When this author decided to pursue a graduate degree in economics in 2001, political economy was the last thing on his mind. I was introduced to political economy at Jawaharlal Nehru University (JNU), in part because of my academic training in one of the best heterodox economics departments in the country, and in part because of my participation in student activism there.
Undoubtedly, this was also a kind of historical accident. I took my JNU MA entrance exam on 13 May 2004, the day the Atal Bihari Vajpayee-led National Democratic Alliance (NDA) government suffered a crushing defeat in the national elections. When I arrived at JNU as a student, there was a new government in power that was dependent on the support of more than 60 Lok Sabha MPs from communist parties.
Commentators, particularly but not exclusively left-leaning, almost unanimously termed the ‘India Shining’ campaign a crushing defeat for the NDA, which was seen as a vulgar celebration of economic reforms despite a massive crisis in the economy, especially in its rural half. While part of this harsh attribution could be termed problematic – India had suffered a major drought in 2002 and economic growth had just begun in the post-reform phase – there can be little disagreement with the fact that 2004 was an important moment of truth and reconciliation for the relationship between economic reforms and India’s larger political economy. The lesson learned by the political class is that aggressively pursuing the neoliberal agenda without providing any relief to the poor is a sure recipe for political suicide.
It was this environment that empowered a broad coalition between mass movements, economists, communist parties and, most importantly, a powerful faction of the Congress Party to pursue a welfare agenda in the country. The Mahatma Gandhi Rural Employment Guarantee Scheme (MGNREGS) and the National Food Security Act (NFSA) were the most significant achievements of this broad coalition. Of course, the latter government materialized under not the first but the second United Progressive Alliance (UPA) government, which did not require the support of the Communists.
The NFSA was, in a way, much more than a retrospective course correction by the Indian state, which in the late 1990s had fragmented the universal public distribution system (PDS) into a targeted system, and restricted subsidized food to populations officially defined as poor. It was this decision that made the poverty line the subject of academic scrutiny and public ridicule. Whether you were poor or not was a matter of extremely low levels of daily expenditure. I still remember one of my professors at JNU telling us in class that all the academics defending the low poverty level in India should be told that the poverty line is as low as the price of a bottle of water that they would buy while conducting surveys in their area!
However, what generated a lot of enthusiasm in civil society and academia was MNREGA, for the simple reason that it promised employment guarantee. A simple removal of this promise would undermine the very basis of capitalist power, where labor is always considered free not to exploit, but also free to starve if it exercises that option.
Despite the legal provisions of MGNREGS, one can claim with reasonable confidence that the actual impact of MGNREGS on the ground has been much less than the revolutionary rhetoric surrounding it. Of course, small here does not mean insignificant. There is good reason to believe that MNREGA boosted rural wages and then provided a minimum threshold, thereby providing a support system for India’s most vulnerable section of workers. Of course, the MGNREGS cushion and support-system varies across states, taking into account local political economy, as both activists and the government have pointed out using data from the scheme.
The debate surrounding the implementation of MGNREGA has also seen wide participation from the larger economist community in India. Hundreds, perhaps, thousands of economics students, teachers, activists worked in the fields along with the crore-strong MNREGA workforce to assess the scheme’s efficacy, or lack thereof, in the most remote and poorest parts of the country. Many such students, based on the personal experience of this author, have taken up work that has nothing to do with rural India or the poor living in these places. However, they are bound to take those learnings with them to the prosperous places where they now work and live. It would not be an exaggeration to argue that MNREGA has guaranteed blue-collar jobs at rural workplaces as well as sanity to many economics students.
At a time when the Narendra Modi government has finally decided to scale back to a great extent; From demand side to supply side and from centrally funded to state funded, replacing the provisions of MNREGA with the Develop India – Guarantee for Employment and Livelihoods Mission (Rural) – one can say that it probably took 11 years to bite the bullet – what should one decide?
The answer, which has found great resonance among the group representing the larger coalition that pushed things like MGNREGA and NFSA, suggests a neoliberalism and déjà vu moment in India’s history. After all, here is a government that has notified four labor codes and then weakened the Rural Employment Guarantee Scheme in less than a month.
