Jobs scheme targets 6% of poor

April 2005 - June 2005 Index

Gargantuan guarantees

· One member of each rural household to get a guaranteed job for 100 days a year at minimum wage of around Rs.60

· Scheme to cost 1 per cent of GDP by 2008-09

· When fully operational after four years, 5.5 per cent of all poor will have guaranteed work.

· State governments to pay unemployment allowance if work not provided within 15 days of registering – allowance at one third the wage rate till 100 days wages got by family

· Half funds to go to panchayats immediately

In the first year of the proposed National Rural Employment Guarantee Act, a watered down version of the original CMP promise of a legally guaranteed job for 100 days a year for one member of each poor and middle class family, the government will not require any additional funding. By the end of four years, when the NAC’s draft employment Act expects the entire country to be covered, it estimates this will cost around Rs.40,000 crore (at 2004-05 prices, or around one per cent of GDP in 2008-09.

In the first year, when just the poorest 150 districts of the country are to be selected, according to the National Advisory Commission’s calculations, a total of 8.35 crore of the country’s total 20 crore poor persons will be covered (that’s 1.67 crore households). At a wage rate of Rs.60 per person and another Rs 40 as the capital cost of providing the job, a total of Rs 100 per person is the estimated cost of providing jobs.

So, at a total of 100 days of job, this works out to a cost of Rs 16,700 crore in 2005-06, when the scheme is expected to be implemented. Since the government spends around Rs 12,000crore on job creation schemes even today, it is expected that next year’s funds could come from merely merging the schemes if need be. At least half the funds would be transferred directly to gram panchayats to ensure better execution.

Courtesy: Business standard : 19.10.2004


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