Friday, September 13, 2013


One of the flagship programs of the the government of India viz Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA), which became the main plank for the UPA I to ride back to power was indeed revolutionary in concept. It is not a mean task to create employment opportunities for millions of people in the rural regions of the country who otherwise would have famished for want of sustainable income to survive. When people do not get work to earn a living in an environment of poverty, providing job at a decent pay for at least 100 days in an year is really God-sent. One of the criticisms against MNREGA is that the outgo of public money ostensibly for the pay out do not reach the intended beneficiaries to the extent expected. Also true is the view that the expenditure was not targeted to create permanent assets at the rural level.  

The government deserved full credits for lifting the wage rates across the country in a dramatic way with every sector of employment attaining the unbelievable growth rate of around 20%! To day the wages demanded by labor, even the most unskilled is in the range of Rs 200-300 per day while a little skill like masonry, carpentry, etc can earn as much as Rs 500-700! In contrast MNREGA was paying out a "measly" Rs 150 per day which has led to a situation where there are hardly any takers for such a low pay! The result is there to see in almost all states where funds under this scheme is grossly under utilized. As there is a minimum pay out guaranteed under MNREGA, labor started demanding higher wages from the private sector entrepreneurs including the land owners for doing jobs like tilling, planting, weeding, harvesting etc. 

In a place like Kodagu, the coffee growing heartland of Karnataka, plantation labor is such short supply that they have to be ferried from far away places for tending and harvesting the crops at costs considered exorbitant by any standards. Same is true with sugarcane cultivation in Mandya district of Karnataka where labor is treated with kid gloves, pampering to their every wish for getting them to the sugar cane fields! Free break fasts, tea and snacks and lunch are standard features in many of these places. Look at the construction industry which depends heavily on labor where an ordinary helper gets Rs 300 a day while a mason demands Rs 500 a day. In states like Kerala these daily wages can soar by almost 50%! Of course every one should be happy that more people are getting more money in their hands, provided it also contributes to increased productivity. Unfortunately this is not happening with absenteeism and boozing becoming more and more rampant!

One of the critical issues is whether such dramatic growth of wages is good for the country as a whole? The answer may not be easy to come but it definitely depresses agriculture to a very significant extent. While small farmers are finding it difficult to tend their land in an efficient way because of shortage of labor, big farmers are increasingly resorting to large scale use of mechanized machinery to do almost all operations connected with agriculture. Is it a desirable trend in the long run? Probably not because of its repercussions on food production. A dispassionate analysis of the present situation obtaining in the country will show that this country will have to suffer steep fall in food production in the coming years because of the consequences of large scale desertion of farmlands by small and marginal farmers as farm activity progressively becomes a losing proposition for these much neglected population eking out a miserable life with hardly any promise or hope for future. It is forgotten that almost 80% of food production comes from the small scale farming community and therefore destroying them will definitely tell on the food production in the country.  

In almost all states, the cost of farm labor is reported to have shot up making it beyond the absorption capacity of millions of small farmers. The cost of inputs like seeds, fertilizers and pesticides has been on an upward swing but not to the extent that can seriously hurt the farmers but it is the cost of labor that is pushing the total cost of cultivation dramatically. It is a common knowledge that the prices for agricultural produce have not kept pace with the escalating cost of cultivation. Recent surveys have revealed that farming is a labor intensive' activity,  with the cost of labor making up almost 50% of the total cost of cultivation of many crops. Is it not a paradox that net return on investment for many farmers is negative for most crops leading to a majority of farmers slowly being pushed 'below poverty line'? How can they survive and sustain themselves under such a hostile environment? Writing off loans and interest burden on these loans especially before the general election does not make any sense and at best it is a short term palliative to the problem. As a consequence of declining availability of cheap labor, acreage under many crops like Ragi, Bajra and Groundnut is progressively coming down. Where is this going to end up and what are its consequences? 

A reckless government announcing the implementation of the much touted Food Security Act, where are they going to find the required grains to be supplied to almost 850 million people, as guaranteed by this imposing Act? Importing is not an option as the required foreign exchange resources are not in the kitty and the measly reserve cannot be frittered away on such a scheme. How is the government going to arrest the fast migration of rural population, with no hope of farming sustaining them, into already bursting cities with very little infrastructure to let people lead a decent life? Future may not be bright as severe shortages are expected vis-a-vis cereals, pulses and oil seeds with the latter two on the import list perennially since a long time due to stagnant production during the last three decades. India happens to be largest importer of Palm oil in the world while for pulses there are only a few sources from where they can be imported. Even if the government is able to garner sufficient cereals to meet its obligations under the Food Security Act, nutritional insecurity is going to haunt the country for a long time to come. 

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