9581 - Replacing welfare schemes with cash transfers would be a mistake: Jean Dreze - Governance Now
Replacing welfare schemes with cash transfers would be a mistake: Jean Dreze
As a development economist, he shares his thoughts on DBT, Aadhaar, and cash transfer under the National Food Security Act, 2013
Pratap Vikram Singh | March 17, 2016
Jean Dreze is equally concerned with theory of development economics as with its practice. A visiting professor at the department of economics in Ranchi University, he has extensively worked on issues related to hunger, famine, gender inequality, child health and education. He has also been at the forefront of several social movements, including the right-to-information and right-to-food campaigns. As a member of the national advisory council (NAC) during the UPA1 government, he conceptualised and drafted the first version of NREGA. In an email interaction with Pratap Vikram Singh, he shared his thoughts on direct benefit transfer, Aadhaar, and cash transfer under the National Food Security Act, 2013. Excerpts:
What are your views on the cash transfer scheme that aims to replace supply of subsidised ration to beneficiaries?
I support some cash transfer schemes, such as social security pensions and maternity entitlements. Interestingly, the central government is undermining these schemes even as it swears by cash transfers as a substitute for the public distribution system (PDS). I am not in favour of that, at least not for the time being. The National Food Security Act is finally being implemented in most states and this is not the time to confuse matters with hasty attempts to replace the PDS with cash transfers. Most of the pilots have failed so far, confirming that there is a long way to go before cash transfers are an appropriate alternative to the PDS, especially in the poorer parts of the country.
Since India is a welfare state, should the government relinquish its responsibility of providing subsidised ration to the deprived and vulnerable?
I don’t think that India is a welfare state by any stretch of imagination. From international perspective, social spending levels in India are very low, as a proportion of GDP. The health system is almost entirely private, and there is no social security system worth the name. Some Indian states like Kerala, Tamil Nadu and Himachal Pradesh have relatively well developed welfare provisions. These are doing quite well. But the bulk of India is way behind. It is against this background that there is a strong case for expanding social programmes, more so because the economy is doing really well.
Coming to the PDS, it has become a very important form of social security for millions of families, especially in the poorer states. Perhaps a day will come when cash transfers can serve that purpose too, but I think that time is quite far away. So I am in favour of consolidating and improving the system, starting with effective implementation of the National Food Security Act, rather than winding it up hastily.
The government has been advocating cash transfer to ensure that beneficiaries receive their entitlement. Isn’t pilferage a matter of concern?
Beneficiaries can also receive their entitlements from the PDS. Many states have made very good progress with PDS reforms in recent years, including Chhattisgarh, Odisha and Madhya Pradesh. Other states have their work cut out. Poor families generally prefer food entitlements to cash transfers for a variety of reasons: inadequate banking facilities, fear of misuse of money, lack of faith in the government’s commitment to protecting cash transfers from inflation, and so on. It is not the poor, but the government who stands to gain from cash transfers, by saving money. That is certainly a consideration, but people’s interests come first.
How do you look at the prospects of integrating Aadhaar with welfare schemes, including MNREGS and pension?
Most of the welfare applications of Aadhaar that have been proposed so far are unnecessary and counterproductive. In Jharkhand, where I live, some of them have caused a lot of damage. For instance, there have been repeated attempts to make Aadhaar compulsory for NREGA workers, for no clear purpose. NREGA functionaries were mobilised for months on end, using very top-down methods, to “seed” the accounts of NREGA workers with Aadhaar numbers. Wage payments were often held up or even blocked because of seeding problems. Worse, job cards were cancelled en masse as a short-cut to enable NREGA functionaries to meet the seeding targets. Supreme court orders were brazenly violated on the way. Today, there is a serious danger of further damage as Aadhaar technology is sought to be imposed on the PDS in Jharkhand, again with no clear purpose.
If the government really wants to proceed with welfare applications of Aadhaar, it has a lot of homework to do. First, it should abide by the supreme court order. Second, a legal framework for Aadhaar needs to be created, with adequate safeguards against violation of privacy and other abuses. Third, hidden coercion must stop and all applications should be genuinely voluntary, as they claim to be. Fourth, the purpose of the welfare applications must be clarified. Only then will a sensible debate on these applications be possible.
The government is planning to manage all welfare schemes through a proposed social security platform – a national electronic database of beneficiaries with their Aadhaar, NPR and socio-economic caste census. Is it the right way?
We have heard of many such “plans” in the last few years. It is difficult to comment until something specific is on the table. If it is a plan to bring cash-transfer components of all welfare schemes, such as NREGA wage payments and social security pensions, into a single payments platform, it may have some merit. If it is a plan to replace welfare schemes themselves with cash transfers, I would oppose it. Cash transfers have a role, but we also need midday meals, health care, free textbooks, and many public services in kind. This is elementary economics as well as a clear lesson from development experiences around the world, or for that matter within India.
The article was published in March 15-31, 2016 issue. The interview was taken before Aadhaar Bill was Passed in LS
- See more at: http://www.governancenow.com/views/interview/interview-jean-dreze-development-economist#sthash.ysACYLpk.dpuf
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March 15, 2016
The Aadhaar coup
The Aadhaar Bill opens the door to mass surveillance. This danger needs to be seen in the light of recent attacks on the right to dissent. No other country, and certainly no democratic country, has ever held its own citizens hostage to such a powerful infrastructure of surveillance.
The Aadhaar project was sold to the public based on the claim that enrolment was “voluntary”. This basically meant that there was no legal compulsion to enrol. The government and the Unique Identification Authority of India (UIDAI), however, worked overtime to create a practical compulsion to enrol: Aadhaar was made mandatory for an ever-widening range of facilities and services. It became clear that life without Aadhaar would soon be very difficult. In these circumstances, saying that Aadhaar is voluntary is like saying that breathing or eating is voluntary. Legal or practical, compulsion is compulsion.
