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Why India Should Continue with the MGNREGA

In their article in the Times of India, http://blogs.timesofindia.indiatimes.com/toi-edit-page/rural-inefficiency-act-despite-protests-about-diluting-nrega-the-pm-is-right-to-confine-it-to-200-poorest-districts/, Jagdish Bhagwati and Arvind Panagriya have argued for the restriction of the NREGA to the 200 most backward districts of the country.

The crux of their argument is that people gravitate to MGNREGA despite other available job opportunities. That is how they come with those startling statistics – of the Government spending a ‘solid Rs 186 to transfer a mere Rs 50’ to a person.

Since implementation, 1200 crore person-days of employment has been generated
A look at Govt. statistics proves that their argument is based on false premises. In 2009, (a drought year), the MGNREGA generate 284 crore person days. The figures for the following two years, were in the range of 151-153 crores. It is no co-incidence that enrollment in MGNREGA reached its peak during the worst drought in the past decade. There has been a startling fall in numbers for 2010 and 2011, both of which saw normal rainfall. This validates the theory that MGNREGA is largely demand-driven and looked upon as a safe-house to fall back upon in case of lack of other options.

Nonetheless, let us ignore these facts and go ahead with the authors’ assumption that almost every person in India (excluding those from those 200 backward districts) has a job for him/herself but chooses to go for MGNREGA instead. Now why would people even want to do that?

Only if they earn a greater amount than they would normally. The NREGA provides a monthly income of 3900 (using the figures provided by the authors). Meanwhile, the Rangarajan Committee has suggested a poverty line of 816 rupees per month per rural Indian. Now an average rural Indian family has 4.5 members. This translates that the poverty line for such a family would amount to an expenditure of 3672 per month, which throws a family reliant on the MGNREGA for income barely above the poverty line (already considered to be unrealistically low).

So NREGA gives a person enough breathing space to escape the official poverty line. Would it not be fair to estimate, therefore, that a less-profitable private job would leave employees throttling in acute poverty? Does this not prove that MGNREGA is still needed?

MGNREGA, in its current form, reaches out to all (or at least attempts to) poor families in need of work. There will definitely be a higher incidence of such cases in backward areas. But there will also be plenty of people who need the scheme but are not living in those districts. Going through the list of the 200 most backward districts in the country reveals that the states of UP, Bihar, Rajasthan etc, will corner a lion’s share of the MGREGS pie. And rightly so! But no one in their right frame of mind can argue that there is no family in Tamil Nadu which requires it.

Indeed, the benefits of MGREGS are doubtless. The authors have not said a word against the scheme itself and implicit in their silence is an endorsement. The very fact that they are not calling for a complete abandonment of the scheme proves that it is beneficial to the country. Even the argument that the scheme boosts inflation has ceased to hold water after a RBI research report canned such a theory.

So why then would you limit the MGNREGS despite its benefits?

In the very first paragraph of their article, the authors have given their line of reasoning -just to get additional funds (another absurd argument made by the authors). There are so many unproductive white elephants the Government has been funding. Is it not true that the Modi Govt is planning to increase the monthly entitlement of grain for each person under the Food Security Act from 5kg to 7kg. If the Government was in such a financially precarious situation then why would want to do that?

Why target only the MGNREGA?

Because it’s implementation has been unsatisfactory. In other words, the authors are trying to say “NREGA implementation is flawed so let us just end the scheme itself.”

This is not to deny that implementation has been plagued  by widespread corruption and ineptitude. Yes, money earmarked for the scheme is being siphoned out of the system. But again, the Aadhar and the Jan Dhan Yojana (if it does not end up resulting in a mammoth collection of idle bank accounts) can be used effectively to iron out these wrinkles. If taken on a war footing, perhaps this can be accomplished within a year. After all, both schemes have been met with immense public response!

There is no doubt that MGNREGA is poorly implemented and targeted. As the authors pointed out, prosperous states like TN are availing disproportionate benefits from MGNREGA. But does this warrant a decision to remove a Tamil Nadu or a Haryana from its ambit?

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