8 13.0 26.2 24.5 23.8

Others 2.7 3.5 5.6 4.5 8.9 8.7 11.1 10.4 9.8

All 100.0 100.1 100.00 100.0 100.0 100.0 100.0 100.0 100.0

Source: NSSO, Unit level data, 2004-05.

Occupation wise, poverty levels were higher among agriculture labourers and

self-employed in agriculture who constituted about 3/4th of total poor in rural India.

The Table 3.2.2 clearly indicates that agriculture labourers are much more deprived in

Andhra Pradesh than in other states. More than 1/3rd and about half of the agriculture

labour households constituted the rural poor at national and state level respectively.

The share of self-employed in agriculture among the rural poor is 32 per cent national

level but it is 24 per cent in A.P. The poverty among other labourers and among all social

groups is higher in Andhra Pradesh than at national level which indicates the possibility

of participation of these labourers in MGNREGS due to higher wage rates.

25 Radhakrishna, R, K Hanumantha Rao, C Ravi, and B Sambi Reddy (2007), “Estimation and Determinants

of Chronic Poverty India: An Alternative Approach”, Indira Gandhi Institute of Development Research, Mumbai, Working Paper (WP) October.

61

Table 3.2.3: Percentage of population Below Poverty Line by Social Group (Rural) -2004-05

(%)

1993-94 2004-05

State SC ST OBC SC ST OBC

Andhra Pradesh 26.0 25.6 NA 15.4 30.5 9.5

All –India 48.1 51.9 NA 36.8 47.3 26.7 Source: Planning Commission, Eleventh Five-Year Plan Documents, Volume III, Table 4.4, 2008b

Among all social groups, SCs, STs and Other Backward Castes accounted for 80

per cent of the rural poor in 2004-05, considerably more than their share in the rural

population (Table 3.2.3). The Sachar Committee Report (GoI 2006) provides poverty

ratios across socio-religious categories. In their estimates for A.P one can see the

differential levels of poverty for different groups. The incidence of poverty fell

considerably among SCs (from 26% to 15%) from 93-94 to 2004-04 whereas the

incidence of poverty increased among the STs as per A.P. HRD Report 2007. At national

level, the incidence of poverty among STs had fallen from 51.94 per cent in 1993-94 to

47.3 per cent in 2004-05. The proportion of ST population among the rural population

living in poverty has been increasing fast. The increase was mainly because of

comparatively slower reduction in the incidence of poverty among scheduled tribes

((Planning Commission, 2008a)26.

Table 3.2.4: Poverty Lines of A.P and India – Rural (Rs. Per Capita Per Month)

State 1973-74 1983-84 1993-94 1999-2000 2004-05

Andhra Pradesh

41.7 72.7 163.02 262.94 292.95

All-India 49.63 89.5 205.84 327.56 356.30 Source: Various NSSO reports.

Note: Official poverty lines for 1999-2000 were updated for each state using commodity-wise

CPIAL for rural areas and CPIIW for urban areas following the Expert Group Method (1993).

26 Planning Commission (2008b), “Eleventh Five Year Plan (2007-12), Volume III, Agriculture, Rural development, Industry, Services and Physical Infrastructure”, Planning Commission, Government of India, New Delhi, Oxford University Press, pp. 79-103.

62

These poverty lines are estimated using the original state-specific poverty lines

identified by the Expert Group and updating them to 2004-05 prices using the Consumer

Price Index of Agricultural Labourers (CPIAL). The poverty line for Andhra Pradesh was

Rs.163 during 93-94 and it enhanced to Rs.292.95 during 2004-05 against the national

poverty line of Rs.356. This is mainly due to higher subsidies on food grains in the state

(Table 3.2.4).

3.2.2 Unemployment Scenario in India and Andhra Pradesh

Table 3.2.5: Distribution rural population and its growth rate (Millions)

State 1971 Growth rate (%)

1981 Growth rate (%) (from 71-81)

1991

Growth rate (%) (from 81-91)

2001 Growth rate (%) (from 91-01)

2011 Growth rate (%) (from 01 to 11)

A.P. 35.1 - 41.08 16.98 48.5 18.12 55.22 17.9 55.40 3.26

India 438.86 - 525.5 19.73 626.9 19.3 741.0 21.54 742.79 2.42 Source: Various Census reports

The rural population growth was lower in A.P. than at national level during the

last thirty years. The census 2011 indicates that 7.46 per cent of total rural population

lives in Andhra Pradesh and growth rate of rural population was marginal both at

national and state level (Table 3.2.5).