Sweeping powers
It took the Supreme Court to put an end to this doublespeak. In March 2014, the court ruled that “no person shall be deprived of any service for want of Aadhaar number in case he/she is otherwise eligible/entitled”.
This was a very sensible interpretation of what it would really mean for Aadhaar to be voluntary. Throughout the proceedings, incidentally, the Central government stood by the claim that Aadhaar was a voluntary facility. The Supreme Court did nothing more than to clarify the implications of that claim.
It is important to note that Aadhaar could work wonders as a voluntary facility. A certified, verifiable, all-purpose identity card would be a valuable document for many people. But the UIDAI has never shown much interest in the Aadhaar card, or in developing voluntary applications of Aadhaar. Instead, it has relentlessly pushed for Aadhaar being used as a mandatory identification number in multiple contexts, and for biometric authentication with a centralised database over the Internet. That is a very different ball game.
The Supreme Court order caused consternation in official circles, since it ruled out most of the planned applications of Aadhaar.
The Aadhaar Bill, tabled last week as a money bill in the Lok Sabha and passed by it, is the Central government’s counter-attack. Under Section 7, the Bill gives the government sweeping powers to make Aadhaar mandatory for a wide range of facilities and services. Further, Section 57 enables the government to impose Aadhaar identification in virtually any other context, subject to the same safeguards as those applying to Section 7.
In concrete terms, the Bill allows the government to make Aadhaar authentication compulsory for salary payments, old-age pensions, school enrolment, train bookings, marriage certificates, getting a driving licence, buying a SIM card, using a cybercafé — virtually anything. Judging from the experience of the last few years, the government will exercise these powers with abandon and extend Aadhaar’s grip to ever more imaginative domains. Indeed, Aadhaar was always intended to be “ubiquitous”, as Nandan Nilekani, former Chairman of the UIDAI, himself puts it.
Mass surveillance
Why is this problematic? Various concerns have been raised, from the unreliability of biometrics to possible breaches of confidentiality. But the main danger is that Aadhaar opens the door to mass surveillance. Most of the “Aadhaar-enabled” databases will be accessible to the government even without invoking the special powers available under the Bill, such as the blanket “national security” clause. It will be child’s play for intelligence agencies to track anyone and everyone — where we live, when we move, which events we attend, whom we marry or meet or talk to on the phone. No other country, and certainly no democratic country, has ever held its own citizens hostage to such a powerful infrastructure of surveillance.
If this sounds like paranoia, think again. Total surveillance is the dream of intelligence agencies, as we know from Edward Snowden and other insiders. The Indian government’s own inclination to watch and control dissenters of all hues has been amply demonstrated in recent years. For every person who is targeted or harassed, one thousand fall into line. The right to privacy is an essential foundation of the freedom to dissent.
Mass surveillance threatens to halt the historic expansion of civil liberties and personal freedom. For centuries, ordinary people have lived under the tyranny of oppressive governments.
Compulsion, arrests, executions, torture were the accepted means of ensuring their submission to authority. It took long and harsh struggles to win the freedoms that we enjoy and take for granted today — the freedom to move about as we wish, associate with whoever we like, speak up without fear. No doubt these freedoms are still elusive for large sections of the populations, especially Dalits and those who live under the boot of the security forces. But that is a case for expansion, not restriction, of the freedoms we already have.
The Aadhaar Bill asks us to forget these historic struggles and repose our faith in the benevolence of the government. Of course, there is no immediate danger of democracy being subverted or civil liberties being suspended. Only an innocent, however, would fail to anticipate Aadhaar being used as a tool of mass surveillance. And mass surveillance per se is an infringement of democracy and civil liberties, even if the government does not act on it. As Glenn Greenwald aptly puts it in his book No Place to Hide, “history shows that the mere existence of a mass surveillance apparatus, regardless of how it is used, is in itself sufficient to stifle dissent.”
Uncertain benefits
The champions of the Aadhaar Bill downplay these concerns for the sake of enabling the government to save some money. Wild claims are being made about Aadhaar’s power to plug leakages.
In reality, Aadhaar can only help to plug specific types of leakages, such as those related to duplication in beneficiary lists. It will be virtually useless to plug leakages in, say, the Public Distribution System (PDS), which have little to do with identity fraud. On the other hand, recent experience has shown that Aadhaar could easily play havoc with the PDS. Wherever Aadhaar authentication has been imposed on the PDS, there have been complaints of delays, authentication failures, connectivity problems, and more. The poorer States, where the PDS is most needed, are least prepared for this sort of technology. There are better ways of reforming the PDS. Similar remarks apply to the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).
I have seen some of this damage at close range in Jharkhand, where Aadhaar was supposed to prove its mettle. Aadhaar applications (in the PDS, MGNREGS, and even the banking system) have had poor results in Jharkhand, and caused much disruption. For instance, MGNREGS functionaries have cancelled job cards on a large scale for the sake of achieving “100 per cent Aadhaar seeding” of the job-cards database. MGNREGS workers have been offloaded by rural banks on Aadhaar-enabled “business correspondents” who proved unable to pay them due to poor connectivity. And the proposed imposition of biometric authentication at ration shops threatens to disrupt recent progress with PDS reforms in Jharkhand.
Seven years after it was formed, the UIDAI has failed to produce significant evidence of Aadhaar having benefits that would justify the risks. Instead, it has shown a disturbing tendency to rely on public relations, sponsored studies and creative estimates (including the much-cited figure of Rs.12,700 crore for annual savings on the LPG subsidy). To my knowledge, there has been no serious evaluation of any of the Aadhaar applications so far. Worse, some failed experiments have been projected as successes through sheer propaganda — business correspondents in Ratu (Jharkhand) and “direct benefit transfer” of kerosene subsidies in Kotkasim (Rajasthan) are just two examples.
No doubt Aadhaar, if justified, could have some useful applications. Given the risks, however, the core principle should be “minimum use, maximum safeguards”. The government has shown its preference for the opposite — maximum use, minimum safeguards. The Aadhaar Bill includes some helpful safeguards, but it does nothing to restrain the use of Aadhaar or prevent its misuse as a tool of mass surveillance. And even the safeguards protect the UIDAI more than the public.
