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Business News/ Politics / Policy/  Is MGNREGS just digging holes and filling them up?

Is MGNREGS just digging holes and filling them up?

Assured employment under MGNREGS offers real gains in earnings, which are also used to acquire productive assets

A recent paper tries to find out what the benefits of MGNREGS are. Photo: Ramesh Pathania/ MintPremium
A recent paper tries to find out what the benefits of MGNREGS are. Photo: Ramesh Pathania/ Mint

Public works programmes are useful for stimulating mass demand in an economy. But do they have any other benefits? A joint paper by Karthik Muralidharan and Paul Niehaus, associate professors of economics at University of California, San Diego, and Sandeep Sukhantar, an associate professor of economics at University of Virginia, looks at the implementation of the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) between 2010 and 2012 in Andhra Pradesh to answer this question.

The government’s entry into the rural economy as an employer of last resort raised overall wages and incomes. This was not offset by any corresponding price increases, implying that the gains from MGNREGS were ‘real’ and not ‘nominal’ or illusory. Increased incomes of MGNREGS workers were often used to acquire productive assets, with MGNREGS-heavy areas showing increased ownership of livestock.

Read more: General Equilibrium Effects of (Improving) Public Employment Programs: Experimental Evidence from India

The four traits required to become a chief executive officer (CEO) are high general ability, execution skills, charisma and a knack for strategic focus, according to a study based on interviews of candidates for top corporate positions in North America. The detailed interviews were conducted and summarized by a consulting firm and subsequently analysed by Steven N. Kaplan and Morten Sorensen, professors with the University of Chicago Booth School of Business and the Copenhagen Business School, respectively. Successful CEOs are generally better at getting the work done rather than being good listeners or being nice to people. They are generally charismatic but relatively weak in analytical ability; they focus more on strategic decisions than managerial details. On the other hand, chief financial officers appear to be at the opposite end of the spectrum; they are strong in interpersonal skills over execution skills, analysis over charisma and managerial ability over strategic focus.

Read more: Are CEOs Different? Characteristics of Top Managers

Greater transparency in sharing macroeconomic data reduces borrowing costs for a country in the international capital market, according to Sangyup Choi and Yuko Hashimoto, economists associated with the International Monetary Fund (IMF). Emerging market (EM) countries which adopted the IMF’s data dissemination standards saw, on average, a 15% reduction in their sovereign risk premia in one year. The premia refers to the excess yield on the sovereign bond issued by an EM country over US Treasury yields. IMF had launched data standards initiatives such as the Special Data Dissemination Standard (SDDS) in 1996 in response to the Mexican financial crisis. Transparency apparently reduces international investors’ risk perception and helps a country cope better with a crisis. India adopted the SDDS in 1996, although it was only in the early 2000s that data began to be publicly shared on IMF’s website in an organized manner.

Read more: The Effects of Data Transparency Policy Reforms on Emerging Market Sovereign Bond Spreads

The relevance of the BRICS (Brazil, Russia, India, China, South Africa) group on the world stage has often been questioned, with the recent India-China tensions fueling scepticism. However, efforts to keep the BRICS group relevant will yield results, according to a group of experts led by Sanjay G. Reddy, an associate professor of economics at The New School for Social Research, New York City. They argue in a recent report that the BRICS countries can together rectify the current under-provision of global public goods (GPGs) like financial stability, the international trade regime, cyber-security, terrorism control and peace. The report shows that households and corporate entities save around 36% of the combined gross domestic product in these countries, exceeding their investment spending of around 33%. This surplus savings is likely to persist in coming decades, which can contribute to financing development projects in other parts of the world.

Read more: The Role of BRICS in the World Economy & International Development

Evidence-based research to find out what kind of policies actually work has been growing within the discipline of economics. Tangible benefits from such research depend on how effectively policymakers use them. Research by Michael Callen, assistant professor of economics at the University of California, San Diego, and others has surveyed bureaucrats in Pakistan and India to find out more about this. Most civil servants were not able to even infer the findings due to individual or departmental statistical inabilities. The problem was aggravated as bureaucrats were more likely to shape their opinion on anecdotal accounts than rigorous statistical evidence in some cases. Lack of incentives to change the status quo and pressure to take decisions quickly were other reasons for inability of such research to influence policymaking.

Read more: Three barriers that make it hard for policymakers to use the evidence that development researchers produce

Economics Digest runs weekly, and features interesting reads from the world of economics.

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Published: 22 Sep 2017, 05:58 PM IST
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