Table 3.2.6: Distribution of estimated number of rural households and growth rate millions

State 1974-75

1983-84

% age growth

rate (over 74-

75)

1987-88

% age growth

rate (over 84-

85)

1993-94 % age growth

rate (over

87-88)

% age growth

rate (over 75-75 to 93-

94

2004-05*

% age growth

rate (over 93-

94)

A.P 7.456 9.456 26.82 10.145 7.29 110.490 12.46 53.02 13.77 24.63

India 82.61 100.555 21.72 108.35 7.75 119.53 10.32 44.70 165.23 25.63 Source: Rao K H (2000), “Changes in the structure of employment in rural areas”, NIRD, pp. 36 and 41. Source: * from NSSO 61st Round

But the number of rural households increased significantly with a decadal

growth rate of around 25 per cent both at state and national level (Table 3.2.6). This is

mainly due to fragmentation of households and increased number of nuclear families.

63

The rural workforce was categorised according to nature of employment. A gradual shift

from casual wage employment to salaried employment was visible both at national and

state level. This was mainly to escape unemployment and underemployment situations.

Table 3.2.7: Distribution of rural workforce according to nature of employment (PS+SS) (%)

Nature of Employment

India A.P.

193-94 2004-05 1993-94 2004-05

Self-employed 58.0 60.2 47.5 47.9

Salaried wage 6.4 7.1 5.2 7.2

Casual wage 35.6 32.8 47.3 45.0

Workforce 100.0 100.0 100.0 100.0 Source: 55th and 61st Round NSSO Employment and Unemployment Survey reports

Further, a comparison workforce distribution between India and AP made and

presented in Table 3.2.7 that indicates high work participation rate in A.P. with a

workforce of 40 million workers during 2004-05. Apart from numbers, the quality of

employment is a cause of concern. All those who were working might not be able to

earn reasonable level of income due to lower wage rates, seasonality, job insecurity,

illiteracy, occupational hazards etc. Moreover, disguised unemployment might still be

prevalent in Andhra Pradesh as in India. About 94 per cent of workforce in the state was

in the unorganised sector (GoAP 2008)27. About 39.4 per cent in the state and 32.8 per

cent of workforce at national level are characterised as casual labour and vulnerable to

uncertainties in labour market.

Table 3.2.8: Estimation of unemployment rates in rural areas (CDS basis)

(%)

State 87-88 93-94 04-05 07-08 87- 88 93-94 04-05 07-08

Male Female

A.P 4.9 5.9 10.0 8.3 9.4 7.0 12.2 9.2

India 4.6 5.6 8.0 8.5 6.7 5.6 8.7 8.1 Source: Rural Development Statistics, NIRD of various years

27 GoAP (2008): “Human Development Report 2007: Andhra Pradesh”, Centre for Economic and Social Studies and Government of Andhra Pradesh, Hyderabad, May, p 53.

64

The labour force will increase by 520 lakhs during the 11th plan period based on

the growth of working age population. So, India has to provide employment to around

1000 lakhs people who mostly live most of them in rural areas28. According to the

Planning Commission assessment, India cannot provide full employment but may to

generate employment to 650 lakhs people to bring down the unemployment rate (CSE

2006).29Table 3.2.8 indicates the (estimated) higher unemployment rates in the state

than at national level for the last four decades. This higher rate of unemployment in

CDS measure indicates prevalence of high seasonal unemployment. Further,

unemployment rate among female is higher than that of male. This is important to note

that the unemployment rate increased during last decade both in Andhra Pradesh as

well as in India. The unemployment rate for males in the labour force of rural India is 85

person days per thousand person days and 81 person days per thousand days in respect

of females (NSSO).30

Table 3.2.9: Average number of days of employment per rural worker: Sex-wise

S.No State 2004-05

Males Females

1. Andhra Pradesh

213 200

2 All India 212 191 Source: 61st Round NSSO Report No 515, Employment and Unemployment situation in India,

July 2004-June 2005

Table 3.2.9 indicates that the employment days for male were marginally higher

compared to female at the state level. The days of employment for both male and

female were less than the required both at state and national level. Hundred days

employment under MGNREGS provides additional 25-30 days of employment to each

adult member of household with 3-4 workers. The decline in unemployment rates

during 2007-08 was mainly due to implementation of MGNREGS in the state.