The wizards of Aadhaar are fond of telling us that we are on the threshold of a “revolution”. With due respect for their zeal, a coup would be a more appropriate term. The Aadhaar Bill enables the government to evade the Supreme Court orders and build an infrastructure of social control. Further, it does so by masquerading as a money bill, pre-empting any serious discussion of these issues. This undemocratic process reinforces the case for worrying about Aadhaar.
(Jean Drèze is Visiting Professor at the Department of Economics, Ranchi University.)
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Posted on: December 9, 2015
In an Exclusive Interview with News Wing Economist Jean Dreze questions Govt's Obsession with Business-Driven Growth.
Q: India’s economic record is a little confusing. Some observers feel that the Indian economy is in recession, others that it is booming. Where does the truth lie?
Ans: Around the time of the last Lok Sabha elections, the refrain in the business media was that the economy is in the doldrums. Today, we are told that the Indian economy is one of the fastest-growing economies in the world. That is correct, but it was also true two years ago. The Indian economy has been growing at about 7.5 per cent per year for the last twelve years, with minor deviations up or down in specific years. The latest estimate for 2014-5, 7.3 per cent, is bang on track. So are the provisional estimates for the first half of 2015-6. So the statistical record does not justify this change in perceptions of the Indian economy. The earlier story, about recession, was used to justify the call for big-bang reforms under the new government. Today’s story, about economic success, is used to claim that the new government is doing very well. The real story is that the Indian economy has been doing very well for a long time, in terms of economic growth. We should be less worried about raising the growth rate, which may or may not be possible, than about achieving faster social progress. That requires not only a reasonable rate of economic growth, but also effective public action in a wide range of fields - health, education, nutrition, basic amenities, environmental protection, social equity, among others.
Q: Some economists argue that since redistribution is difficult to achieve, growth is the best development strategy. What do you feel?
Ans: This is a misleading way of posing the problem. Development is not just a matter of growth and redistribution. Both can certainly help: growth raises per-capita income, and redistribution increases poor people’s share of it. But development means more than raising per-capita income. It is about the quality of life. All sorts of things can be done to enhance the quality of life without necessarily involving growth or redistribution. For instance, bringing accountability in public life can contribute a great deal to the quality of life, and is an essential part of development in the broad sense of the term. Similarly, improving the quality of school education would be a form of development, which does not depend on growth or redistribution alone. So there is a lot to do, other than aiming at faster growth or more redistribution. Focusing on economic growth alone is a very narrow way of thinking about development.
Jean Dreze : AProfile
Dr Jean Drèze (born 1959 ) is a Belgium-born Indian development economist who has been influential in the economic policy making of India. His work in India include issues like hunger, famine, gender inequality, child health and education, and the NREGA. He had conceptualized and drafted the first version of the NREGA.
His co-authors include Nobel laureate in economics Amartya Sen, with whom he has written on famine, Nicholas Stern, with whom he has written on policy reform when market prices are distorted and Nobel laureate in economics Angus Deaton. He has written a dozen of books with his co-authors and more dozen of his articles published in Indian newspapers and abroad. He is currently an honorary Professor at the Delhi School of Economics, and Visiting Professor at the Department of Economics, Ranchi University. He was a member of the National Advisory Council of India in both first and second term.
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Q: The Modi government seems to be pursuing a business-driven growth model. How far is this likely to serve the purpose of development in this broad sense?
Ans: This is a corporate-sponsored government and its main function appears to be to assist business, especially big business. In fact, this is explicit. For instance, improving the “investment climate” is one of the main objectives of the central government. Business certainly has a role to play in the Indian economy today. However, there are large areas of social life where business is not the best approach. Business is not a good way of organising education, or health care, or social security, or public transport, or urban planning, or the protection of the environment, or so many other things that are crucial for the quality of life. In all these fields, public action is very important. The government’s single-minded focus on supporting business leads to a dramatic neglect of constructive action in these fields.
Q: The government’s growth strategy also places a lot of emphasis on physical infrastructure. Is this justified?
Ans: We certainly need better infrastructure. The question is what sort of infrastructure, what are the priorities. Consider for instance Ranchi, where I live. The infrastructure is pathetic. There are water shortages, power cuts, blocked drains, traffic jams, health hazards of all sorts. A sensible government would strive to improve basic amenities and public services, not just for a privileged minority but for everyone. What political leaders actually like, however, is high-tech corporate-sponsored projects like the proposal to build a brand-new “smart city” of one square kilometre just outside Ranchi. This is unlikely to be of much help to the vast majority of Ranchi’s residents. But it will generate lucrative contracts for private companies, and perhaps some handsome kickbacks. That seems to be the real purpose.
Q: There were large cuts in social expenditure in the last Union Budget. The central government is justifying this on the grounds that states are now getting a larger share of the divisible pool of taxes, as recommended by the Fourteenth Finance Commission. Is this convincing?
Ans: The Commission did not recommend that centrally sponsored schemes should be trimmed as a counterpart to greater tax devolution. On the contrary, it stressed the need for continuation of central support in some critical fields including “education, health, water supply and sanitation, child nutrition”. The Commission did call for a new institutional mechanism to oversee these schemes, but that is very different from abrupt and unilateral budget cuts. Even if some of these cuts are justified in the medium term, they should not be imposed on the states without taking any precautions to protect important schemes. The central government seems to have embarked on an ill-planned delegation of social policy to the states that is likely to cause some short-term disruption at the very least.
Q: Despite some ambivalence towards the social sector on the part of the central government, many states are still trying to expand and improve their social policies. Do you feel that there is any future in these efforts?
