RURAL EMPLOYMENT GUARANTEE SCHEME—TWO VIEWS

Summary

This Forum of Free Enterprise pamphlet records two opposing addresses delivered at a Bombay symposium on 28 April 1975 assessing the Maharashtra Government’s Employment Guarantee Scheme (EGS), the precursor to what would later become India’s national rural employment-guarantee policy. The editors frame the volume as a public-education exercise: one speaker, the economist Prof. Gangadhar Gadgil (then Economic Adviser to the Apte Group of Industries), argues that the EGS is a ‘welcome and revolutionary measure’ that gives concrete content to the Article 41 right to work and channels resources to the poorest rural strata. The other, N. G. Abhyankar, I.A.S. (Retd.), a former Development Commissioner and Finance Secretary of Maharashtra (then Executive Director of the All-India Manufacturers’ Organisation), argues the Scheme is a costly diversion of scarce resources toward ‘totally unproductive ends’ and indistinguishable from earlier scarcity-relief programmes. The two essays appear back to back under a common title and are aimed at students of economics, administrators and policymakers.

Essays

I — A WELCOME MEASURE

By Prof. GANGADHAR GADGIL

Gadgil’s address (‘A Welcome Measure’) concedes the EGS’s limitations but treats it as a ‘welcome and revolutionary’ attempt to honour the directive principle in Article 41 of the Constitution. He traces the Scheme’s growth from a Rs. 10 crore experiment in 1972 to a Rs. 50 crore programme covering rural areas and ‘C’-class municipal towns, and defends its targeting logic: keeping employment rural prevents distress migration to large cities where the social cost of maintaining the unemployed is higher. He answers the standard criticisms one by one — that ‘Kulaks’ will obstruct it, that landlords will capture the assets, that the new cesses fall on the small salaried class, that the financial cost is understated — by arguing the surcharges are progressive within their limits, the big farmers already bear over 75 per cent of indirect taxes, and Rs. 50 crores is under 5 per cent of Maharashtra’s budget. The bulk of the essay is constructive: he urges that works be done through co-operatives of small and marginal farmers and landless labourers rather than left as wage-doles, that some afforestation, percolation tanks and Khar-land bunding be designed to yield monetary returns, that administrative machinery be radically reformed (he cites his visit to the Konkan’s Chiplun area, where the Koyna’s water runs to waste), and — most provocatively — that participation be tied to compulsory vasectomy for those with two or more children and to literacy camps for workers’ children. He closes by warning that the Scheme will either be ‘the harbinger of a great social and economic revolution’ or ‘another avenue of waste, corruption, inflation and frustration’, depending entirely on implementation.

• Frames the EGS as the first serious institutional attempt to redeem the Article 41 directive on the right to work.
• Defends confining the Scheme to rural and small-town areas because urban social-maintenance costs are higher and large cities already draw inter-state migrants.
• Rebuts the charge that the cess on incomes above Rs. 400/month is regressive by arguing that the salaried already bear heavy indirect taxes.
• Estimates the true unemployment-coverage cost at Rs. 150 crores (against the Rs. 50 crore programme), citing Professor Dandekar and Rath’s earlier work.
• Proposes that wage-works be organised through co-operatives of small farmers and landless labourers so the assets created (afforestation, percolation tanks, Khar-land bunding) generate monetary returns.
• Calls for a ‘revolution in administration’ to fix the multiplicity of agencies that frustrate rural development.
• Urges that EGS employment be tied to family planning (vasectomy for workers with two or more children) and to literacy classes for workers’ children at camps.

II — DIVERSION OF SCARCE RESOURCES

By N. G. Abhyankar I.A.S. (Retd.)

Abhyankar’s address (‘Diversion of Scarce Resources’) is a closely argued administrative critique from a former Development Commissioner of Maharashtra. He stresses that the EGS is not a general employment guarantee but specifically a guarantee of non-agricultural work in the rural areas, and that the Centre and Planning Commission have so far refused to share its cost on a 50:50 basis. He organises his argument around five questions — whether the Scheme is genuinely path-breaking, whether its works produce durable assets, whether it amounts to a permanent scarcity-relief programme, whether it degenerates into ‘digging holes and filling them up again’, and whether the diversion of funds is justified. On the employment side, he argues that the types of works on the State’s approved list — open wells, percolation tanks, contour-bunds, rural roads — have low labour-absorption per rupee and demand skilled (not unskilled) labour for completion; only contour-bunding, which the Agricultural Refinance Corporation’s own field study found to add ‘nil’ productivity in Maharashtra, can absorb large numbers. He marshals the experience of the 1969-72 scarcity-relief programmes to show that such rural roads typically washed away in the next monsoon, and that absent advance engineering, geological and groundwater surveys, well-construction targets produced ‘holes without water’. On the administrative side, he contrasts the firm schedules and engineering discipline of normal Plan works with the EGS’s open-ended, voluntary, district-collector-driven model, in which ‘powerfully entrenched local vested interests’ rather than need would dictate which works got started — citing the routine paving of roads in front of municipal chairpersons’ houses. He concludes (in the pages seen) that the EGS is in essence a permanent scarcity-relief programme that cannot be justified district-by-district when prosperous areas like Sangli, Kolhapur, Nanded and Jalgaon are included alongside Bhir and Osmanabad.

• Insists the EGS is a rural non-agricultural employment guarantee, not a general one — and that the Centre and Planning Commission have refused 50:50 cost-sharing.
• Frames the inquiry around five critical questions, including whether the Scheme degenerates into ‘digging holes and filling them up’ and whether diversion of funds is justified.
• Argues the approved works (open wells, percolation tanks, storage tanks, rural roads) have low unskilled-labour absorption and depend on skilled engineering labour for completion.
• Cites the Agricultural Refinance Corporation’s field study finding that Maharashtra’s Rs. 60 crore contour-bunding programme since 1952 produced ‘nil’ increase in agricultural productivity over much of the sample.
• Uses the 1969-72 scarcity-relief experience to show rural roads constructed under such programmes vanished with the next monsoon and well-targets produced ‘holes without water’.
• Contrasts firm Plan-programme schedules and engineering discipline with the EGS’s open-ended, voluntary, collector-driven model captured by local vested interests.
• Argues that universal district-wise allotment cannot be reconciled with the genuine needs of varied districts, citing the prosperous diversified agriculture of Sangli, Kolhapur, Nanded and Jalgaon.

---

Generated by the v1.5 extraction pipeline. Awaiting editorial review.