15 September 2005

Why India's poor need an employment guarantee...Transcript of an interview to ABC TV

ABC TV Asia-Pacific interviewed a colleague and I on India's radical new Employment Guarantee Act for an episode of one of their regular programmes, The Editors.

Siddharth Varadarajan: I think this is definitely something which has global significance, because for the first time in the past 20-25 years, you actually have a government which is acknowledging it has a responsibility to provide some measure of employment protection to its citizens.

Broadcast date: 14 September 2005
ABC Asia-Pacific

Episode 33: Poor plan

This week we examine an Indian government plan to give work and hope to the poor. Will the new scheme turn the tide of poverty in India?

Plus, we speak to Australian journalist, Peter Olszewski, who has been working in Rangoon and critisises America's sanctions against Burma's military regime. (Note: Burma has been renamed Myanmar by the military regime)


Jason Tedjmasukmana: Hello and welcome to The Editors, I'm Jason Tedjmasukmana in Singapore standing in for Grace Phan. Tonight India and two very different opinions about the latest government plan to help the poor.

Siddharth Varadarajan, deputy editor, The Hindu: I think this is definitely something which has global significance because for the first time in the past 20-25 years you actually have a government which is acknowledging that it has a responsibility to provide some measure of employment protection to its citizens.

Pramit Pal Chaudhuri, foreign editor, Hindustan Times: The political landscape of India is littered with poverty alleviation programs of almost every possible description, and they've all been abandoned after three or four years largely because they don't seem to work very well, or the funding for them simply dries up.

Jason Tedjmasukmana: Also tonight Myanmar or Burma as some still prefer to call it, is there balance in the international community's approach to the military junta there? One journalist who has worked in Myanmar accuses the west and the US particularly over its economic sanctions as being overly harsh and doing Burmese people more harm than good.

Peter Olszewski, journalist: You will not starve the Myanmar people into submission and in my book I quote a Myanmar intellectual who says how dare you westerners starve us and make us fight a revolution from the comfort of your lounge room.

Jason Tedjmasukmana: That interview later in the program but first to India's poor plan, which is exactly what its detractors are calling it, a poorly devised political ploy that does little for India's most needy and destined to fail. Its defenders on the other hand claim that legislation just passed by the Indian parliament will be a conduit for India's new found prosperity to flow through to millions of people mostly in rural areas who remain wretchedly poor.

The legislation says that at least one adult in every poor household in the countryside should be guaranteed 100 days of work a year at the rate of at least 60 rupees or a $68 a day, just to put that wage into perspective, the World Bank says that more than 30 per cent of India's one billion people live on less than a dollar a day. The program is expected to cost an estimated 250 billion rupees or $5.6 billion a year, but sceptics say it could end up at six times that amount.

In a moment two senior Indian editors with very different views debate the issue. But first a look at how the proposed plan has been covered in the media both at home and abroad. 'BBC News' ran the story under the heading, "India's villagers get job promise". It quoted the president of India's ruling Congress party, Sonia Gandhi, telling parliament that "we are today passing a truly radical law which has far-reaching and profound consequences". The US 'Christian Science Monitor' said "India moves to spread wealth", and added, "social welfare spending it seems is staging a comeback here after 15 years of focus on privatisation and encouraging the high tech sector.

The 'Interpress Service' newsagency reported a story under the headline, "India passes world's biggest job guarantee plan". It quoted economics professor Prabhat Patnaik saying "this is the most important piece of legislation on behalf of India's impoverished millions since India won independence in 1947". The same story quoted another economist, Surjit Bhalla saying, "the law opens the floodgates to widespread corruption".

In a similar vein the 'Financial Times' reported, "India bill to help the poor criticised". It quoted analysts saying "the proposed scheme was too expensive to be tenable, and was unlikely to benefit those for whom it was intended". The 'Economist' pointed to critics of the new rural employment laws who it said, "regarded the legislation as yet another way of pouring unmeasured pots of good money after bad". Both sides of the debate were summed up in a piece in Calcutta's 'The Telegraph', which said "the debate is stuck between unthinking idealism and intemperate cynicism".

And finally the Indian website, 'rediff.com' said "we have tried to fight poverty by various means but have met with little success. So what India needs is something more lasting than patchwork policies to help its millions of poverty stricken people".

So is this new scheme more than just a patchwork of policies? To discuss this I'm joined by our guests both from New Delhi, Pramit Pal Chaudhuri is the foreign editor of the 'Hindustan Times' and The Editor's regular commentator on Indian affairs, and Siddharth Varadarajan is the deputy editor of 'The Hindu'. Gentlemen thanks for joining us on The Editors. Before we debate this issue could you both give me some idea of the feedback you've been getting from people about how the new program might work?