28 GoI (2008), “Eleventh Five Year Plan Document (2007-12), Inclusive Growth”, Planning Commission, Government of India, Volume 1, Chapter IV, p 75. 29 CSE (2006), “National Rural Employment Guarantee Act: Opportunities and Challenges” Centre for Science and Environment, New Delhi, p.5. 30 NSSO (2008) “64th Round NSSO” Report No 515, Employment and Unemployment situation in India, National Sample Survey Organisation, Government of India, July 2007-June 2008.

65

Table 3.2.10: Average wage earning of casual labour in rural areas (Rs./day)

S.No State /UT 2004-05 2007-08

Male Female Male Female

1. Andhra Pradesh

56.21 33.33 81.69 55.02

2. All India 59.29 37.97 75.30 51.17 Source: NSSO, Report No. 522, Employment and Unemployment Situation in India,

62nd Round, July 2005–June 2006.

Though the average daily wage earning increased, the decline in the growth rate

of real wages is a cause for concern. Growing rural wages in real terms is one of the key

determinants of poverty reduction in India. It is a major challenge to provide livelihood

security to the vast number of workers with low productivity and low wages in country.

To summarise that out of 302 million poor, 75 per cent are in rural areas. The

high incidence of poverty is directly related to prevalence of under and unemployment

on large scale. The rural workforce continues to suffer due to excessive seasonality of

employment, lack of wage employment opportunities and low wage rates. Migration of

labour, discrimination between wages paid to men and women, distressed child labour

etc. are therefore, common features of rural areas. To eradicate the problems of rural

unemployment and underemployment a multi-pronged strategy is required. The

strategy and policy of direct attack on poverty by way of target approach for the rural

poor came into being in the Fourth Five Year Plan. Towards this end many wage

employment programmes were being implemented in the rural areas. Status of these

wage employment programmes is presented in section 3.3.

3.3 PERFORMANCE OF VARIOUS WAGE EMPLOYMENT PROGRAMMES IN INDIA

During first two FYP periods the government has gave much emphasis to reduce

the unemployment in the primary sector. The Rural Works Programme (RWP) paid

more attention during third FYP to capital accumulation and generation of employment

as well as raising the supply of wage goods. It was expected that RWP would provide

increased employment opportunities and in the process create productive assets to

66

strengthen the rural economy. It had been proposed to provide employment for an

annual average of 100 days to about 1 lakh persons in the first year and to about 2.5

million persons by the end of the Third Plan Period31.

The Government of India in April 1971 initiated the Crash Scheme for Rural

Employment (CSRE) to alleviate the prevailing conditions of unemployment

underemployment in rural areas. The duration of the scheme was three years. The

Programme Evaluation Organisation’s (PEO) evaluation revealed that the programme

neither generated sizable employment nor provided any guidance for employment

planning. The experience of CSRE indicated the need for more concerted efforts to

tackle the problem of rural unemployment. The Bhagavati Committee on Rural

Unemployment drew attention to this aspect in its report, and recommended the

initiation of the Pilot Intensive Rural Employment Project (PIREP). This was implemented

during 1972 to 1976 in 15 Community Development Blocks situated in various parts of

the country with different economic and ecological conditions. It was an action–cum-

pilot study project on the characteristics of employment in selected areas. Though PIREP

proved to be slightly a better programme as it threw light on certain characteristics of

rural unemployment. The Review Committee pointed out that due to certain

organisational problems, PIREP could not be of much use in evolving a comprehensive

programme for the whole country (Singh, K 2008)32.

Simultaneously, the Food For Work Programme (FFWP) launched in 1976-77,

aims at creation of additional employment in rural areas through utilisation of surplus

food grains available in the buffer stock for payment as wages and thereby to create

durable community assets. FFW was observed to have severe limitations in meeting the

food needs of all the poor in drought prone areas on time, defeating its basic objective.

