Economy

Budget 2021 Is a Chance to Undo the COVID-Induced Inequality That Has Surged Across India

Ideally, the government should increase the work entitlement for MGNREGA to at least 150 days, double the budget and put in place an urban employment guarantee act.

Let’s start with those who did well over the last 10 months. The Sensex index crossed the 50,000 benchmark for the first time on January 21, 2021, with a whopping 70% increase since April 2020.

The Oxfam inequality report, just released, gives an idea of how the economy has functioned, for whom, and where our policy interventions have left us. The wealth of Indian billionaires increased by a massive 35% in the last 10 months. The Oxfam report states that just the increase in wealth of the top 100 billionaires could sustain the MGNREGA for ten years.

This is at the same time that we have faced an extreme recession – with the first quarter in 2020 measuring a 23.9 % degrowth, unknown in the history of independent India.

Let’s look at who suffered. The same Oxfam report says that 1,70,000 people lost their jobs every hour in April 2020. Innumerable studies have pointed to the shrinking workforce and the rising rates of unemployment, even while there are some signs of recovery in growth rates (CMIE), the highest levels of food insecurity and starvation known in recent times (Hunger Watch), distress migration and reverse migration, the casualisation of jobs, the workforce shrinking by over 13% for women (Nikore FLFP study) during the pandemic; children out of schools, and children beginning to go to work. Everything seems to have gone wrong with the economy, and working people have suffered deep distress.

A group of migrant workers walk to their native places amid the nationwide complete lockdown, on the NH24 near Delhi-UP border in New Delhi, March 27, 2020. Photo: PTI/Ravi Choudhary

To add to all the negative indicators, inequality has increased dramatically in spread and intensity, with Oxfam calling Covid an “inequality virus”. But growing inequality perhaps helps explain why one group is clearly bullish even while millions continue to face acute economic distress.

The pandemic has of course contributed to this distress. But so has one of the harshest “lockdowns” seen across the globe. The pandemic was, and is a natural calamity, but the lockdown is a policy measure. Relief measures announced were not matched by financial provisioning. Countries across the globe – not just from Europe and North America, put aside approximately 10% of their GDP to alleviate distress, and help rebuild their economies. In India too, the PM announced 10% of GDP as a relief and stimulus package, but if credit is removed from the calculation, real enhancement of relief in cash or kind, or enhancement of schemes and additional allocations, amounted to little more than 3% to 4% of GDP.

Also read: Two Key Numbers to Look Out for in the Upcoming Budget 2021

The lockdown related distress in India was unprecedented, and painful with millions of people from the unorganised sector hitting the roads to head home by any mode possible, because they had no job, income, or residential security in the places that employed them. This should have been a wake -up call of what needed to be done, not only to climb out of the effect of the pandemic, but also address and correct the underlying systemic injustice this mass exodus had made so obvious to everyone.

Instead, we have seen a government using this period to keep dividing people along religious lines, for political gain and consolidation, through a series of discriminatory laws and amendments. What has been worse, has been the enactment of laws and policies such as the farm laws and labour codes that further dilute the basic rights of farmers and workers.

What has actually helped working people in India to survive the pandemic, and not have food riots across the country, has been our food stocks, and bumper harvests despite the pandemic. While almost all other tangible production sectors including manufacturing, went through unprecedented periods of near-zero productivity, enforced by the strictest of lockdowns, the agricultural sector carried on despite all the risks and tribulations they had to face.

Farmers seem to have responded to the pandemic with a kind of economic maturity and understanding that the laws of nature have to be followed both in terms of survival, and in terms of productivity. While we had 23.9% negative growth in the first quarter, the agricultural sector was the only one that showed a positive growth rate of 3.5 %, and if it were not for agriculture, the figures would have been so much worse.

Amongst relief and revival measures we must acknowledge and understand what actually saved vast numbers of people from hunger, starvation, and destitution. If it had not been for MGNREGA and the National Food Security Act (NFSA), the distress would have been even more acute, and we would have probably seen food riots, anarchy, violence, and uncontrollable protests on the ground. These were laws that this government dismissed, and derisively commented on as useless handouts.

But when the country faced acute distress and unemployment, even as a functional platform of delivery, the government had only these schemes and laws to turn to. Let’s first look at the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and rural wage employment. The government allocated Rs 40,000 crore more to MGNREGA to make a total of one lakh crore. Experts pointed out that this was barely enough to actually cover the existing needs of MGNREGA.

Also read: Lockdown Woes: How Successful Have the Centre’s Efforts to Boost NREGA Been?

Even as per the approved labour budget of 2020-21, for generating 336 crore person days of labour in the year, and covering the pending liabilities from previous years approximately 1 lakh crores would have been needed. Therefore, the Rs 40,000 crore did not really do anything to help alleviate the additional Corona disaster-related distress, and MGNREGA coffers are now running dry with only about 5 % of the budget remaining, and two high demand months of the financial year still to go. Almost 94% of the so-called approved labour budget has also been used up, leaving states struggling to accept the demand for work from people.

We approach this budget at a time when millions of people have migrated back to their villages, and many are still there. 1,56 crore new job cards have been issued, and an additional 2.79 crore workers have sought and got work through MGNREGA. At the time after the pandemic when 30% of women dropped out of the workforce, MGNREGA provided an additional avenue for paid work with 1.05 crore more women coming to work on MGNREGA this year. In fact, MGNREGA is one of the most progressive gender oriented forms of paid work where more than 47% of the workforce is women, who get work near home, on projects that strengthen their development infrastructure, and where money goes directly into their bank accounts.

MGNREGA

Labourers work on a dried lake to try and revive it under the NREGA at Ibrahimpatnam, on the outskirts of Hyderabad, June 17, 2009. Photo: Reuters/Krishnendu Halder/Files

In addition, there is an existing provision to expand MGNREGA relief to 150 days in case of a “natural disaster”. However, despite the dire need, with many households completing their 100 days of work; this provision has not been activated. It would also require higher financial allocation. Despite COVID-19 being an unprecedented national disaster, and letters from many states to the central government asking them to provide an additional 50 days of work and additional funds, the government of India has steadfastly refused to pass the requisite orders. The government’s refusal to strengthen one of the most cost-effective methods it has had available to provide employment security to people in distress is inexplicable.

The government instead seems determined to place its faith in the corporate sector, reforming labour laws comprehensively, through the four new labour codes slanted in favour of the employer, thereby further informalising the already vulnerable and distressed unorganised sector. Along with the recent farm laws, it is clear that the government believes that it is the corporate sector that needs support, and greater opportunities for profit.

Also read: ‘Worst Is Behind Us, but Economy Is Not in Comfortable Position’: Montek Singh Ahluwalia

This reveals the contempt for Indian workers, farmers and their contribution to the Indian economy, and why the Oxfam report shows the corporates have done so well. Unfortunately, it has increased their wealth, but not even trickled down in terms of jobs, and income security of the working people of India. Vast numbers of them will still have to look for wage employment in public works through MGNREGA, or some form of urban employment guarantee.

It is therefore important to see the budget as a place that makes some minimal advance based on what has worked. Ideally, the government should increase the work entitlement for MGNREGA to at least 150 days, at least double the budget to Rs 2 lakh crore, and put in place an urban employment guarantee act if it wants to make people a part of its revival and growth story. Otherwise, we can be sure that it will not be only farmers who will be on the streets in the next year, and yet another Dickensian budget, of contrasts and inequality, will have contributed to it.

Nikhil Dey is a social activist who works with the Mazdoor Kisan Shakti Sangathan.