The marquee National Rural Employment Guarantee Scheme (NREGS) has faced mounting criticism ever since it was launched more than two years ago. The focus of this criticism has largely been on wasteful expenditure, and the consequent impact on the government’s finances as well as on corruption.
Now, it transpires that the programme is actually having wider economic effects that go beyond its impact on the fiscal deficit. As Mint reported on 10 May, fewer migrant labourers from Bihar turned up during the annual rabi (winter crop) harvest in Punjab this year. So, while the local markets have been flush with a record harvest and the government is well ahead of its procurement targets, Food Corporation of India, the official grain procurer for the government, is hard-pressed to transport the grain to its warehouses. There are not enough migrants to do the heavy lifting.
The labour shortage is partly because of the fact that the rural jobs scheme offers minimum employment to impoverished farm labourers near their villages. There is no incentive to travel hundreds of miles to work in Punjab. (The opportunities that have emerged from the spurt in construction activity are another factor.) This should be welcomed. Not only is the programme offering employment to the poor but manual labour in the country has an option for, perhaps, the first time ever. It could be that NREGS is also putting a floor on the wages that agricultural labourers can earn.
But the bigger issues remain. For one, there is still little proof that NREGS is creating assets that could help create long-term income for villagers. The government must review the situation at the earliest. It has, after all, spent Rs12,000 crore in 2007-08, and is budgeted to spend Rs16,000 crore this fiscal year.
While graft is a matter of concern, an equally legitimate one is the capacity that the scheme is creating. One of the biggest concerns is that the implementing authority at the village level does not have the capacity to create quality assets that would yield long-term benefits to the rural populace. Anecdotal evidence supports this theory.
Has NREGS begun to have an impact on the rural economy? Write to us at firstname.lastname@example.org