The United Progressive Alliance government’s top-billed social security scheme, the National Rural Employment Guarantee Scheme (NREGS), has run into all the problems that critics said it would when it was launched in early 2006.
A draft report of the comptroller and auditor general found that only 3.2% of the registered households had 100 days of employment in a year (Feb 2006 to March 2007). Providing 100 days of employment is a fundamental goal of the NREGS. The average employment was a paltry 18 days.
The Harvard economist Andrei Shleifer analysed government corruption by considering its “industrial organization”. Officials could act as monopolists who dispense licences, permits, etc. Another possibility is that several officials supply the same government-provided good and jointly maximize corruption.
(Illustration: Malay Karmakar/Mint)
The present context is similar to Shleifer’s first situation where local officials such as the block development officer (a key official in the NREGS affairs as he prepares plans and pays wages and unemployment allowance to those eligible) behave as independent monopolists. There is some truth in the parallel. An earlier survey of the scheme in Orissa by the NGO, Centre for Environment and Food Security, found that officials at the local level were accountable to none. Villagers who desperately wanted employment had no courage to confront such “monopolists”. In spite of the innovative features of the NREGS, such as social audits and local control by residents, things have gone awry.
A quick look at NREGS statistics is startling. Even in very different districts, there are sad uniformities. In Dantewada district in the Naxalite-infested Chhattisgarh, there was little or no gap between employment demand and provided in 2007-08 (96,380 person days). Yet, only 3.5% of the families could get 100 days of employment. This in spite of the availability of a diverse array of work: from drought proofing to local irrigation work to road-building to construction. Paschim Medinipur, a very different and peaceful district in West Bengal, had a similar work demand and supply profile. It fared even worse: Virtually no family got 100 days of work.
Local officials have found a way to create “limitless” corruption possibilities from a limited scope of work. The demand-driven nature of the programme (instead of the usual targeted approach) makes this possible. In the latter way of doing things, work ceases to be available once an asset, for example a road, has been created. In a work demand approach, the demand for work becomes a right that a villager can ask for.
As a result, a constant increase in the number of person days of labour demanded while the number of assets to be created is limited, is a sure recipe for corrupt practices. This is not to argue for a targeted approach (which in any case leads to corruption) but to seriously rethink such approaches to removing poverty.
The inherent limitations of such work in rural India cannot be denied. Once all such activity has been completed, what next? Economic growth and development cannot stop at mere construction work. The sustainability of such schemes where funds flow from the top into a limitless pit is doubtful.
The story of failures in these programmes has an interesting trajectory. At the root it is exploitation of design flaws by the wily that ultimately flowers as corruption. One can call it information asymmetry or political disempowerment or any other name, it leads to the same result. The prognosis is not good. It’s all the more disheartening if this is all that can be implemented after the serious thinking and work that have gone into poverty alleviation programmes. It is deeply frustrating for India’s poor who are shown a dream that does not materialize and fades away.
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