October 17, 2007EconomyPublic Policy

Good money after bad

With more platitudes, this time

This is an archived blog post from The Acorn.

As Andy Mukherjee wrote, just as evidence of waste and corruption was mounting against India’s two-year-old rural employment guarantee program, the authorities in New Delhi decided to extend the profligate project to the entire country”. Surely, with talk of elections already in the air, you can’t expect the UPA government not to throw fiscal prudence to the winds. Not least when the request to expand the scheme comes from the exalted Rahul Gandhi.

Just how bad is the evidence? Amit Varma tells us (via WSJ):

Last month, the Delhi-based Society for Participatory Research in Asia, a non-profit organization, released a preliminary study on NREGAs governance. The results are shocking. In the financial year beginning in April 2006, only 6% of the households registered under the scheme actually received their 100 days of employment. PRIAs study also cited shoddy implementation practices across 14 of India’s 28 states. In the surveyed villages, only 45% of registered households had even applied for work under the scheme. And of those households that had applied for a job, only 44% had received one within the required 15 days.

PRIAs results mirror the findings of another study carried out by the Centre of Environment and Food Security earlier this year. The CEFS study focused on the state of Orissa, and found that about 75% of the funds spent in Orissa had been siphoned and pocketed by the government officials.” We could not find a single case where entries in the job cards are correct and match with the actual number of workdays physically verified with the villagers,” the study noted. Out of a total $187 million in public monies spent in the state during the 2006-2007 fiscal year, around $127 million was effectively stolen. [WSJ]

In spite of these dismal results, there’s no sign of the UPA government attempting to improve the design of the employment guarantee programme. Changing the incentive structures of the various stakeholders might reduce the leakage in a very leaky bucket. As has become tiresomely common with him, all Prime Minister Manmohan Singh has hinted at is changing platitude structures—like implementing the scheme honestly and sincerely”. As he should know by now, honesty and sincerety”, even if it were for real, is not a sufficient guarantee of good outcomes.

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