Supreme Court’s naïve assumption: State govts function for the best interests of rural workers

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NREGA Sangharsh Mocha note on Supreme Court judgement in Swaraj Abhiyan PIL:

The much awaited Supreme Court judgement in the Swaraj Abhiyan PIL has let down millions of National Rural Employment Guarantee Act (NREGA) workers — the most marginalised citizens of India who need employment and social security.  The Court has ignored the wealth of evidence against the brazen violations of the legal entitlements of NREGA workers and has allowed the Central Government to get away with a series fallacious interpretations of the employment guarantee act.

The petitioners had approached the court in 2015 with the issues of (1) squeezing funds to the program via reduction in labour allotment through “approved labour budget” (2) delays in payment of wages and compensation thereof, and (3) absence of social audits.

Sanction to the process of “approving” labour budgets

The Court rejected the petitioner’s submission of using “agreed to labour budget” by the Central Government as an arbitrary means of curbing work demand. The petitioner had argued that the exercise of “approving” labour budgets goes against the spirit of the Act. In fact, the National Electronic Funds Management System (Ne-FMS) guidelines issued by the Centre in 2016-17 say “the Management Information System (MIS) “will not allow” States to “generate more employment above the limits set by Agreed to LB”. This meant that the work demand of workers was not even getting registered and the MIS was being used as a means to curb work demand. Because of the ongoing PIL, the Centre was forced to rescind guidelines that enabled the use of the MIS to constrict demand for work. The Act has no provision of either the states or the central government to ration the projected demand for work prepared by each state.

The Central Government had argued that as some states are unable to fully utilise their labour budget, there is a need to rationalizing the funds allocated to them. In doing so, it fails to acknowledge that the labour budget is only an estimate of the projected demand for work in the coming financial year.

  • First, it is impossible for anyone to accurately predict the demand for NREGA work, as it depends on various factors such as availability of alternative employment, wage revisions and crop yield.
  • Second, early throttling of funds through “approved labour budget” causes the field functionaries to use it as a central order to not register work of labourers.
  • Third, the inability of states to spend the entire funds allocated to them does not cause any loss to the public exchequer, as allocations for the subsequent year are based on the balance money available to states.
  • Finally, from a moral standpoint, it’s unfair to make the most vulnerable wait for funds to trickle in to get work instead of getting work proactively.

Refusal to accept rationing of funds

As the Court gives sanctity to the illegal exercise of “approving” labour budgets, it rejected the petitioner’s submission on an informal cap on release of funds. It reasoned that since many states have spent more than the “agreed to labour budget”, there is no rationing of funds.

The Court did not note that in August 2017, the Ministry of Rural Development (MoRD) demanded a supplementary budget of Rs 17,000 crores, but the Ministry of Finance sanctioned only Rs 7,000 in January 2018. Thus, NREGA functioned with a shortfall of at least Rs 10,000 crores in 2017-18. Also, due to shortage of funds in 2016-17, senior MoRD officials instructed state governments to go slow in the generation of employment during monsoon. The Central Government’s practice of stopping funds to states in case of financial irregularities by the latter is also a tactic of rationing funds. The Central Government should initiate strict disciplinary action against such states, instead of unfairly penalising NREGA workers.

Also, the Court’s argument that the allocated NREGA budget is adequate as no state has demanded additional funds is based on the naïve assumption that state governments always function with the best interest of rural workers. The approved labour budget becomes the target for the states to meet in terms of employment generation. Such target driven approach is at odds with the demand driven, worker centric Act, causing a natural truncation of budgets sought and allocated.

Order on timely payment of wages and compensation

The petitioners brought to the notice of the Court that workers are only compensated for delays in wage payments that arise due to delays by the states and not for those caused by the Central Government or the payment agency. The Court accepted this submission and instructed the Central Government to “prepare an urgent time bound mandatory program to make the payment of wages and compensation to the workers”. (As the Central Government has absolved itself of any obligation towards mitigating wage delays, it is a matter of little surprise that in 2016-17, only 17% of wage payments and in 2017-18 only 43% of wage payments were processed on time in stage II – which is the responsibility of the Central Government and payment agencies.)

Notwithstanding the disappointing judgement, NREGA Sangharsh Morcha and PAEG congratulate the strong language of the Court in its direction to the Centre to pay wages on time. However, it is unclear how this direction will translate into tangible action items for the Centre to do so on time. The Morcha and PAEG are peeved about two things in this regard:

(1) Not setting up explicit orders to clear the pending delay compensation in a time bound manner is distressing.

(2) Not explicitly apportioning accountability structures on the Centre for delays in funds release to the states.

The Morcha and PAEG are also disappointed by the failure of the Court to take cognizance of the brazen violations of its earlier orders in this case. On 13 May 2016, the court had ordered the government to release adequate funds for timely payment of wages, pay compensation to workers who receive their wages with delays, increase the scale of employment and ensure the effective functioning of state and central employment guarantee councils.

The Morcha and PAEG will continue to bring to light the gross violations of the legal entitlements of NREGA workers. They will now go to Court to challenge the illegality of paying NREGA workers less than the statutory minimum wage – currently, NREGA wages of as many as 27 states and Union Territories are less than the corresponding minimum wage.

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