Reaching Inclusive Growth Through

Employment Guarantee Programme:

Outline of a Strategy
Indira Hirway
Centre for Development
Alternatives, Ahmedabad

JNU – IIAS Conference, 28-29 June

2007
 This Presentation

• Argues that a well designed EGP can be viewed

as a an important component of a full
employment strategy in a developing country like
India
• Such a strategy can lead to economic growth
that is inclusive in terms of employment by
addressing
• Some of the major concerns that India is facing
with respect to its growth that has caused
multiple exclusion in the economy.
 What is Inclusive Growth With Respect to
employment?
• Generation of productive employment (decent
work) for labour force in the economy, as
employment is a key to inclusive growth,
• Employment generation in all sectors, regions
and for all socioeconomic groups
• Particularly (1) for poorer sections of population,
(2) backward regions, (3) lagging sectors and (4)
ST / SC / OBC / women etc
• Inclusion of small enterprises / producers
preferably in a decentralized framework
• Controlling inequalities and disparities
ELR Strategy or Employment Guarantee for
Achieving Full Employment
• New Deal was the first major programme in
industrialized countries that showed how
employment generation by government can
promote full employment
• This approach is now developed in to a major
strategy under which government is seen as
Employer of Last Resort (ELR) to promote full
employment in industrialized countries (Minsky,
Abba Lerner, Philip Harvey)
• In the case of developing countries also state
sponsored EGP can lead to full employment
though the context will be different.
 The Indian Scene of Employment

• The high growth rate has failed miserably to

generate adequate ‘decent’ employment for the
labour force
• In fact, there is deceleration in aggregate
employment generation in spite of high growth
• Neo liberal policies promote technical progress,
i.e. high growth in labour productivity leading to
high growth of GDP, but lack any built in
mechanism to ensure full employment
• Higher growth or labour flexibility though offered
as solutions are not real solutions
 Manifestation of Exclusion / Hurdles to Full
Employment

• Low productivity leading to subsistence

status
• Low incomes and low levels of living
• Inadequate avenues for productive
employment
• Poor quality of employment in terms of
social protection
 Contd..

• Supply side constraints: poor physical &

economic infrastructure
• Poor social infrastructure and low human
capabilities / skills
• Degradation & depletion of natural resources
which support livelihood of 60 % population
• Unstable and lagging agriculture
• Rising inequalities and disparities
• High incidence of poverty with poor at the
bottom frequently starving
• Demand side constraints
 An Alternative Approach

• In stead of addressing these constraints directly,

the neo liberal policies advocate a development
path that focuses on economic growth through
privatization, liberalization and globalization
• And when this path poses problems, we think of
controlling technical progress or using surpluses
for social sectors
• Why can’t we start with what we have and what
we lack rather than what others have
 EGP can construct

• Social infrastructure (for care, education, health, water &

sanitation) for improving human capabilities / skills, and
quality of life
• Economic infrastructure (for example, roads) to promote
economic growth,
• Infrastructure for agriculture (WSD, irrigation, etc)
• Natural capital building (related to land development,
water augmentation, forestry) for raising productivity of
workers in allied activities
• Assets (farm ponds and other asset building) for private
farms / enterprises particularly for small producers
 EGP and Gender

• Women’s unpaid work consists of (1) drudgery like

collection of fuel, fodder, water etc, (2) child care and other
care, (3) other low productivity activities that deprive them
from accessing productive activities
• These can be seen as ‘hidden vacancies’, as many of
these activities can be shifted to the market through public
provisioning, infrastructure development and public
services, and this in turn can release women for productive
work
• EGP can substitute portions of this unpaid work by creating
suitable assets that can reduce burden of unpaid work of
women (and men) that is particularly taxing for the poor.
• EGP has proved to be attractive to women, who can also
gain in terms of employment and wages
 Unpaid work of Poor and EGP

• Non-market economic Activities: Acquiring / Collecting

basic necessities like water, fuel wood etc
• Non-market economic activities: collection of raw
material for income generating activities (fodder for
animal husbandry, bamboo for craft, raw materials for
manufacturing - NTFP)
• Non-market subsistence production at low productivity
(crop cultivation, subsistence fishery, forestry etc)
• Unpaid domestic work: care related activities
• Unpaid domestic work: household repair in non durable
shelter
• Unpaid work: Traveling
 Role of EGP: Short Run

• Reduce drudgery
• Improve quality of life
• Improve public provisioning / infrastructure
• Improve productivity / technology in income
generating activities
• Release women and poor for productive
activities
• Promote capital formation
• Improve labour absorbing capacity of the main
stream economy
 EGP in the Long Run

• Promote labour intensive development

• Encourage sustainable development
• Increase labour productivity / technology in
economic activities
• It engenders development
• Promote manufacturing and structural
transformation in the economy
• Integrate small producers / poor in to the growth
process
• Participate in the world trade based on
advantages
 EGA A Full Employment Strategy

• Employment guarantee for the poorest to ensure

their full employment
• Insurance in terms of employment for the poor in
crisis
• Labour intensive growth for the economy in the
second round through assets that generate main
stream employment
• Rising aggregate demand that will push up
growth along with changing its composition, and
push up employment
 EGP is only a component / Starting point

• EGP is not for creating a permanent army of unskilled

workers – it is successful when it is not needed
(Dantwala)
• It is a tool for transition of the economy from labour
surplus economy to labour using economy
• It requires productive use of the assets generated
including infrastructure
• It requires a set of supplementary policies in the areas of
skill formation, credit, marketing, institutions etc
• It needs a long term vision and suitable interventions
 EGP based strategy is not a Low Income
Strategy
• This strategy involves up gradation of
technology and improved labour
productivity
• It incorporates globalization based on
comparative advantages
• It promotes economic growth that is broad
based and inclusive
• It answers some of the concerns that India
is facing today
 Assessing NREGA

• NREGA lacks a long term perspective in

designing and in implementation
• Weak planning component: (1) lack of
perspective planning, (2) lack of convergence
and (3) lack of multi level planning
• Designing problems of NREGA: role of
institutions / social mobilization not recognized
• Lack of commitment, and poor supervision &
monitoring
• Lack of political strategy to address structural
issues
 Concluding Observations

• This is an outline of a strategy, needs

further detailing
• We are not recommending some thing that
is not doable, not feasible.
• We have an EGP Act, an EGS and we
have to build on it