Title: A triple blow to job guarantee scheme
(A lack of sufficient funds, rampant payment delays and abysmal wage rates are to blame)
Point: The ₹11,000 crore fraud that diamond merchant Nirav Modi is said to have created is a figure that needs to be put in perspective.
The total amount of wages pending under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme for the whole country (2016-17) was around ₹11,000 crore too. This sum is a fifth of the MGNREGA budget announced for financial year 2018-19.
MGNREGA stands out in its worker-centric legislation and stated emphasis on transparency and accountability.
Several potentially progressive measures such as a real-time management information system have been put in place. The scheme is meant to be demand-driven in the sense that the government is mandated to provide work within 15 days of a worker seeking work.
Otherwise the worker is entitled to an unemployment allowance. A second key provision of the Act pertains to payment of wages within 15 days of completion of work, failing which a worker is entitled to a delay compensation of 0.05% per day of the wages earned.
However, both these provisions have been routinely violated. There is an ongoing Public Interest Litigation in the Supreme Court (Swaraj Abhiyan v. the Union of India) concerning these violations. We look at three ways in which a lack of funds has led to a subverting of these provisions in letter and spirit.
First, budget allocation over the years has been insufficient.
The real budget of 2018-19 is much lower than that of 2010-11.
Second, even this low budget allocation has undergone various kinds of curtailment. By December of each year, through a bottom-up participatory planning approach, every State submits a labour budget (LB) to the Centre. This contains the anticipated labour demand for the next financial year.
The Centre, on its part, has been using an arbitrary “Approved Labour Budget” to cut down funds requested by States (using the National Electronic Fund Management System, or Ne-FMS), making this a supply-driven programme.
Thus the “approved labour budget” puts a cap on funds. So, for 2017-18, for example, if one aggregates the requested LB of all States, the minimum budget requirement adds up to ₹72,000 crore. However, the initial allocation was only ₹48,000 crore, which is in synchrony with the approved LB (as on the first week of April 2018).
The lack of payment of wages on time has meant a violation of the second key aspect of the Act.
Stagnating wages:
The third point is about stagnating MGNREGA wages. Delinking of MGNREGA wage rates from the Minimum Wages Act (MWA), 1948 has contributed to this.
MGNREGA wages are a less lucrative option for the marginalised, being lower than the minimum agricultural wages in most States. As primary beneficiaries of the Act, women, Dalits and Adivasis could be the most affected and pushed to choose more vulnerable and hazardous employment opportunities. Such contravention of the minimum wages act is illegal.
Final Words:
MGNREGA now faces a triple but correlated crisis — a lack of sufficient funds, rampant payment delays, and abysmal wage rates. What this reflects is not only a legal crisis created by the Centre but also a moral one where the fight is not even for a living wage but one for subsistence. One hopes for a just order from the judiciary. (Public Interest Litigation)
Idioms & Phrases
1) Bide one’s time = Wait quietly for a good opportunity
2) The big smoke = Any large town
One word Substitution
1) One who hates mankind = Misanthrope
2) Constant efforts to achieve something = Perseverance
Title: Rupee rout
(Slide of the currency and a widening trade deficit present the RBI with a huge dilemma)
Context:- India’s macroeconomic threats lie exposed as it grapples with the rupee’s slide.
The currency sunk to a closing low of 68.07 against the U.S. dollar on Tuesday, its lowest level in 16 months, before recovering slightly the next day. The rupee, already one of the worst performing Asian currencies, has now weakened 6.2% in 2018.
The rise in crude oil prices through this year, amidst rising geopolitical tensions in West Asia and dwindling global supply, have obviously hurt the rupee and the trade balance.
Meanwhile, despite a depreciating currency, India’s merchandise exports are stumbling instead of gaining from the opportunity. April clocked a sharp decline in exports from employment-intensive sectors such as readymade garments and gems and jewellery, according to official data.
The trade deficit has consequently widened to $13.7 billion in April, compared to $13.25 billion in the same month in 2017.
As the U.S. Federal Reserve has come to adopt a more hawkish stance, investors in search of higher risk-adjusted yields have started to pull money out of emerging markets.
The yield on the 10-year bond issued by the Indian government has risen to more than 7.8%, from 7.1% in early April. Foreign portfolio investors (FPIs) pulled out ₹15,500 crore from India’s capital markets in April, which is the highest monthly outflow since December 2016. Not surprisingly, about two-thirds of the outflow was attributed to the bond market.
India is better placed than countries such as Argentina or Turkey. But that’s no reason to be complacent (आत्मसंतुष्ट) as external account risks can get out of hand very quickly.
Final Words
Policymakers, blessed with relatively benign(gentle) external economic conditions after the taper tantrum of 2013, will have to find means to spur exports — whether by facilitating swifter GST refunds or taking on tariff and non-tariff barriers from the developed world. Efforts to diversify India’s energy basket also need greater stress.
Phrasal Verb
1) Wipe out = Cause to be very tired, destroy
2) Write out = Write down every word or letter
Vocabulary words:
Rampant (adj) = Uncontrolled especially something unwelcome (अनियंत्रित)
Abysmal (adj) = Extremely bad, dreadful
Pertain (verb) = Be appropriate (मुनासिब होना)
Subvert (verb) = Undermine the power and authority of (नाश करना)
Truncation (noun) = The process of shortening something (काट-छांट)
Rescind (verb) = Revoke, cancel (रद्द कर देना)
Absolve (verb) = Discharge, declare free from guilt (दोषमुक्त)
Deficit (noun) = Shortage in amount (घाटा)
Grapple (verb) = Struggle
Dwindle (verb) = Diminish gradually in size, amount, strength
Depreciate (verb) = Diminish in value
Stumbling (adj) = Making repeated mistakes, moving with difficulty
Scupper (verb) = Prevent from working, ruin (तबाह करना)
Hawkish (adj) = Advocating an aggressive policy
Complacent (adj) = Showing uncritical satisfaction (आत्मसंतुष्ट)
Exodus (noun) = A mass departure of people
Benign (adj) = Gentle and kind
Taper (verb) = Diminish or reduce
Tantrum (noun) = An uncontrolled outburst of anger
Phrasal Verb
1) Wipe out = Cause to be very tired, destroy
2) Write out = Write down every word or letter
