One of the highlights of the budget presented by Finance Minister Pranab Mukherjee on 6th July, 2009, is the much trumpeted increase in the allocation for the National Rural Employment Guarantee (NREG) Scheme, with legal guarantee of partial employment to one part of the population. The NREG Act guarantees 100 days of work for one member of every rural household that wishes to engage in daily wage unskilled construction labour at a prescribed minimum wage rate.  Expenditure by the central government on NREG Scheme was estimated at Rs. 16,000 crore in the original budget for 2008/09, which was presented by the then Finance Minister Chidambaram in February 2008.  During the year, further additions were made and the revised estimate for 2008/09 is Rs. 30,000 crore.  This was part of the 'fiscal stimulus' announced before the elections. For 2009/10, Pranab Mukherjee has presented a target of Rs. 39,100 crore, which is 30% higher than what was spent the previous year.

In order to understand the aim behind this increased allocation, it is useful to make a rough calculation of how many partial jobs (100 days or less in a year) are likely to be created and examine what the impact of this scheme has been and is likely to be on the economy and on different classes in society.

Out of the total allocation, if we assume that half will be spent on wages and half on materials, we get a figure of Rs. 19,550, or say rounded to Rs. 20,000 crore spent on paying wages. On the ground, it is well known that not all of this will actually get paid to the daily wage workers who turn up. Ignoring this issue of 'leakages' for the time being, and assuming Rs. 100 per day to be the daily wage paid per worker, we get a figure of 2 crore persons, each getting 100 days of work at Rs. 100 per day – that is, each earning Rs. 10,000 in the year.  This is the maximum possible addition to rural wage earnings. If we assume that 50% of the funds meant for wage payments get siphoned off, it will mean that 1 crore persons, not 2 crore, would benefit from the scheme.  If the average wage paid is not Rs. 100 but only Rs. 80, then Rs. 10,000 crore paid as wages will be distributed among 1.25 crore persons, each earning a maximum of Rs. 8000.

Reports from states where the NREG scheme has been implemented relatively well indicate that people who were earlier working as agricultural labourers on peasant farms are now turning up for the NREG scheme, resulting in a shortage of farm labour. This means that the person-days of work generated by this scheme are not all additional.  Some of them are only substituting for wage employment of a different kind. The net impact is less than the gross generation of employment and additional incomes resulting from the NREG scheme. While new work is being created, some old work has been destroyed.

Expenditure on this scheme adds to the rural market for commodities. The non-wage component adds to the demand for bricks, for cement and other materials, while the wage component adds to the demand for consumption goods. A poor peasant who toils on his own plot of land grows and cooks his own food and buys little from the market, whereas a daily wage worker will spend most of his wages to buy what he needs from the market.  This is one result of the NREG Scheme – that it expands the rural market for various building materials and mass consumption goods.

The part-time work force being created is a model of super-exploitation.  At the end of 9 hours of hard labour, the NREG worker is not guaranteed even the full amount of the prescribed minimum wage of Rs. 100 (US$ 2).  Wage payment is subject to cuts depending on the 'output' of an individual worker, which gives discretionary power to government officials to cut the daily wage rate.

Creating an army of partially employed and super-exploited daily wage workers is very useful for the capitalist class. In addition to its impact on the rural market for mass consumption goods, it serves to set a benchmark for maximum exploitation of labour, with piece-rate adjusted wages, no benefits and no security of employment. Such a partially employed rural workforce serves as a reserve pool of cheap labour for the capitalist class, which can be drawn upon for full-time employment as and when required.

The working class cannot and must not give up its demand for the Right to Work as a universal right of every adult member of society. Neither the NREG Act nor the Scheme for which Rs. 39,100 crore has been allocated addresses the issue of the right to work. On the contrary, NREGA is based on the premise that it is not possible to provide work for all. On the basis of this bourgeois false premise, the NREG Scheme offers "at least something", which the part-time super-exploited employee is supposed to be grateful for, and show his or her gratitude by voting for the NREG party!

Capitalism is a system in which a minority of private owners of the means of social production extract more and more out of the toiling majority, on a daily, weekly and monthly basis.  Such a system gets repeatedly into crisis due to over-exploitation, as a result of which the majority of people cannot afford to buy what the capitalists want to sell.  In the name of tackling the crisis, the capitalist class calls on the government to take measures – not only to put more money into the hands of the capitalists themselves, but also to put more money in the hands of some of the poor toilers, so that household consumption demand can be boosted. In other words, the engine of the economy is oriented to suck more out of the toiling masses, while the engine driver, the government, periodically redistributes some of what is sucked out of the labour of people back into the hands of some of them, so as to 'stimulate' demand for capitalist products.

The aim and interests of the working class cannot be satisfied with temporary redistribution of what is sucked out of them. Nor can workers accept 100 days of work as being a job.  The right to work means a full-time work throughout the year.

The right to work can be guaranteed as a universal right of all adult members of society, if and only if the economy is reoriented in the direction of socialism. Putting more into the hands of the working people than is taken out of them will then become the daily pattern, the way the engine works. There will be so many millions of households to be provided with all amenities of modern human living conditions that there will be plenty of work. Everyone can be employed. As the productivity of collective labour increases, daily working hours can be reduced to give more time to the working people to spend with family and friends. The level of consumption of all working people will rise every year, not as a temporary 'stimulus', but as the permanent character of the system and society.

In conclusion, people must not get confused by the propaganda of the ruling party and its supporters that the NREG scheme is designed for the benefit of the rural poor.  It is a scheme designed to benefit the capitalist class. It is aimed at creating a large pool of cheap labour available for super-exploitation.  It is aimed at negating the demand for the Right to Work, and the demand of youth for "jobs for all!"  It is aimed at expanding the rural market for commodities. It is aimed at preserving the capitalist system by pacifying a section of unemployed workers and by creating the illusion that the central government cares for the poor.