Ans: Indeed, there are vast possibilities for more extensive and effective social policies in India. If India’s GDP continues to grow at around 7.5 per cent per year or so for another twenty years, and if the share of social spending in GDP rises by 50 per cent over the same period, there will be five times as much money for the social sector in twenty years’ time as there is today, in real per-capita terms. If good use is made of these resources, building on what has been learnt in recent years, the average Indian twenty years from now could enjoy even better public services and basic amenities than the residents of Kerala or Tamil Nadu enjoy today.
Q: What needs to be done to make better use of these resources?
Ans: Making good use of social spending requires, first and foremost, a better work culture in schools, health centres, Gram Panchayat offices, and the public sector in general. This may sound like a pipe dream, but it can also be seen as a natural development in a country with a modicum of democracy. Public-sector absenteeism, exploitation and corruption thrive on the disempowerment of the public and the submissive acceptance of practices that are, in fact, totally unacceptable. As democratic engagement gains strength and the public becomes more articulate and vigilant, these practices often become harder to sustain, and the corresponding social norms tend to evolve. Of course, one should not rely on this process alone to achieve more responsibility in the public sector – better incentives and accountability measures are also required. But these measures are best seen as part of the larger need to change the public work culture through democratic practice.
Q: In recent work, you have shown that Bihar is catching up with other states in some important fields, such as child development. Do you think that the outcome of recent elections in Bihar has anything to do with this record?
Ans: I tend to be sceptical of anyone who claims to understand why people vote one way or another. However, it seems clear that the people of Bihar give some credit to the previous government for its development record. This appreciation is not misplaced: there is growing evidence that Bihar has made rapid progress in many important fields in recent years. For instance, female literacy in the age group of 10-14 years increased from 51 to 81 per cent between 2001 and 2011, and the proportion of children who are fully immunized shot up from 33 per cent in 2005-6 to 60 per cent in 2013-4. For a state that used to be thought incapable of running proper public services, this is a real step forward. Let us not forget, however, that in spite of recent improvements Bihar is still one of India’s worst-governed states. The living conditions of poor people there are dreadful. Bihar has shown an ability to change, but radical change is yet to happen.
Q: What about Jharkhand?
Ans: Change will come to Jharkhand sooner or later. The corruption, violence, crime and exploitation that we are seeing there today cannot endure forever in a society with democratic institutions. How that change will come about, however, is hard to predict. Political change happens in all sorts of unexpected ways.
Q: You were prevented from attending the recent Economics Conclave in Delhi last month, after receiving a warm invitation from the Finance Ministry. Do you feel that growing intolerance is spreading to academic circles?
Ans: I don't think that we have reached the stage of serious attacks on academic freedom, though there have been some skirmishes, like the forced recalling of Wendy Doniger's book The Hindus. Artists and writers are far more vulnerable to harassment. That's because their work tends to be more subversive than academic research. If recent trends continue, however, it is only a matter of time until irrationality and fanaticism also affect academic work.
Q: What do you think is the reason for this surge in irrationality, and for recent attacks on rationalists?
Ans: Rationalist thought is threatening for those whose dominance is based on indoctrination and superstition. Consider for instance the caste system. The dominance of the upper castes depends on perpetuating a whole system of irrational beliefs about the abilities and rights of people who are born in different castes. The spread of education, enlightenment and democracy threaten this system of dominance. Naturally, those who stand to gain from the system have a tendency to suppress this spread of rationalism and reaffirm the old, irrational dogmas. That, I believe, is one possible reason for recent attacks on rationality, though there may be others too.
Q: Is rising intolerance a threat to India’s onward economic march?
Ans: Tolerance is a value in its own right, we don't have to justify it by arguing that it has economic returns. Still, I think that Raghuram Rajan had a point when he said that open debate and enquiry foster economic progress. This is not primarily because investors are put off by intolerance - investors care about profits, not communal harmony and that sort of thing. It is because economic progress depends on human creativity, innovation and initiative, all of which benefit from freedom of thought and expression. All this, of course, is a little speculative, and that's another reason for valuing tolerance for its own sake rather than as an economic asset.
Q: Earlier this year, you spent ten days with the Jan Adhikar Yatra that went from village to village in Jharkhand to mobilise people against growing attacks on their social and economic rights. Can you share some of your memories from the Yatra?
Ans: The strongest impression I retain from the Yatra is how so many people in rural Jharkhand are still struggling with very basic survival issues – how to save their land, where to find water, how to feed their children. It is really a humanitarian emergency, but we are so used to it that we don’t feel any urgent need for action. Once in a while, during the Yatra, I checked the news on the internet, and it was shocking to see how public debates are dominated by trivial issues – who should be allowed to eat beef, how a street in Delhi should be renamed, where the Saraswati river used to flow, and so on. Basically, poor people count for very little. This makes you realise how far we still are from democracy in the real sense of the term.
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BS Reporter & PTI | New Delhi
November 7, 2015 Last Updated at 00:20 IST
Noted economist Jean Dreze said on Friday the government’s “single-minded” focus on high-tech cash transfers through Jan Dhan, Aadhaar, and Mobile as a foundation for social policy was “fraught with dangers”, even as he contended that he was first invited to the Delhi Economics Conclave and then told not to turn up.
“Learned economists and policymakers are meeting at Vigyan Bhawan today to discuss the unfolding ‘revolution of social welfare policy’ led by the JAM (Jan Dhan, Aadhaar, Mobile) trinity,” said Dreze.
“I was initially invited to address this Economics Conclave, but the finance ministry informed me at the last minute that my presence was not required after all. I take this opportunity to share my views with the public rather than behind closed doors,” he said in an article widely published in news websites, before listing out a number of reasons why he thinks the government’s thrust on JAM won’t work.
Dreze is a development economist who counts Nobel Laureate Amartya Sen as one of his influences and with whom he has co-authored several books. Dreze was also a member of the National Advisory Council, a body which was set up during the UPA government’s first term. Dreze later resigned from the body.