‘Works’ rather than the food needs of the poor became the focus.

31 NIRD (2010), “Policies and Programmes for Rural Development”, (SRD 503), Chapter 4.1, pp 109-129, Ministry of Rural Development, GoI, Hyderabad. 32 Singh, K (2008), “ Rural Development Policies, Programmes and Management, Sage Publication, New Delhi, Chapter 10, pp. 181-200.

67

The `FFWP' was replaced by National Rural Employment Programme (NREP) in 1981 for

generation of additional gainful employment for the unemployed and underemployed

men and women in the rural areas. The programme was also expected to stabilise the

market wage rates in the rural areas at least to the level of statutory minimum wages.

By spending 25.66 lakh MT food grain along with Rs.3304 crore, about 9432.5 lakh

person-days of employment was generated under this programme. The PEO of Planning

Commission evaluated the programme in 1982 and found that construction of rural

roads accounted for a predominant part of the total value of assets created. It was also

found that the Panchayats had no uniform role in the implementation of NREP in

different states or districts. However, by and large, Panchayat Samities played an

important role in respect of the NREP works in most of the states33.

Rural Landless Employment Guarantee Programme (RLEGP) was launched in

1983 and continued up to 1989, with an aim to improve and expand employment

opportunities for rural landless by providing guarantee of employment to at least one

member of every landless labour household up to 100 days in a year.

During the seventh plan, priority was given to the works that needed to be taken

up in backward areas having a predominant population of unemployed landless labour,

particularly for the SC and ST, and works benefiting women in areas which were low

wage packets. An amount of Rs.2266.3 crore was spent to generate about 353.5 lakh

person-days of employment.

In April 1989, the two on-going employment programmes NREP and RLEGP were

merged into a single employment programme known as the Jawahar Rozgar Yojana

(JRY). The JRY was designed to arrest the seasonality of wage employment and provide a

positive impact on the prevailing wage rates in rural areas. After three years of

implementation of JRY, the strategy was changed for its better implementation by

33 Rao, K H (2000), “Changes in the structure of employment in rural areas”, NIRD, Chapter VIII, pp 170-172

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providing targeted employment of 90-100 days to unemployed and underemployed

persons.

Employment Assurance Scheme (EAS) was introduced with effect from 2nd

October 1993 in 261 districts in which Revamped Public Distribution System (RPDS) was

in operation. It covered about 1,778 blocks and by 1996 it was extended to all rural

blocks of the country. The primary objective of this scheme was to provide assured 100

days employment of unskilled manual work to the rural poor who are in need of

employment and seeking it. One of the weaknesses observed in the implementation of

the programme was that the provision of employment under the scheme did not focus

on the persons registered for the purpose with the panchayat (PEO 1988)34.

A new programme called Jawahar Gram Samridhi Yojana (JGSY) to develop rural

infrastructure at the village level in a planned manner was initiated. This programme

came into effect from 1st April 1999 and ended by 2002. Since its inception till

November 2002 about 6003.34 lakh persondays of employment was generated by

utilising Rs.5046.26 lakhs35.

Attaining 8 per cent GDP growth per year, reduction of poverty ratio by 5

percentage points by 2007 and providing gainful and high-quality employment at least

to the additional labour force were some of the objectives of Tenth Five-Year plan

(2002-2007). The need was felt that the different programmes for wage-employment in

the rural areas to merge into one comprehensive programme which would take care of

food security, additional wage-employment and village infrastructure at the same time.

With this noble idea, a new Wage-Employment Programme namely the Sampoorna

Grameen Rozgar Yojana (SGRY) was introduced in 2001.

As the SGRY was not sufficient to meet the requirement of additional wage

employment in the most backward districts, it was felt that the additional resources

34 PEO (1988), “Evaluation on Employment Assurance Scheme on the basis of sample from 14 states”, Programme Evaluation Organisation, Planning Commission, GoI, New Delhi 1988 35 Desai, V (2005), Rural Development in India-past, present and future, A challenge in the crisis”, Section 3, Himalaya Publishers House, New Delhi, pp 111-124.