However, a more honest answer requires deeper introspection. The current economic system in India could not be more different from the one that prevailed in the 1990s, when governments were neither able nor interested in protecting India’s welfare architecture outside a small group of workers in the public sector. Not only is the food safety net much larger than it was during the targeted PDS of the late 1990s, but other types of welfare provisions are also being introduced by both the Center and the states through innumerable cash transfers and centrally sponsored schemes. In other words, the Indian state today is more of a pragmatic than dogmatic neoliberal where its offerings to capital are oblivious to the concerns of preserving political capital. A large part of this expenditure has been made possible by the (revenue) fruits of so-called neoliberal development.
We will have to wait and see how much money the Center expects to save in MNREGA when the Budget is presented in February (or the Revised Estimates next February). But what should be shocking is that unlike the three farm laws promulgated through ordinance in 2020, there have been no spontaneous protests over the weakening of MGNREGS. But then again, the lack of organic political traction for MGNREGS from below, or one might say, lack of weaponized political traction, is not entirely new or surprising. While its second drama came in the 2020 Bihar elections when an MGNREGS worker was fielded as a candidate in the assembly elections and performed very poorly, the larger truth is that MGNREGS workers have never been organized as a powerful political force by political parties, or civil society or interest groups like farmers and trade unions.
This lack of political power of MNREGA workers is not very difficult to explain. They are among the most vulnerable people in the society and also take up jobs under the scheme to relieve pressure rather than earning a fortune or earning a living. In the rural economy, MNREGA is more of an SOS medicine than an active nutrient in the diet. Unless there is a massive shock to the economy – as happened during the pandemic – a large-scale revolt against rolling back the availability of painkillers is unlikely, despite worrying commentary from people, mostly civil society elites, who helped create it. What has made the opposition even more unlikely is that India’s poor now have a federal platter of palliative measures in addition to MNREGA, which was the case when the scheme was first implemented.
Let me now return to the personal anecdote with which I began this column. A young student starting his or her engagement with political economy today will read angry, concerned and worrying commentary on the weakening of MNREGA, but will fail to see the corresponding political attraction to it that my generation saw in the 2004 election results. Indeed, the near political consensus today on cash transfers ahead of state elections is likely to lead observers of political economy to believe that the political regime is more committed than ever to welfare in the transactional sense, even if it is seen as undermining its promise of an “employment guarantee” in the larger constitutional sense.
make no mistake. Even enhanced welfare offerings do not offer what one of India’s best-known heterodox economists called “growth with dignity” in his monograph, published at the height of the debate around the enactment of MGNREGA. Unless India succeeds in taking its growth above current levels for a sustained period, it remains at risk of falling into the lower-middle income trap, which will make things more difficult once our demographic dividend window passes a critical point in the wrong direction.
In 2004, it was radical to tame the horse of neoliberal economic policy and ensure that it did not run away without hitching a ride on the well-being, or rather the survival, of millions of the underprivileged. The horse that was tamed at that time never got out of its grip, as is evident from the centrality of economic palliative measures in politics, despite some kind of reshuffling of priorities.
The more important question to ask today is whether this horse can be made to run faster without being thrown off the proverbial democratic cart. To effectively and honestly answer this question requires deploying a more critical perspective on the post-2004 period in the Indian political economy as a continuation in the duality between political legitimacy vis-à-vis capital and labour, rather than a one-off coup that occurred in 2014, which many progressives often allege.
In terms of political practicality, this would require casting a much wider net than the miserable state of the earth that the universe of MNREGA workers has captured. The challenge is more difficult to solve, intellectually and politically. But we have to solve this if India has to continue its forward journey in history. Progressives, be it in academia or politics, should think about this challenge and not remain fixated on what I would call an obsolete, albeit historically progressive moment in the Indian political economy, which the enactment of MGNREGA has marked.
Roshan Kishore, HT’s data and political economy editor, writes a weekly column on the state of the country’s economy and its political fallout, and vice versa.
