By: Raghav Gaiha and Shylashri Shankar
In his budget speech, Arun Jaitley shied away from taking a tough stand on the MGNREGA. In a seemingly non-controversial comment, he emphasised that “wage employment would be provided under MGNREGA through works that are more productive, asset creating and substantively linked to agriculture and allied activities”. The subtext, however, is controversial. As argued below, far from a benign neglect, it will be a slow kill.
Recent debate shows a diversity of views, ranging from a defence of the MGNREGA in its present form against its proposed dilution into a scheme without any “guarantee” to a case for raising the outlay to build assets on small farms. The dilution of the guarantee would be disastrous for the “entitlements” of the poor and vulnerable (‘No going back on MGNREGA’ , Nikhil Dey and Aruna Roy, IE, July 10).
With all its drawbacks — mistargeting, corruption and unusually long delays in payment of wages — the MGNREGA has not only raised awareness about entitlements among disadvantaged groups but has also enabled them to demand them. But optimistic accounts tend to fall short on the failures.
The design and implementation failures of the MGNREGA have been pervasive and large. Its targeting accuracy in the four states studied (Madhya Pradesh, Rajasthan, Tamil Nadu and Andhra Pradesh) varied enormously, based on household surveys conducted by us (and others) during 2007-10. Two insights from our analysis are pertinent. First, frequent hikes in the minimum wage rate under the MGNREGA weaken the self-selection of poor but physically dextrous individuals. MP had the highest percentage of poor participants (81 per cent), followed by Rajasthan (50 per cent) and Tamil Nadu (40 per cent); in contrast, only 28 per cent of Andhra participants were poor. In the two southern states, the acutely poor’s probability of participating in the scheme was lower than those of others, while the moderately non-poor and affluent had higher probabilities, suggesting that the better-off benefitted more from it. In MP and Rajasthan, the acutely poor had the highest probability of participating, showing sharper targeting towards those groups in those states. In Rajasthan, however, the affluent had the second highest probability, displaying an element of capture by well-off groups.
Second, comparison of the earnings of the poor and non-poor reveals a somewhat worrisome pattern. The variation between the daily average MGNREGA wage earned by poor and non-poor groups was low in the two southern states, implying there was no discrimination against the poor. In Rajasthan too, the variation was relatively low. However, in MP, the non-poor’s daily average wage rate was markedly higher than that continued…