69

should be channelised into some focus areas like water conservation and drought

proofing which is the principal problem in some states and major cause of backwardness

of certain regions. Some areas are flood–prone and measurers for flood control require

special attention in these areas in a planned manner. The states were finding difficult to

provide state share of funds and therefore a 100 per cent Centrally Sponsored Scheme

(CSS) was proposed so that the investment in backward areas does not suffer because of

lack of resources available with the states. Another new programme called National

Food For Work Programme (NFFWP) was launched in the month of November 2004 in

150 most backward districts of the country. The objective of the programme was

providing additional employment and food–security through creation of economic,

social and community assets in these districts. During 2004-05, Rs.2019.45 crore funds

available for implementation of the programme. However, 28.21 per cent of funds were

only utilised and Rs.785.18 lakh person-days were generated. During 2005-06,

Rs.3604.33 crores funds were available with the states and Rs.1160.83 crores were

spent to generate Rs.1805.19 lakh person-days generated (until December 2005 as

reported by the states). Under the SGRY, about 100 crore person-days of wage-

employment were envisaged to be generated every year and about 264.6 lakh MT of

food grains were utilised during its implementation besides Rs.27756.5 crore were spent

to generate about Rs.28130 lakh person-days of employment36.

Nevertheless, some common problems was observed in successful implementation

of the above wage employment programmes

Little involvement of the local community in selection and implementation due

to top down and central approach

Absence of social monitoring resulted in wastages of resources, leakages, and

corruption

Employment was provided on the basis of availability of funds and willingness of

implementers

Inability to provide minimum livelihood security as there was no guarantee

36 MoRD (2006), “Annual Report”, Ministry of Rural Development, Government of India, New Delhi

70

Delay in wage payment and lack of amenities to workers

Hence, it was felt to have a rights based employment programme for rural workforce.

3.4 RATIONALE FOR MAHATMA GANDHI NATIONAL RURAL EMPLOYMENT

GUARANTEE ACT, 2005

If India’s official poverty line of monthly per capita consumption of Rs.356 in

rural and Rs.593 in urban is taken as benchmark, 300 million Indians are poor. Even

though, the share poor has dropped steadily from 55 per cent in the early seventies to

28 per cent in 2005 what has not changed is the deep rootedness of poverty in rural

areas where three quarters of the poor live (Planning Commission 2008b)37. Persistent

poverty anywhere is said to have created a threat to prosperity of the country. The main

reason for the high poverty in rural areas lies in the fact that India is still largely an

agrarian economy. Of the rural poor, 41 per cent are informal agriculture labourers and

22 per cent are self-employed farmers with tiny landholdings. This also affects urban

poverty as the poorest households in the cities are distress migrants from rural areas

with stagnating farming incomes (Planning Commission 2008a)38. Further agriculture

sector absorbs 52 per cent of labour force but contributes less than one fifth to the

country’s GDP. Labour absorption capacity of agriculture sector slowed down

considerably, form 1.8 per cent annually between 1983 and 1994 to 0.4 per cent

between 1994 and 2005 (Planning Commission 2008a). One main reason for low

productivity of agriculture (per worker) is excess of (underemployed) farming labourers.

As the workforce continues to grow, the earning situation for both landless and land

owning becomes worse. The available land plots (number as well as size) decrease from

generation to generation, the share of land-owning farmers holding less than 1 hectare

of land having risen from 56 per cent in 1982 to 70 per cent today (Planning Commission

2008a). As a consequence, the landowners, in order to supplement their incomes,

37Planning Commission (2008a), “Eleventh Five Year Plan (2007-12), Volume I, Inclusive Growth”, Planning Commission, Government of India, New Delhi, Oxford University Press, 2008, Chapter IV, pp 63-85 38 Planning Commission (2008b), “Eleventh Five Year Plan (2007-12), Volume III, Agriculture, Rural Development, Industry, Services and Physical Infrastructure”, Planning Commission, Government of India, New Delhi, Oxford University Press, 2008, pp 79-103.

