Thursday, Oct 23, 2014

The other side of populism

Providing employment to rural unskilled labour is the single most direct and effective way of reducing poverty. Providing employment to rural unskilled labour is the single most direct and effective way of reducing poverty.
Posted: May 3, 2014 12:20 am

By: Dilip Mookherjee

How a patchily implemented NREGA could end up hurting the Congress.

Nine years have passed since the UPA government launched the MGNREGA, the world’s largest workfare programme. The scale of the programme is staggering, providing employment to a third of India’s rural population, at an annual cost of nearly 1 per cent of the GDP. It has formed the backbone of the UPA’s anti-poverty and rural safety net programme, and may represent its most important legacy in the long run.

Views concerning the impact of the MGNREGA are varied, often predictably along partisan lines. Critics argue it is beset with corruption and leakages, populist, politically motivated and manipulated by the UPA for its own electoral advantage. It is said to be responsible for runaway fiscal deficits, inflation and slowdown of growth. Supporters argue that the programme has succeeded in reducing rural poverty, building infrastructure and strengthening local governance. Where does the truth lie?

To answer this, it is essential to review ground-level evidence concerning how the MGNREGA has actually performed. There are numerous studies based on large household surveys, besides a few books, field studies and government reports. Written by academic scholars both in India and abroad, the research papers are free of partisan bias. Though they examine different aspects of the MGNREGA, often with contrasting methodologies, they present a coherent perspective on its main shortcomings and achievements.

With regard to the implementation of mandated provisions, the evidence shows myriad shortcomings and wide variations across states. Less than 50 per cent of beneficiaries were aware of the work-on-demand feature, and just 20 per cent were aware of their unemployment benefit entitlement. Gram sabhas are held infrequently, with low participation rates. There is substantial rationing: in 2009-10, while 25 per cent of rural households were provided work, 19 per cent sought work but did not get employed.

Household surveys and social audits reveal numerous complaints — delayed wage payments, non-issuance of dated receipts, non-payment of the unemployment allowance, and payment of less than full wages. In some states, resistance from local elites has prevented social audits from being carried out. In states such as Andhra Pradesh, where they have been carried out, there is no sign of these complaints abating through successive years. A rising proportion (ranging from 25-50 per cent) are to do with non-payment or delayed payment of wages, besides bribes (14-20 per cent), benami payments (16-19 per cent) and missing records (4-6 per cent). There were fewer complaints regarding material irregularities, but these are intrinsically harder to detect. Follow-up disciplinary action on discovered irregularities were largely lacking, with major or medium actions taken in only 3.4 per cent of the cases. A recent study of eight AP districts estimates that the overall leakage of continued…

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