Chief Economic Advisor Arvind Subramanian, whose economic team in North Block had organised the event, tried to downplay the matter by saying that the cancellation was due to “last-minute adjustments” in the schedule of the conference and it had nothing to do with Dreze’s views. “As soon as we had decided, we informed Jean Dreze about it. Just want to make it clear (that) this has nothing to do with views, because the finance minister himself personally called the Kerala chief minister. It is not based on views or anything and everyone is welcome to attend,” he told reporters on the sidelines of the conclave.
He said the government respected Dreze highly and that the latter was welcome to attend the conclave.
Dreze told news agency PTI that he was told he would not even be allowed to attend the conclave.
“On the train to Delhi, I received a call from a functionary from the Ministry of Finance who explained, with some embarrassment, that I had been dropped from the programme and would not even be allowed to attend. No reason was given,” he was quoted as saying by the agency.
In his article, Dreze said that the ambitious implementation of JAM would be faced with a number of hurdles.
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Development economist
Posted: 04/05/2015 17:41 IST
In the backdrop of workers taking to the streets on Labour Day to protest against their status, here is why the government's rural jobs guarantee programme presents an alarming picture today.
Declining expenditure
Central Government expenditure on NREGA declined from Rs 40,100 crores in 2010-11 to Rs 38,597 crores in 2014-5. In real terms, this means a decline of about 30% over four years. As a ratio of GDP, Central Government expenditure on NREGA dropped from 0.6% in 2009-10 to 0.3% in 2014-5.
Falling employment
Declining expenditure combined with rising costs have led to an even sharper decline in NREGA employment. The number of person-days of work generated by NREGA declined from 284 crore in 2009-10 to 155 crore in 2014-5 - a crash of close to 50% in five years. If NREGA employment declines by another 50% in the next five years, nothing will be left of this programme.
Fewer rights
The entitlements of NREGA workers have been repeatedly restricted during the last two years. Some illustrations:
(1) NREGA has been delinked from the Minimum Wages Act - the Central Government reserves the right to set wage rates.
(2) Even the stipulated wage is not guaranteed as a right (the clause "Under no circumstances shall labourers be paid less than the wage rate" has been removed from Schedule 1 of the Act).
(3) A critical provision enabling NREGA workers to claim compensation for delayed wages under the Payment of Wages Act has also been removed.
(4) Compliance with the Persons with Disabilities Act has been removed from the Guidelines.
(5) Daily-wage payments are no longer allowed (piece-rate payment is compulsory).
(6) The right to demand work has been turned into a duty: no formal application, no work.
Rising delays
According to the Central Government's NREGA website, delayed payments accounted for 70% of all NREGA wage payments in 2014-5 (up from 50% in 2013-4). Instead of the earlier provision whereby NREGA workers were entitled for compensation under the Payment of Wages Act in the event of delays, the new Schedules provide for compensation at a measly rate of 0.05% (yes!) per day.
UID - The next blow?
Earlier this year, the Ministry of Rural Development announced that Aadhaar (UID) would be compulsory for all NREGA workers from 1 April 2015: no UID, no work.
This was a clear violation of a Supreme Court order (March 2014) stating that "no person shall be deprived of any service for want of Aadhaar number in case he/she is otherwise eligible/entitled" and directing the government to modify all its forms and circulars accordingly.
Following another Court order on 16 March 2015, the Ministry issued a "clarification" on 15 April, explaining that arrangements for a case-by-case exemption from UID had been put in place.
However, numerous reports from the field indicate that there is continuing pressure to impose UID on all NREGA workers. This takes the form, for instance, of cancelling the Job Cards of workers who don't have a UID, or of refusing them work. This illegal imposition of UID on NREGA workers is causing enormous disruption and could easily lead to another setback in the entire programme
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All MGNREGA workers without a UID are supposed to be ‘escorted’ (sic) to enrolment centres, and after that to the bank so that their Aadhaar number can be seeded into their account. It is impossible to do this by March 31
Written by Jean Dreze | Updated: March 19, 2015 6:05 am
It is easy to see why the Unique Identity (UID) project, also known as Aadhaar, has caught the imagination of many administrators, economists and policymakers. Identity verification is a routine problem in India and Aadhaar sounds like a foolproof solution. The idea is really smart and the technology is cutting-edge. After the initial hurdle of universal enrolment, numerous applications are possible: monitoring the attendance of government employees, linking multiple databases, fighting tax evasion, facilitating the portability of social benefits and much more. When ace promoter Nandan Nilekani was appointed to lead the project, the happy fate of Aadhaar appeared to be sealed.
And yet, Nilekani’s sales pitch left one question unanswered: is Aadhaar voluntary or compulsory? The initial claim was that Aadhaar was a voluntary facility. Indeed, this is how the sceptics (like business guru Jaithirth Rao, a committed libertarian) were swayed. Yet this claim was clearly hollow: how could Nilekani, or the Unique Identity Authority of India (UIDAI), assure us that Aadhaar was voluntary when they had no control over its applications? The UIDAI’s real position was: “we provide the number, it is up to the government to decide what to do with it”.
This raised the possibility that Aadhaar would become mandatory for the purpose of various social programmes such as the MGNREGA and the public distribution system. Indeed, it quickly became clear that the Central government was keen to impose Aadhaar on a whole series of schemes — almost anything that involved identify verification. That suited the UIDAI very well, since it led people to rush to Aadhaar enrolment centres. But the UIDAI’s claim that Aadhaar was a voluntary facility posed a problem — how would enrolment be fast-tracked? The government’s imposition of UID as an eligibility condition for social benefits provided a neat answer.
And so, a tacit understanding quickly emerged that while Aadhaar was voluntary in principle, it was due to become essential for anyone who wanted to function — get a driving licence, transfer property, have a civil marriage or just get paid as a MGNREGA worker. In short, frankly speaking, it was compulsory.
This should have called for a reassessment of the whole project because there is a world of difference between a voluntary Aadhaar and a compulsory Aadhaar. Providing Indian residents with a convenient way of identifying themselves would certainly be doing a great service to millions of people who lack adequate identity documents. But imposing Aadhaar as an all-purpose identity proof is a very different idea. It carries at least four dangers.
