National Rural Corruption Guarantee Scheme

Over two years ago, in Aug 2005, I had written that the national rural employment guarantee scheme (NREG) will ultimately end up increasing the number of poor and deepening poverty — which of course was easy enough to predict since the policy is “pro-poor” and like all policies “pro-” something do, increases that something.

The NEGS is not novel. Maharashtra has had an employment guarantee scheme for decades. According to Sharad Joshi, it “has produced few permanent assets. And the EGS in Maharashtra is synonymous with corruption. Government officials concoct false registers of attendance.”

Corruption is not unexpected when money is involved and the transaction is between officials who have the power and control over the money, and the poor unemployed labor who would be willing to take only a share of whatever is due to him or her. It has been variously estimated that only about 25 percent of any relief money actually reaches the intended beneficiary. Politicians and bureaucrats steal the majority of funds.

Now reports are surfacing that the damned scheme is beset with corruption. That news would surprise you if you are in the habit of being surprised to learn that bears shit in the woods, or that astrologers prey on the gullible.

Any competent economist could have foretold the likelihood of such a scheme actually delivering what its proponents claimed. But then, one may recall that among the promoters was Dr Manmohan Singh, who I believe is a fairly high-ranking official in the Indian government and reportedly has some influence on Indian policy matters. I further believe that the “Dr” in front of his name has something to do with a formal degree in economics. So how does one explain his apparent support of such a wrong-headed policy, a policy that guaranteed corruption? One may be inclined to be kind and generously explain that by saying that perhaps Manmohan Singh does not understand basic economics and should go back to school.

Or one can be a realist and say that Dr Singh does understand economics but even more acutely he understands what is likely to brighten the political fortunes of his bosses. Dr Singh should have known from his years as an economist and an observer of Indian reality that the thousands of crores of rupees will simply be siphoned off by the intermediaries. But he cynically promoted the scheme for political reasons. It is not the first time that he has done so and is unlikely to be the last.

If the leadership is corrupt, is it any wonder that the schemes that they cook up are riddled with corruption? Now at least they should rename the scheme as “The National Rural Corruption Guarantee Scheme” and be done with it.

Author: Atanu Dey

Economist. View all posts by Atanu Dey