Siddharth Varadarajan, deputy editor, The Hindu: I attended a public rally in a very poor village where there were poor people talking about why they needed this law, and one thing which stuck in my mind was the testimony of a young boy. He was hardly nine or 10 and he told the audience that he went to school maybe twice a week, that most days if his mother and father both managed to find work then he himself did not have to seek work in a brick kiln after school. But he says half the week he would have to work for four to five hours in a brick kiln and earn just ten rupees, that's hardly 20 cents. And only then would there be enough money in the family to have a meal at breakfast, lunch and dinner of simply rice and a bit of gruel. No question of vegetables, no question of any other high protein, God, this is the kind of poverty we're talking about and this is endemic. Surely the government cannot begrudge its people some measure of employment and income support.

Pramit Pal Chaudhuri, foreign editor, Hindustan Times: In West Bengal, the state that I lived in and one that is ruled by a left-communist government, they also have a lot of public works programs that were designed to alleviate poverty. The ultimate point though was that the party, even the left parties essentially ensure that the money was siphoned off to their local patronage networks.

And even whatever public works that they did were specifically designed to collapse at the end of the year, they were building essentially dykes on the river because Bengal has a lot of, is a river and delta state, were designed to collapse so that they could ask for the same amount of money next year. There was absolutely nothing productive being done out of this and they were ensuring that the people who were getting the work were not necessarily poor but people who had party affiliation to the left party in power.

Jason Tedjmasukmana: An Indian government plan to give work and hope to hundreds of millions of impoverished people, will it work? We'll be back after the break.


Jason Tedjmasukmana: Welcome back, tonight we look at India's underclass, after achieving higher incomes for its skilled and educated India's now looking to its poor. It has introduced new laws to provide work for millions of people, mostly in rural areas who languish on the bottom rung of Indian society. The big question is will the plan work? With me from New Delhi is Pramit Pal Chaudhuri, foreign editor of the 'Hindustan Times', and Siddharth Varadarajan, the deputy editor of 'The Hindu'.

Siddharth you describe this plan to help the poor as a global breakthrough. Why such strong praise?

Siddharth Varadarajan: I think this is definitely something which has global significance because for the first time in the past 20-25 years you actually have a government which is acknowledging that it has a responsibility to provide some measure of employment protection to its citizens. I mean, over the last 20 years you've had the orthodoxy of liberal neo-classical economics which says that job creation should be left to the market, and in India you have for the first time an official acknowledgement that markets are not really up to the task and given that reality it is the duty of the government to take some kind of interventionist or corrective steps to provide some measure of job protection or some measure of employment guarantee to its most impoverished citizens. So I think globally this is very definitely a breakthrough.

Jason Tedjmasukmana: Pramit how would you describe the plan?

Pramit Pal Chaudhuri: I'd have to be a little more cynical, I think that in fact poverty alleviation programs are dime a dozen in Indian history. We have literally, the political landscape of India is littered with poverty alleviation programs of almost every possible description, and they've all been abandoned after three or four years largely because they don't seem to work very well, or the funding for them simply dries up. Even the present one for example to help finance this one, an earlier one called the Food for Work program is being essentially abolished to help provide the funding for the present one. So I don't really see anything new in this program other than perhaps the scale of this poverty alleviation program.

Jason Tedjmasukmana: Pramit you mentioned the cost, the plan is said to cost a minimum of 5-point-6 billion dollars a year. Can India afford that?

Pramit Pal Chaudhuri: I think India can, I mean 5-billion dollars will not break the bank. The issue though of course is 5-billion dollars in the initial projection, which is essentially a pilot project covering about 200 districts. That's covering an estimated 20, it's assuming about 20 to 25 million people sign up for the program. If perhaps for example it then is extended to all of the Indians below the poverty level, which is roughly two or three-hundred people, then you're looking at, at a budget busting amount of money because we can make out the calculations, you multiply that by about 15, you're looking at about $65 to $75 billion, which is definitely well beyond something the Indian government could afford.

Siddharth Varadarajan: No I don't agree, I think when this program is extended to the rest of the country it will not necessarily be a straightforward multiplication process, in other words if you're spending 5.6 billion for the first stage there's every likelihood that the amount needed for subsequent stages may actually be less because you have, in economic terms, what's known as the multiplier effect -- money that you pour in and you provide for poor people to spend is money that gets recycled into the rural economy.

