The real scandal

Non-Congress states have performed better in the MGNREGA corruption index

Written by Surjit S Bhalla | Published: February 4, 2012 3:29 am

Non-Congress states have performed better in the MGNREGA corruption index

The Supreme Court has “officially” declared corruption in the 2G case. All licences stand cancelled. The 2G scam has been the most talked about corruption case in India. Land grabs and mining are the other two areas of widespread corporate and public (bureaucrat and politician) corruption.

Less talked about,actually hardly,is in the name of the poor corruption. This is corruption in programmes meant for the poor. Indeed,when reference is made to the possibility of corruption in schemes like MNREGA,the refrain is “Why are you criticising money spent on the poor? What about telecom licences,diesel subsidies,and other expenditures in the name of the rich?” These questions are worthy of an answer; perhaps not,because corruption is corruption no matter in whose name it is pocketed.

This year,2012,is also the sixth anniversary of MNREGA,the flagship programme of the UPA government,both Mach I and Mach II. In a recent interview,the rural development minister,Jairam Ramesh,admits to corruption in MNREGA and points to introduction of MNREGA 2.0 in the very near future. He also points to the great success of Andhra Pradesh in performance; “traditional communities who were expected to kowtow to the local elites to the dominant castes today have a certain sense of empowerment. They are getting money… they have an assurance of employment…” Also,in places like Andhra Pradesh,“we have a strong management information systems,where we can track the flow of funds”. Andhra Pradesh is repeatedly mentioned by Ramesh,and always glowingly,a total of five times in the interview (Mint,February 2). It is also the only state whose performance is lauded by Ramesh. It maybe a coincidence,but Andhra Pradesh is also a Congress-ruled state. Jairam Ramesh’s boss,Rahul Gandhi,has made pointed references to corruption,and particularly MNREGA corruption,in Uttar Pradesh,a state where important elections are underway. This is a state ruled by Mayawati,a chief minister who has often been accused of rampant corruption. Of course,the Congress shares this dubious honour,especially now that the “honour” has the imprimatur of the Supreme Court.

A reasonable assumption is that all political parties are corrupt. But who is more corrupt? This question can be answered,in a narrow sense,by examining the relative performance of the different parties with respect to MNREGA. The NSS Employment-Unemployment survey for 2009-10 included several specific questions pertaining to a household participation in the employment guarantee scheme. As the Congress,and Jairam Ramesh,have repeatedly stressed,this employment programme involves backbreaking work,and is available on demand by those really poor,and really in need of some employment.

The NSS survey has the advantage that it not only asked questions on employment,but also on consumption. It is the only survey that has detailed information on both the participation in the MNREGA programme,and the poverty and caste and other characteristics of the household. If the program is only availed by the really poor,the data will show it. If the non-poor are benefitting from the programme,the NSS data will show it. And if the non-poor are participating,then questions need to be asked — why are the non-poor availing of such low-paying,minimum wage and lower jobs? Are they so desperate for low wages? Most likely not.

If the non-poor are benefitting from an exclusive pro-poor programme,then one has the beginnings of an index of corruption. There are two separate indices of corruption that can be objectively defined. The first is the difference in participation of the poor and non-poor in the programme. The second is the difference in expenditure on the poor and non-poor. The sum of the two differences is the corruption index.

The table ranks the different states in India according to this index. The second and third columns list the political party administering the programme and the fraction of rural population that is poor according to the Tendulkar poverty line. The computation is illustrated with respect to the best performing (least corrupt) state,Chattisgarh. The fourth column shows that 58 per cent of the poor in the state benefited from participation in MNREGA; but a third of the non-poor,35 per cent,benefitted as well. The difference in these two percentages,23 per cent,is the net performance gain. In terms of expenditure,of every Rs 100 spent on wages,Rs 63 accrued to the poor and Rs 37 accrued to the non-poor. The difference,26 percentage points,is the second component of the index. Adding the two differences yields 49 as the corruption index for Chhattisgarh. (Note that the index is computed such that large values mean less corruption). In contrast,the worst performing state,Kerala,has a net difference of minus 64. In this Communist-ruled state,an overwhelming amount of money — 84 per cent — went to the non-poor.

Jairam Ramesh’s comments about the great performance of Congress-ruled state of Andhra Pradesh can now be put in perspective. Three-fourths of the “well-administered” and well-monitored money went to the self-confessedly non-poor! Mayawati’s performance,much maligned by the Congress,turns out to be a case of pure politicking. In reality,the UP MNREGA administration was significantly better than average. The distribution of wages went equally to the poor and non-poor. Its net index of 13 is 30 index percentage points better than the national average of minus 17.

A casual perusal of the second column shows an overwhelming presence of non-Congress-ruled states in the top half of performance. The only Congress-ruled state that performs better than the bad national average is Maharashtra,a state that Congress administers jointly with the NCP. Rajasthan,the flagship Congress state of its flagship pro-poor programme provided more than twice as much in wages to the non-poor than to the poor. Maybe the Supreme Court and/or the CAG would like to look at these corruption numbers as well — now that the case is closed on the telecom scandal!

The writer is chairman of Oxus Investments,an emerging market advisory firm

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