Comments on: The REGS Guarantees Poverty

By: Krishnan

Krishnan — Mon, 26 Sep 2005 18:32:13 +0000

Fabulous article!
Yesterday, Charlie Rose interviewed Palaniappan Chidambaram. So the FM says, 1 in 4 Indians lives on less than a dollar a day. And Charlie asks, how much is India’s per capita income. FM says, some $700. Charlie says, USA ? FM says, oh, some $30,000. Charlie says “Whaaat?!!”. FM says, yes we have huge problems. But we shold look at PPP. Charlie asks “What is that ?”. FM says, well it is how much an Indian can purchase in his local economy. By that measure, we are up there with you guys.
But, Charlie says, India has great poverty.
Yes, the FM agrees. Our farmers are not able to subsist when the farming season is over, about 5 months every year.
So what do they do, Charlie demands.
Well, they commit suicide….the FM sheepishly admits. But then he bounces back, “The REGS scheme is designed to help these farmers. So now they will be employed, they will have an income, & they won’t kill themselves”.

Ofcourse Charelie hasn’t read this brilliant piece by Atanu, so he has no idea what REGS really is, & he moves on to the next question, “Mr. Chidambaram, is India’s the third largest economy or fourth in Asia…” blah blah.

By: Varun

Varun — Sat, 24 Sep 2005 10:36:24 +0000

Thanks for this great essay. By far this is the best article ever I have read up on REGS.

You convey things very clearly and succintly.

Thanks

By: kaisare.net » Blog Archive » Rural Employment Poverty Guarantee Scheme

Fri, 23 Sep 2005 23:29:51 +0000

[...] Rural Employment Poverty Guarantee Scheme Atanu Dey presents an excellent analysis of the pitfalls of the Rural Employment Guarantee Scheme. I quo [...]

By: Patel

Patel — Fri, 23 Sep 2005 19:38:54 +0000

In terms of political capital, you would assume that the REGS would buy you a lot more, in terms of economic reform, than just the VAT.

Increased spending on infrastructure projects cannot be argued as comprimise by the CPI as they find no fault in increased government expenditure.

You would expect that with the introduction of the biggest welfare program in the countries history coupled with the fact that the main opposition party is in shambles, the congress government would be able to do more in areas such as divestment.

People tell me I’m a nice, honest, hardworking guy… maybe I should run for prime minister next time around.

By: Stephen Stohs

Stephen Stohs — Fri, 23 Sep 2005 18:35:34 +0000

Nu,

I have little or nothing to add to what you say — you have explained the problem with employment guarantees better than any other source I have seen on the subject.

Unfortuntately, governments appear to have little incentive to adopt policies to increase productivity by letting people internalize risk, as they capture rents from opportunities for bureaucratic and political corruption. (Check out the US govt bailout of New Orleans to the tune of $200b if you want an example of the problems w/free govt insurance from this side of the world).

You clearly explain how this employment guarantee kills initiative and drive, thereby strangling the “goose that lays golden eggs” and ensuring these guaranteed jobs will pay little real income. Unfortunately, that which seems an obvious folly to you looks like a politically popular free lunch to the average citizen, while the policy of internalizing risk and reward, which might provide the incentives for increased real income, sounds hard-hearted.

Best,

Steve

By: Pankaj

Pankaj — Fri, 23 Sep 2005 09:38:27 +0000

Hello Atanu, When I look at the bill, I see it as another populist measure among many which has drained India's resources and created so much destitution. With my nascent knowlegde of economics, I could take a much simplistic view here . Only a trained economist would have dissected this bill with the precision and brilliance you have done. I hope you try to publish this article on Business Standard or some International publication. I am sure it will get published. Thanks.

By: avidnewsreader

avidnewsreader — Fri, 23 Sep 2005 08:57:51 +0000

“…..Or you could have 100 people use hand-held shovels and do it. Or you could employ 1000 with tablespoons, or 10,000 people with toothpicks to do the job. In the end only one hole gets dug but you employ more people…..”

I am enlightened.

Here is another related article arguing for globalization:

http://saag.org/papers16/paper1547.html

“…Over 80% of the worldâ€™s produce is consumed by the 1 billion people in the affluent countries. ……

The 20% also produce the 80% and hence should have no qualms about consuming it. The way ahead for developing countries is produce and sell more to increase their share of the pie, as China and India are increasingly showing, and not by trying to stifle consumption in the developed world by certain â€œredistributive methodsâ€ which have severe consequences in store for the rich and poor alike…..”