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Numbers to the rescue

Popular perception of NREGA’s performance is as much a victim of unscrupulous sarpanchs,block and village officials and local...

Written by Raghav Gaiha |
October 20, 2009 2:20:36 am

Popular perception of NREGA’s performance is as much a victim of unscrupulous sarpanchs,block and village officials and local politicians as of analysts. While tales of greed and corruption have become a staple of media reports,analysts have found an easy target,one vulnerable to revealing a barrage of averages of how unsatisfactory its performance has been and the meagre consequent trickle of benefits to the poor segments of the rural population. Yet the juggernaut of NREGA continues to roll in an ever expanding political constituency. While the underlying economic rationale of workfare gets diluted or blatantly ignored through hikes in NREGA wage rates and substitution of private assets for public assets,the financial commitments have grown by leaps and bounds. Whether the distribution of benefits has become more skewed in favour of the relatively affluent and must therefore be corrected is an issue that is submerged in the official rhetoric of empowerment and course corrections through social audits. A deeper probe is timely,going well beyond largely descriptive statistics that inform the public discourse,but fall short of policy insights. Our analysis,based on a large survey of households and other stakeholders in three states (viz. Rajasthan,Maharashtra and Andhra Pradesh) conducted in 2007-8 is motivated by this concern.

Let us first consider the targeting accuracy in terms of participation.

The poor and non-poor (using the official poverty line) were equally distributed among the NREGA participants in Rajasthan (50.22 per cent and 49.78 per cent,respectively). Note that per capita income used here is net of NREGA earnings. Given the poverty cut-off point of Rs 450,those with monthly incomes below Rs 300,i.e.,24 per cent of the participants,are classified as acutely poor. At the upper end of the distribution,i.e. those with incomes exceeding Rs 700 per capita,are classified as relatively affluent. About 20 per cent of the participants were thus relatively affluent. It is surmised that this is a direct consequence of high NREGA wages (relative to agricultural wages) that weakens the self-selection of the poor in workfare.

In Maharashtra,the participants were overwhelmingly non-poor (71.78 per cent),based on a poverty cut-off point of Rs 436. The acutely poor were a tiny fraction (about 11 per cent) while the relatively affluent were a staggering 37.68 per cent.

Targeting in Andhra Pradesh was dismal too,with the non-poor accounting for 69.50 per cent of the participants,based on a poverty cut-off point of Rs 352. Acutely poor were a bare 9 per cent while the relatively affluent were more than a quarter (26.50 per cent) of the total participants.

We used the distribution of days worked,to analyse the skewness of the distribution of the benefits of NREGA.

In Rajasthan,among the non-poor participants,about 40 per cent worked less than 30 days,about 37 per cent worked 30-60 days and about 23 per cent worked more than 60 days. Thus less than a quarter of the non-poor came close to accomplishing the legislated limit of 100 days per household. Among the poor,a slightly lower share (about 36 per cent) worked less than 30 days,a much higher share (about 44 per cent) worked 30-60 days,and a lower share (about 20 per cent) worked more than 60 days.

In striking contrast to Rajasthan,large majorities of both non-poor and poor participants (81 per cent and 70 per cent,respectively) worked in the lowest range (less than 30 days) and negligible fractions (1.3 per cent and 0.60 per cent) in the highest range (more than 60 days). So more than moderately high shares worked in the middle range (30-60 days),with the share of the poor (about 30 per cent) just under twice as high as that of the non-poor (over 17 per cent). So the markedly lower participation of the poor was partly compensated for by the longer participation of a segment.

In Andhra Pradesh,distributions of days worked were similar between the poor and non-poor. Just under half in both cases (about 48 per cent of the poor and about 46 per cent of the non-poor) worked less than 30 days,well over one-third (about 36 per cent and 38 per cent,respectively) in the middle range of 30-60 days,and remaining moderate shares in the highest range (more than 60 days).

Whether NREGA made a difference to the poor can be assessed in terms of poverty outcomes. In the three districts of Rajasthan in the sample,the head-count poverty index registered a reduction of 5-7 percentage points; in Maharashtra,a reduction of 2 percentage points,and in Andhra Pradesh of about 9 percentage points.

In conclusion,while far from impressive,NREGA is not an unmitigated failure.

Raghbendra Jha is Rajiv Gandhi Chair Professor of Economics,Australian National University; Raghav Gaiha is Professor of Public Policy,Faculty of Management Studies,University of Delhi; Shylashri Shankar is Senior Fellow,Centre for Policy Research,Delhi

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