And I think the money will not be as large as people think, but even if it is a large sum, it is money well spent, and this country is spending an enormous amount of money on all kinds of wasteful things. You have any number of hidden subsidies for the rich, you have I think in many senses wasteful defence acquisitions.

Jason Tedjmasukmana: Pramit, Ila Patnaik, business editor of the 'Indian Express' says this employment guarantee plan has the potential to become, "India's best anti-poverty program if implemented well". What's to say it can't be properly handled and why would that be difficult?

Pramit Pal Chaudhuri: Rajiv Gandhi when he was prime minister made a famous statement where he said that out of every rupee that is spent on anti-poverty alleviation, only 15 per cent actually makes it to the people who it's targeted for, the rest of it just leaks out through the system through bureaucracy inefficiency. And one of the key criticisms of the employment guarantee scheme is that there has been almost no major administrative reform in how it functions.

It more or less functions exactly for example as an earlier scheme, which is run by the Maharashtra government, and the Maharashtra government one was riddled with corruption, it was riddled with all sorts of fake workers, people say politicians claiming 20 grandchildren were the people under the poverty scheme and taking the money, nobody showing up for work, it went on and on. It's been the entire history of fighting poverty in India at the government level. It's how do we ensure that nobody ever has any problems with these programs when they're announced, the problem always is that after two years everybody looks and says where has the money gone? And this program has nothing administratively new to make it function any better than any previous program.

Jason Tedjmasukmana: Siddharth would you agree that there is a history of failed programs?

Siddharth Varadarajan: No I don't agree with that, I think there are two things which separate the employment guarantee act from all those schemes, in this case a poor person who presents himself or herself to work under the employment guarantee scheme has a legal right, and if the government does not provide her that job or him that job then they're entitled to some kind of unemployment benefit.

Secondly this law has been accompanied by the passage of the Right to Information act, which for the first time in India is going to make governments, it's going to oblige governments to make public details of expenditures at the grassroots level. For example the way in which this scheme works and to a certain extent in Rajasthan where you have the Right to Information act in operation for the past two or three years, it's been very, very difficult for the bureaucracy to cheat, this act is well structured and I think there is every reason to expect that it's going to perform much better than earlier anti-poverty schemes.

Pramit Pal Chaudhuri: Well the Rajasthan program that he mentioned where you had a program of poverty alleviation merge with the Right to Information bill had a relatively I think, I can't remember the figure but I think roughly 40 per cent of the money actually made it through, and that's very high by the standards of most Indian anti-poverty schemes. The Right to Information factor is very important and I completely agree on that, the program is that most states in India do not have Right to Information bills, or the ones they have have been eviscerated or just ignored. Rights by themselves don't necessarily result in people understanding or even factoring this into the way they think, and the poorest people of India, and we're really looking at people who are below sub-Saharan African levels of poverty, don't have a clue as to what their rights are.

Siddharth Varadarajan: Given the manner in which this law has come about and the involvement of political mobilisation at grassroots level, I think the signs are optimistic, we are going to look at something which is going to be quite empowering in the rural areas and which has the potential to transform the social, economic and political equations in the countryside.

Jason Tedjmasukmana: Pramit Prime Minister Manmohan Singh has set the goal of eradicating poverty by 2020. How confident are you that this could happen?

Pramit Pal Chaudhuri: If we could achieve eight per cent plus economic growth rate then yes, poverty will fall. It may not be by 2020 but I think we would be able to see the back of poverty in India at some point in the near future.

Jason Tedjmasukmana: Siddharth an end to Indian poverty by 2020, is that possible?

Siddharth Varadarajan: No I don't agree because India has grown at seven, eight per cent for the past seven or eight years, poverty hasn't fallen by as much as the advocates of trickle down would suggest, so I think if the employment guarantee program is implemented properly and is expanded gradually and is accompanied by other forms of income support, nutritional support, public investment in education and health of the kind that this country sorely needs, I think by 2020 it is quite possible that poverty in India can be eliminated. But it can only be done if the government fulfils its obligation and does for its people what the private sector so far has failed to do.

Jason Tedjmasukmana: Thank you gentlemen very much, I've been speaking with Pramit Pal Chaudhuri, the foreign editor of the 'Hindustan Times', and Siddharth Varadarajan, the deputy editor of 'The Hindu'. Coming up one man's view of Myanmar, is the heavy-handed approach to the military regime there the wrong way to go? We'll be right back after the break. [PROMO]

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