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The Indian government has launched one of the country's most ambitious efforts to tackle rural poverty. The National Rural Employment Guarantee Scheme (NREGS) promises 100 days of work each year for one member from each of India's 60 million rural households. A look at past schemes, and what the future holds for the masses.
In a country where reportedly every generalisation is trivially true, one generalisation holds non-trivially and with overwhelming force. It is this: Indian governments are pro-poor. Every policy that any government ever espouses, fundamentally it always is pro-poor, irrespective of any minor variations such as pro-market or pro-planning or pro-globalisation or pro-self sufficiency. The percentage of people below the poverty line is estimated to be around 25. That is, India has about 250 million people who are so unimaginably poor that they can't cross the poverty line that is set way below what can be considered necessary for a human existence. Around 33 million were added to that role in 2001-02 alone. For comparison, that is more than the entire population of Canada in 2001 (30 million). A study on pro-poor programmes throws light on how they have fared. In this regard, it will be worth watching how the recently launched NREGS, another pro-poor programme, will come through. It promises Rs 60 per day for 100 days of employment a year to one member of every rural unemployed family. The Central government funds this scheme, with the State expected to contribute 10 per cent of the cost. The cost in the first year alone is expected to be around Rs 15,000 crores (approximately $3.3 billion.) The NREGS is not novel. The scheme is a successor to the infamous National Food-For-Work Programme (NFWP). Launched in November 2004, the NFWP aims to ensure food security to the poorest of the poor in 150 of India's most backward districts. Clearly the NFWP has provided neither food nor work. Improper implementation, siphoning off of government funds, failure to pay minimum wages and the rampant flouting of guidelines are just some of the irregularities found into the implementation of the NFWP in the past. The findings of investigation of NFWP revealed that in most parts of the country, middlemen and contractors used machinery for easy and fast completion of the task and pocketed a large portion of the project benefit, thereby denying employment opportunities to the targeted beneficiaries. Prior to this scheme, Sampoorna Grameen Rozgar Yojana (SGRY) was launched in 2001 to provide a greater thrust to additional wage employment, infrastructural development and food security in the rural areas with an annual outlay of Rs 10,000 crore. Beneficiaries covered under the SGRY included the Dalits, women and parents of handicapped children/child labourers rescued from hazardous industries. Meanwhile, last year, The Directorate of Vigilance and Anti-Corruption has unearthed a scam in the implementation of the scheme. Also, Maharashtra has had an employment guarantee scheme for decades. Rural urban believes that it has produced few permanent assets. Corruption is not unexpected when money is involved and the transaction is between officials who have the power and control over the money, and the poor unemployed labour who would be willing to take only a share of whatever is due to him or her. It has been variously estimated that only about 25 per cent of any relief money actually reaches the intended beneficiary. Politicians and bureaucrats steal the majority of funds. As a matter of equity and fairness, the rural poor do need some kind of safety net. The design of exact mechanism of a safety net is not easy considering the scope of the problem. But a number of questions that arise in connection of the NREGS. Even if the NREGS is not beset with corruption and fraud, is it the best mechanism? Is the scheme consistent with the reforms required in the economy? Will the secondary effects drown out whatever primary benefits accrue to the rural people? The basic objection that entails the scheme is that it is in effect a purely income redistribute scheme. Also, the money spent on the NREGS has an opportunity cost. What is lost is the government's ability to fund production-enhancing projects. Suppose the money was spent for a massive drive to provide primary education and health services to rural areas coupled with a reduced family size drive. Or it was used to improve the infrastructure of the country such as building a modern rail transportation system. Any of a large number of public works projects would generate large employment opportunities and lead to capacity building and thus increase the total national income. In this case, it would not be just an "employment generation" but "income generation". Analysts say this is the most ambitious pro-poor scheme launched by an Indian government, in a country where nearly 70 per cent of the population lives in villages. However, critics say the scheme is too expensive and question whether the government has the funds for a programme expected to cost anywhere between $5-25 billion (Rs 22,500-1,12,500 crore). They say rather than paying for unskilled manual labour, the government should invest in improving rural infrastructure - especially in health care and education, and weed out the leakages that had sprung up in the system, including inflated schemes, bogus registrations, fraudulent requisition of funds. Others say there is little transparency, which may lead to red tape and corruption. Now, NREGS has been approved, to the glee of politicians and with a note of triumph by Left-leaning economists. We have tried a number of similar schemes over the past 50 years without much success. One hopes this scheme will not be like the case of a Hollywood actor marrying for the sixth time - hope triumphing over experience, a tribute to the heart than to the mind.
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