First, Aadhaar creates a vast infrastructure of social control that could be misused. This may sound like paranoia — after all, India is a democracy of sorts. Yet it is a democracy where abuse of state power, from petty harassment all the way to torture, are a harsh reality for large sections of the population. In any case, principled resistance to the growth of state power is important for the healthy survival of democracy everywhere.
Second, the entire project is being rolled out without any legal framework. While Aadhaar is effectively being made compulsory, no law defines or protects the rights of the subjects of this compulsion. Further, in the absence of any privacy laws worth the name, people have no protection against possible abuse of the data they part with — including biometrics — at the time of UID enrolment. Privacy is not only an important liberty in its own right, it is also essential for the exercise of other liberties, such as the freedom to dissent.
Third, Aadhaar is not always an appropriate technology. Even in the best circumstances, it is not foolproof. In areas with weak infrastructure (for example, poor connectivity or power supply), it can cause havoc.
Indeed, Aadhaar requires four imperfect technologies to work together: biometrics, computers, mobiles and the internet. Even a small risk of one of them being out of order can lead to considerable hardship for users.
Finally, the coverage of Aadhaar is still far from complete, and it could take years to become universal. Enrolment agencies, paid on piece rates, have drained the more accessible ponds, but those who fell through the net will be harder to catch. Even if enrolment centres are created, say, in every block, some people may find it difficult to get there and meet the requirements. As a recent World Bank report notes, identification systems can easily turn into a source of social exclusion.
Confronted with evidence of UID compulsion, the Supreme Court took a strong stand on this in two successive orders, dated September 2013 and March 2014. The latter clearly states that “no person shall be deprived of any service for want of Aadhaar number in case he/ she is otherwise eligible/ entitled”. This order has far-reaching implications since it effectively bans most compulsory applications of UID (with important exceptions, for instance, monitoring office attendance).
Interestingly, however, there is no sign of the government having taken any notice of these orders. On the contrary, the UID drive continues as more and more compulsory applications of Aadhaar are being forced on the public.
The Central government’s latest move is to make UID mandatory for all MGNREGA wage payments in 300 districts from April 1. The ministry of rural development recently sent stern orders to this effect to state governments. All MGNREGA workers without a UID are supposed to be “escorted” (sic) to enrolment centres, and after that to the bank so that their Aadhaar number can be seeded into their bank account. Everyone knows that it is impossible to do this by March 31, and that MGNREGA workers without a UID will effectively be deprived of their right to work from then on — but who cares?
Even those with a UID are likely to face serious hardships as the system adjusts to this new and daunting imposition from the Centre. Little has been learnt from earlier experiences of similar top-down orders, such as the abrupt switch to bank payments of MGNREGA wages in mid-2009, which caused prolonged chaos and confusion.
As the ink dries on this article, another Supreme Court hearing on this matter has been held (on March 16). The court heard evidence of violations of earlier orders, including the case of a couple being refused a civil marriage without UID. Final arguments are to be heard from July 13 for disposal of the case.
Meanwhile, the Central government is expected to write to all chief secretaries and ask them to ensure compliance with court orders. Hopefully, this will lead to some rethinking of the government’s invasive and coercive approach to Aadhaar.
The writer, a former member of the UPA’s National Advisory Council, is visiting professor at the department of economics, Ranchi University
express@expressindia.com
First Published on: March 19, 201512:54 am
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Published: August 1, 2013
Jean Drèze
Despite its many flaws, the food security bill is an opportunity to end the leakages from the PDS and prevent wastage of public resources
The National Food Security Bill, now an ordinance, has been a target of sustained attacks in the business media in recent weeks. There is nothing wrong, of course, in being critical of the bill, or even opposed to it. Indeed, the bill has many flaws. What is a little troubling, however, is the shrill and ill-informed nature of many of these attacks. Statistical hocus-pocus has been deployed with abandon to produce wildly exaggerated “estimates” of the financial costs of the bill, and no expression seems to be too strong to disparage it. The fact that the food bill could bring some relief in the lives of millions of people who live in conditions of terrifying insecurity seems to count for very little.
Findings
Meanwhile, recent studies shed some useful light on the state of India’s Public Distribution System (PDS) — one of the controversial foundations of the bill. As far as the “below poverty line” (BPL) quota is concerned, there is a clear trend of steady improvement in many States, including some that had a very poor PDS not so long ago. A recent study of the PDS in Koraput, one of Odisha’s poorest districts, found that almost all BPL households were receiving their full monthly quota of 25 kg of rice at the stipulated price. Similar findings emerged from a survey of the PDS in two districts of Uttar Pradesh (Lakhimpur Kheri and Chitrakoot), where most BPL households were getting their due — 35 kg of rice or wheat per month. The main problem was the restrictive nature of the BPL list, which left many households excluded. These surveys confirm earlier findings of a study by the Indian Institute of Technology in 2011 that BPL households in nine sample States received 84 per cent of their PDS entitlements.
It is in the “above poverty line” (APL) quota that embezzlement continues in many States. In Uttar Pradesh (U.P.), APL households are supposed to get 10 kg of wheat per month, but most of the APL quota goes straight to the black market. The gravy flows all the way to the top: the complicity of the then Food Minister, Raja Bhaiya, in this scam was exposed last year by Tehelka, but the “bhaiya” retained his post. Recent investigations suggest that leakages in the APL quota are also very high in Bihar, Jharkhand, and Madhya Pradesh, among other prime offenders.
The main reason for this vulnerability is that the APL quota is treated as a dumping ground for excess foodgrain stocks. In recent years, foodgrain procurement has increased by leaps and bounds, but distribution under the BPL and Antyodaya quotas has remained much the same, since allocations are fixed and lifting is close to 100 per cent. To moderate the accumulation of excess stocks, the Central government has been pushing larger and larger amounts of foodgrain into the APL quota, which is now almost as large as the BPL quota (close to 20 million tonnes of foodgrains in 2012-13). One consequence of this dumping is that the entitlements of APL households are, by nature, unclear and unstable; in fact, they are not entitlements but ad hoc handouts. This gives middlemen a field day, since APL households are often confused as to what they are supposed to get, or whether and when their quota has arrived. The current situation in U.P., where most of the APL quota goes straight to the black market without anyone raising the alarm, is just an extreme example of this situation.
