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The limitations of MGNREGS

The persistence of such programmes shows the lack of incentives in the current system that could encourage efforts by stakeholders towards reform
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First Published: Mon, Apr 29 2013. 06 39 PM IST
A file photo of women working under MGNREGA. Photo: Ramesh Pathania/Mint
A file photo of women working under MGNREGA. Photo: Ramesh Pathania/Mint
The performance audit on the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) by the Comptroller and Auditor General (CAG) last week brought to light an array of deficiencies. Apart from inadequate maintenance of records on fund disbursement and non-completion of works, the programme has not performed well on its goal of generating employment too.
The CAG audit has noted that fund allotment has been arbitrary and there is no sign of increased funds being allotted to states with higher poverty levels. None of this should come as a surprise considering MGNREGS is a government make-work scheme that pretends to create productive employment, but in real acts as nothing more than a benefits transfer mechanism.
It is quite far-fetched to consider MGNREGS’s failure to create adequate employment as an economic loss due to non-utilization of labour resources. Make-work schemes like MGNREGS do not aim at generating productive employment in the first place, but merely at creating work for work’s sake. In other words, from the perspective of economic efficiency, it is the programme’s indifference towards productive employment that merits public attention.
The only other sensible way, then, to gauge the worth of MGNREGS is purely as a public welfare scheme. This, precisely, is what the CAG audit has done, and the results are not encouraging. In welfare programmes, the misappropriation of public funds by government authorities is only to be expected. Public authorities, entitled with rights over public resources, are bound to use them to their personal ends.
Interestingly, these problems involving public money do not raise eyebrows any more, with taxpayers remaining indifferent to the blatant misuse of their wealth. Such indifference is only to be expected as taxation per se involves involuntary—and thus unaccountable—transfer of benefits. This essentially means there is very little incentive for taxpayers, the ultimate funders of such programmes, to monitor the use of their contributions.
The case of MGNREGS brings forth the potpourri of troubles that plague government programmes—in terms of economic as well as social efficiency. Apart from this, the persistence of such programmes, despite being a huge drain on public resources, shows the lack of incentives in the current system that could encourage efforts by stakeholders towards reform.
Can social welfare programmers make economic sense? Tell us at views@livemint.com
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First Published: Mon, Apr 29 2013. 06 39 PM IST