‘MGNREGS failed to impact poverty, needs revamp’
The report has advocated that the flagship scheme should be redesigned to create capital assets.
The report has advocated that the flagship scheme should be redesigned to create capital assets that would help improve rural productivity.
Noting that the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) has failed to make a substantial impact on poverty rates in states like Bihar, the World Bank has called for a revamp of the scheme with a greater focus on creation of capital assets.
“Analysis of household survey data from Bihar shows that under the ideal conditions, the rural poverty rate of 50 per cent at the time of the survey could come down by at least 14 percentage points…the actual impact on poverty is only one percentage point,” said the India Development Update that was released by the World Bank on Tuesday.
The report has advocated that the flagship scheme should be redesigned to create capital assets that would help improve rural productivity and issues such as unmet demand and payment of stipulated wages should be addressed.
“If MGNREGS were to be implemented effectively, its design would ensure that there is no unmet demand for work. On-going efforts at convergence of the scheme with other programmes will ensure that the assets created are productive and of lasting value,” said Rinku Murgai, lead economist, World Bank and one of the authors of the study on the scheme.
The World Bank report has, however, noted that the scheme has the vast potential to reduce poverty be providing employment and income and is better than a cash transfer scheme such as the JAM (Jan Dhan Yojana-Aaddhar and mobile technology) trinity as it is better targeted and has a multiplier effect on economic activity.
“In essence, the key benefit of MGNREGS is asset creation. It could be better than a cash transfer scheme but needs to have a better impact in poorer states,” said Onno Ruhl, country director (India), World Bank, adding that it can be scaled up to help provide relief in rural areas where unseasonal rains have damaged crops.
The scheme has had a mixed performance across the country with states such as Andhra Pradesh showing a significant increase in consumption, land investment and asset accumulation and leakages in the scheme are not as bad as reported.
But the report found that though the scheme is designed to ensure that there would be no unmet demand for work, at an all India level, 46 per cent of households reported that one or more of their members would have liked to get employment under the scheme, only 25 per cent secured any work over the course of the year according to the National Sample Survey Organisation (NSSO) 2009-10 survey.
The World Bank’s India Development Update also found that discrepancies between stipulated and actual wage rates was huge with workers in Bihar receiving on average a 10 per cent lower wage than what was actually stipulated.
India’s GDP to growth at 7.5% in FY16: World Bank
New Delhi: The World Bank on Tuesday pegged India’s growth rate at 7.5 per cent in 2015-16, a tad lower than the 8.5 per cent forecast in the Union Budget. The World Bank, however, noted that the economy seems to have turned around on the back of reform measures taken by the government and India’s GDP growth would touch 8 per cent in 2017-18 depending on a pick-up in investment.
While it has warned against external factors such as global crude prices as downside to growth, Poonam Gupta, senior economist World Bank said that the risk of any action by the US Fed on India is lower compared to 2013 as the country has better forex reserves. She also said that deficient monsoons’ impact would be marginal as the farm sector makes a small contribution to overall GDP.
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