Rectifies PDS defects
The food bill is an opportunity to clean up this mess, and to cure two basic defects of the PDS: large exclusion errors, and the leaky nature of the APL quota. In effect, the bill abolishes the APL quota and gives common entitlements to a majority of the population: 75 per cent in rural areas and 50 per cent in urban areas. These are national coverage ratios, to be adjusted State-wise so that the coverage is higher in the poorer States. In this new framework, people’s entitlements will be much clearer, and there will be greater pressure on the system to work. Indeed, wide coverage and clear entitlements are two pillars of the fairly effective PDS reforms that have been carried out in many States in recent years (other aspects of these reforms include de-privatisation of ration shops, computerisation of records and transparency measures). Seen in this light, the bill can be a good move not only for food security, but also from the point of view of ending a massive waste of public resources under the APL quota.
Cash transfers
The main goal of the PDS is to bring some security in people’s lives, starting with protection from hunger but going well beyond that. A well-functioning PDS liberates people from the constant fear that it might be difficult to make ends meet if crop fails, or if someone falls ill, or if there is no work. The value of this arrangement has been well demonstrated in many States — Tamil Nadu, Chhattisgarh, Odisha, Rajasthan, among others. Whether a system of cash transfers could serve the same purpose at lower cost, and how long it would take to put in place, are issues that need further scrutiny and debate. Meanwhile, the PDS is in place, there is a ration shop in every village, and huge food stocks keep piling up. It seems sensible to use these resources without delay. In any case, the food bill does not preclude a cautious transition to cash transfers if and when they prove more effective than the PDS.
Three problems
Having said this, there are many reasons for concern over the impact of the bill. Three related problems look increasingly serious. First, there is a danger of over-centralisation of the PDS under the bill, at a time when many State governments are making good progress with reforming the PDS on their own. To illustrate, the bill seeks to impose a system of “per-capita entitlements” (e.g. 5 kg of foodgrains per person per month) across the country, as opposed to household entitlements (e.g. 25 kg per household). Per capita entitlements are certainly more equitable and logical than household entitlements. But the transition from the latter to the former is not a simple matter, and could be very disruptive if it is imposed overnight from the top. Just think about how an old widow in Rajasthan, who lives alone and survives on her monthly quota of 25 kg of PDS rice, would feel on being told that her entitlement is being slashed to 5 kg per month.
Political tool
The second danger is excessive haste. As the country gears up for a string of elections, the Central government — and some State governments — are keen to fast track the roll-out of the bill for electoral purposes. A sense of urgency is certainly appropriate as far as food security is concerned, but undue haste could be very counterproductive. For instance, some State governments apparently propose to use the BPL Census of 2002 to identify eligible households, instead of the more recent and reliable Socio-Economic and Caste Census — just to speed things up. This is a disastrous idea. A better way of fast tracking the roll-out of the bill would be to universalise the PDS in the country’s poorest districts or blocks.
Last but not least, the promulgation of an ordinance has turned the bill into a political football. The Congress claims that the bill is a non-partisan initiative, but is also trying to use it as an electoral card. The Bharatiya Janata Party says in the same breath that it supports the bill and that it will not allow Parliament to function. The Samajwadi Party is shedding crocodile tears for farmers, but is unable to explain why the bill is “anti-farmer.” The All India Anna Dravida Munnetra Kazhagam claims that the bill is against Tamil Nadu’s interests, without mentioning that it will enable the Tamil Nadu government to save large amounts of money on rice purchases from the Centre. The real issues are getting lost in these squabbles.
It remains to be seen whether the monsoon session of Parliament will provide an opportunity to repair this damage, and also to consider the much-needed amendments to the bill. The silver lining is that food security has finally become a lively focus of democratic politics in India. Whatever happens to the bill, State governments are under great pressure to reform their PDS and make it work for people rather than for corrupt middlemen and their political masters. This was long overdue.
(Jean Drèze is visiting professor at the Department of Economics, University of Allahabad.)
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June 27, 2012
- BHARAT BHATTI
- JEAN DRÈZE
- REETIKA KHERA
Technical glitches in the unique identification method make it unreliable in disbursing wages under the employment guarantee scheme
Within a few weeks of “Aadhaar-enabled” payments of Mahatma Gandhi National Rural Employment Guarantee Scheme wages being initiated in Jharkhand, earlier this year, glowing accounts of this experiment started appearing in the national media. Some of them also gave the impression, intentionally or otherwise, that this successful experiment covered most of Jharkhand. A fairly typical excerpt, which condenses five grand claims in a few lines, is as follows: “As the new system ensures payment of wages within a week, the demand for work under MGNREGS has gone up. Consequently, migration has been checked, families have been reunited and, no less important, some workers have a saving in the bank.”
Enthused by these upbeat reports, we tried to trace the evidence behind them, but quickly reached a dead end. The authorities in Ranchi referred us to the website of the Unique Identification Authority of India (UIDAI), but we did not find any evaluation of the experiment there or, for that matter, any details of it. There was no alternative, it seemed, than to check the facts for ourselves.
Ratu Block
We headed for the Ratu Block in Ranchi District, the source of most of the reports. It was, at that time (early March), one of the five Blocks where the experiment had been launched. On arrival, we found that only three gram panchayats (GPs) were involved, out of 14 in Ratu Block. The showpiece appeared to be Tigra GP, but it turned out that even there, only one worksite had enjoyed the blessings of Aadhaar-enabled wage payments. In the three GPs together, the system had been implemented at five worksites, employing a total of about 50 workers. We managed to interview 42 of them with the help of a small team of student volunteers.