71

increasingly join the landless in seeking wage labour. People have to resort to

agriculture work because there is no alternative, especially in the form of labour-

intensive, low and semi-skilled manufacturing jobs. Despite unprecedented growth rates

of almost 8-9 per cent in recent years, the manufacturing sector has not generated

enough employment opportunities to absorb the underemployed (surplus) workforce

and its share in total employment has still not reached even to 20 per cent (Ravi and

Engler 2009)39. In this situation, redistribution of economic resource is very essential by

creating employment opportunities to the rural poor. Income employment

opportunities improve the market demand leading to increase economic activities which

in turn enhance the employment opportunities. Policy induced rural work programmes

can be considered as programmatic efforts to generate non-farm employment

opportunities to sustain consumption and income especially during the times of distress.

In the 56th year of the Republic and working of the Constitution, the Parliament

of India passed the National Rural Employment Guarantee Act 2005 towards partial

fulfilment of Constitutional obligation under Article 39 (a) and 41 of the Directive

Principles of State Policy, contained in part IV of the Indian Constitution. NREGA can

thus be construed as a timely intervention for employment generation and thereby

poverty alleviation (Chandranayak et al. 2009)40.

Acts like MGNREGA are very important keeping in view of the types of assets to

be created under it. For example, in India the cultivated acreage is about 156 m ha

(49%) of geographic area. This includes 143 m ha of net sown area and 14 m ha current

fallow. Of the cultivated land, about 53 m ha (35%) is irrigated. The remaining 90 m ha

is rainfed. The forest area is about 68 m ha (22%) and area not available for cultivation

is about 41 m ha which includes urban land. The per capita availability of land declined

39Ravi, S and M. Engler (2009), “Workfare in Low Income Countries: An Effective Way to Fight Poverty? The Case of NREGS in India”, Indian School of Business, Hyderabad, and Centre for Policy Research, Working Paper Series, 16 July. 40 Chandranayak, N, B Behera, Mishra, Paluk (2010), “Appraisal of Processes and Procedures of NREGS in Orissa: A Study of Mayurbhanj and Balasore District”, Indian Institute of Technology, Kharagpur, August.

72

from 0.89 ha in 1951 to 0.37 ha in the mid 1990s and is estimated to reduce further to

0.19 has by 2035. As far as agriculture land is concerned, the per capita availability of

land is 0.48 ha. An estimated land of 174 m ha has deteriorated in quality and requires

treatment to restore it to make productive and profitable in use (GTZ 2002)41. One of

the most essential works to be carried under MGNREGA is development of land which

solves the problem in a significant way. In the present scenario of poverty,

unemployment and underemployment and low land use pattern, MGNREGA is much

needed.

To summary of above, all developmental plans focused on agriculture sector for

its increased production because the agriculture is main source of employment in the

country. The reduction in unemployment and poverty mainly in rural India were some of

the primary objectives of five year plans since independence. Further, the set goals of

Millennium Development also focused on reduction of poverty to 18.75 per cent by

2015. India is still lagging behind in the context of human development. Thus poverty

and unemployment are the two major causes in Indian Economy to lag behind.

The low value of labour could be due to the fact that most of the workers are

engaged in unskilled work with low wage rates, mainly in agriculture work. The

Problems of low wage rate, seasonality of agriculture employment, informal nature of

work are some of the causes to the prevalence of large scale unemployment both in

Andhra Pradesh and India. The government took initiatives in the form of wage

employment programmes. Among those programmes, Rural Works Programme (1961),

CSRC (1971), FFW (1976) NREP (1981), RLEGP (1983), NFFWP (2001), SGRY (2001) were

important in terms of providing employment to rural workforce. Owing to centralised

nature of these programmes, their performance was not up to the expected level and it

was felt that there should be rights based and demand led wage employment

41

GTZ (2002), “Principles and practices of integrated watershed management in India, Indo-German bilateral project: Watershed Management”, Gesellschaft fur Technische Zusammenarabeit (GTZ), New Delhi, pp 1-2.

73

programme would be effective. In brief one can say that MGNREGA is continuation of

earlier wage employment programmes aiming to eradicate poverty and unemployment

by providing legally guaranteed 100 days of employment to each rural household.

Nevertheless, this ‘Rights Based’ intervention is conceptually and quantitatively

different from the earlier ones. Hence, it is essential to estimate the performance

MGNREGA at macro and micro level to estimate its impact.

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