Edit: Time for government to address labour shortage due to NREGS

When development economist Jean Drèze conceptualised and drafted the first version of the National Rural Employment Guarantee Act, little did he realise that it would boomerang and impact the growth of a crucial sector like construction, which claims to be one of the highest employers of unskilled labour. When the scheme promises migrant labour from states such as Gujarat, Bihar and Andhra Pradesh a statutory minimum wage of Rs 120 per day for 100 days, there is no reason for them to take the trouble of moving to cities and take part in the organised labour market in construction. It is a catch-22 situation for the government. It is politically not viable for the UPA to abandon the rural employment guarantee scheme (NREGS). On the other hand, real estate, construction and infrastructure are the flag-bearers of India’s growth story, and should not be made to suffer from labour shortage. The government can revisit history for a solution. Back in colonial times, Indian indentured workers were shipped out to Mauritius and the Caribbean. Each man was required to appear before a magistrate and declare that he was going voluntarily and the contract was for five years with pay of less than Rs 10 per month plus rations. Lack of opportunities back home lured these unskilled labourers to move abroad and even settle there. In the recent past, unskilled and semi-skilled Indian workers have been moving to West Asia, Africa and Europe in search of work. It is the same reason why workers from poorer economies such as Nepal and Bangladesh have moved to India. India’s construction sector has seen a surge of Chinese workers in major projects. Their participation was so engrossing and overpowering that these project sites were transformed into Chinatowns. However, the government thought it wise to put a stop to this as it had the potential to shrink employment opportunities for Indian labour. As a result, the government restricted the entry of unskilled and semi-skilled labour from China. The government informed China’s policy leaders that it would only allow migration of highly-skilled workers to its industries. However, today, when the country’s booming sectors might be hit by a labour shortage, it is advisable to import manpower from down the value chain. It is time for the government to consider India as a booming economy where migrant labour from other countries will come in search of employment and may eventually settle here, just the way we did in the 1820s. It is time to let go the cautious approach of a growing economy and behave like a nation that has come of age and is not afraid of opening up its shores to people of other countries who are seeking a livelihood. There is also a need to take a fresh look at the rural employment scheme. The scheme has to go beyond just serving political needs. There is no need for the government to employ all available rural labour in this scheme. In any case, all they do is dig trenches or build dykes. They can be gainfully employed in major government-funded and executed infrastructure projects under the same scheme so that labour shortage in big projects in cities can be addressed. The rural employment scheme is a sub-optimal way of employing rural people and has the potential of further shrinking the labour market for construction projects, big or small, where their earning will be much higher. If the labour shortage becomes more acute it could impact the growth of the economy. It is time that the government explored ways of sustaining its political agenda without impacting the growth of the economy.