The main role of Aadhaar in the Jharkhand experiment is to facilitate the implementation of the “business correspondent” (BC) model. Under this model, accredited agents provide doorstep banking services to MGNREGS workers using a micro-ATM. They act as extension counters of the local bank (in this case, Bank of India), disbursing wages close to people’s homes. Biometric authentication is meant to prevent identity fraud, e.g. someone’s wages being withdrawn by someone else. Aadhaar is one possible foundation of biometric identification, though not the only one. In this approach, wages are paid through Aadhaar-enabled accounts that are supposed to be opened at the time of UID enrolment. Authentication requires internet connectivity, so that workers’ fingerprints and Aadhaar numbers can be matched with the UIDAI’s Central Identities Data Repository.
The BC model widens the reach of the banking system in rural areas. This, in turn, helps to bring more MGNREGS workers under the umbrella of the banking system, as opposed to post offices, where corruption (including identify fraud) is a serious problem. Doorstep banking facilities are also a significant convenience for workers in areas where bank offices are distant, overcrowded, or unfriendly.
A little farcical
Coming back to Ratu, some aspects of the experiment were a little farcical. For instance, on one occasion, workers from Tigra were asked to collect their wages 10 kilometres away, so that Aadhaar-enabled payments could be done in front of a visiting Minister. On a more positive note, the system seemed to work, at least under close supervision. Further, most of the workers had a positive view of it. They appreciated being able to collect their wages closer to their homes, without the hassles of queuing in overcrowded banks or of depending on corrupt middlemen to extract their wages from the post office. They did not fully understand the new technology, but nor were they afraid or suspicious of it.
Having said this, there were problems too. Dependence on fingerprint recognition, internet connectivity, and the goodwill of the BC created new vulnerabilities. Fingerprint recognition problems alone affected 12 out of 42 respondents. Some workers did not have a UID number, and some had a UID number but no Aadhaar-enabled account. None of them had received bank passbooks, making it difficult for them to withdraw their wages from the bank when the Aadhaar system failed.
Four respondents were yet to find a way of getting hold of their wages. Otherwise, the payment of wages was reasonably timely, but this had more to do with intensive supervision than with Aadhaar. It is important to understand that Aadhaar, on its own, is of limited help in reducing delays in MGNREGS wage payments. This is because the bulk of the delays occur before the banking system is involved — at the stage of submission of muster rolls, work measurement, preparation of payment advice, and so on. At every step, there is a lot of foot-dragging, and Aadhaar is not the answer.
(According to the MGNREGA Commissioner in Jharkhand, quoted in one of the articles mentioned earlier, “Against one month now, payments will reach workers’ accounts in one week.” This statement is typical of the delusional mindset of the Jharkhand administration. Not only are current delays much longer than one month, the claim that Aadhaar will reduce them to one week has no basis.)
Nightmare
What next? It is easy to envisage a certain way of extending this experiment that would turn it into a nightmare for MGNREGS workers. Three steps would be a potent recipe for chaos: depriving MGNREGS workers of bank passbooks, imposing the system even where there is no internet connectivity, and insisting on a single bank operating in each Block (the odd “one Block, one bank” rule).
All this may seem far-fetched, but there are precedents of this sort of irresponsibility. Short of this, if the Aadhaar-based BC model is hastily extended without the system being ready (as happened earlier with the transition from cash to bank and post-office payments of MGNREGS wages), it could easily compound rather than alleviate other sources of delays in wage payments.
It is also possible to see a more constructive roll-out of the BC model across the country. In this constructive approach, the BC model would act as an additional facility for MGNREGS workers, supplementing ordinary bank procedures instead of becoming a compulsory alternative. This would enable labourers to bypass the BC in cases of fingerprint recognition problems, or when the BC is corrupt or unreliable. For this purpose, the first step is to issue bank passbooks to MGNREGS workers — this had not been done in Ratu.
The question remains whether Aadhaar adds value to other versions of the BC model. In the adjacent Block of Itki, the BC model is being implemented without Aadhaar, in partnership with FINO, a private company. Workers’ fingerprints are stored on a smart card, used for authentication and tamper-proof record-keeping. This obviates the need for internet connectivity, an important advantage of the Itki system in areas like rural Jharkhand.
Aadhaar, for its part, has two potential advantages. First, it facilitates multiple biometric applications based on single UID enrolment. Second, Aadhaar facilitates “inter-operability”, that is, linking of different UID-enabled databases. But the same features also have costs. For instance, dependence on a centralised enrolment system (as opposed to local biometrics) makes it much harder to correct or update the database, or to include workers who missed the initial enrolment drive. Similarly, inter-operability raises a host of privacy and civil liberties issues. A brief exploratory visit to Itki did not uncover any obvious reason to prefer the Aadhaar system to local biometrics.
Poor cousin
It is also worth noting that the Jharkhand experiment is a very poor cousin of much earlier and larger efforts to implement the BC model in Andhra Pradesh. Unlike UIDAI, the government of Andhra Pradesh has conducted serious experiments with the BC model and learnt from them. Biometric micro-ATMs are now being installed at local post offices, an important idea for the whole country: micro-ATMs could give post offices a new lease of life as effective payment agencies.
In short, Aadhaar-enabled payments for MGNREGS workers raise many issues that are yet to be properly examined and debated. The Ratu project, for one, looked more like a public relations exercise than a serious experiment. Incidentally, we learnt in June 2012 that Aadhaar-enabled wage payments had been discontinued in Tigra, due to resilient fingerprint recognition problems. That, of course, was not reported in the national media.
Last but not the least, it is not clear why MGNREGS should be used as a testing ground for UID applications when other, more useful options are available. For instance, UID could be used quite easily to monitor office attendance of government employees.
The social benefits are likely to be large, and this is a more natural setting for early UID applications than the jungles of Jharkhand. Any takers?
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Volume 28 - Issue 27 :: Dec. 31, 2011-Jan. 13, 2012
INDIA'S NATIONAL MAGAZINE
from the publishers of THE HINDU
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