Nov 12 2014 : The Economic Times (Delhi)
THE JEAN DREZE INTERVIEW - `NREGA Is In Need of Reform'
The economist shoots straight: While there's no need to `capitulate' to corporate interests, the National Rural Employment Guarantee Act could do with simplification, besides a perk-up in transparency. The government needs to put the recipients back in the picture, he tells Atmadip Ray
For one who had worked so closely to frame the world's largest job guarantee programme, known as the Mahatma Gandhi National Rural Employment Guarantee Act, it's not easy to see it succumb to pressure.It's no wonder that economist-cum-activist Jean Dreze will raise his voice against this, along with eminent academics such as Pranab Bardhan and Maitreesh Ghatak.Dreze says corruption related to NREGA and leakages -its major blemishes -are on the wane. In an interview, Dreze also lays out his vision of how strong banking and financial infrastructure can make NREGA stronger.The government seems to be planning to squeeze the scope of NREGA and money allotted to it. What, according to you, is prompting the government to do so?
The new government appears to be caught between conflicting demands from the public and its corporate sponsors. People, especially the poor, want more social support and better public services. The corporate sector, however, tends to oppose social spending, because it means more taxes, or higher interest rates, or less public money for infrastructure and so on. Employers are particularly averse to NREGA, for obvious reasons. A government that prides itself on being pro-business was bound to take a fresh look at this programme. However, my sense is that the government is yet to make up its mind on the issue.
A major chunk of NREGA money is said to be siphoned off by middlemen.
What is your experience?
If leakages alone were a good enough reason to wind up government programmes, a lot of things would beg to be shut down: the university system, the defence establishment, the Ganga Action Plan, and so on. Leakages actually raise two questions: is the programme worth it despite the leakages, and can the leakages be reduced? In the case of NREGA, I would answer `yes' to both. Official employment genera tion figures are increasingly consistent with independent house hold survey data, suggesting leakages are going down. This is also plausible in the light of various steps that have been taken to plug leakages, from bank payments of NREGA wages to social audits and proactive display of all essential records on the web. More needs to be done, but there is no reason to capitulate.
NREGA seems to be the driving force behind financial inclusion. Payments through banks and post offices were meant to safeguard against corruption. But what's the scene on the ground?
What are your suggestions to reduce the level of corruption related to NREGA?
The most vulner able link at the moment is the post office. It is not a reliable payment agency as things stand. Village post offices are vulnerable to being captured by corrupt middlemen, especially in the poorer states. The postal system also seems to be unable to pay wages on time. Yet many states continue to rely heavily on post offices for NREGA wage payments, because of the limited capacity of the banking system in rural areas. One option is to modernise the post office, another is to expand the capacity of the banking system. Both raise difficult operational issues and the solution may differ between states. For instance, some states have been able to use business correspond ents to expand the reach of rural banks, but in other states, this arrangement has not worked, at least so far. There are real possibilities of major advances in this field in the next few years.
Even if we admit that corruption played a part in NREGA payment, top economists including you have argued that NREGA should stay in its current form. What is the trade-off here?
We did not argue that NREGA should “stay in its current form“. We argued that workers' entitlements, including the right to work on demand, should not be curtailed.Speaking for myself, I am very much in favour of reforming NREGA. To start with, I believe the programme should be simplified. For instance, there are needless complications in the planning process and the work measurement system. Aside from stifling the programme, these complications affect the transparency of NREGA. So there is no trade-off between reforming NREGA and fighting corruption.Alas, the new government seems absolutely clueless as far as constructive NREGA reforms are concerned.
What is your view on the Jan Dhan Yojana?
Is it possible for banks to open at least one savings account for every household given the existing infrastructure bottlenecks like power and rural road connectivity?
Opening accounts is not difficult -it was done on a large scale under NREGA much before Jan Dhan Yojana was launched. The difficulty is to provide adequate services to t the account holders, including, for instance, prompt and convenient payment of wages or pensions. How Jan Dhan Yojana is sup posed to help in that respect is not clear s as things stand. Some people think cash transfers are seamless, but flow-of-funds problems affect most social programmes in cluding NREGA, social security pensions and even midday meals.
The government runs about 22 pro-poor schemes but you and Prof Amartya Sen have argued that India has fallen behind its neighbours in South Asia in every social indicator -from literacy to child malnutrition to access to toilets. What is going wrong? Is there a need to consolidate the schemes for a better result
It is not quite true that India has fallen behind “in every social indicator“. But this certainly applies to many social indicators, including some very important ones such as infant mortality and sanitation. The contrast with Bangladesh is particularly telling, and we also know something about why, say, infant mortality is lower in Bangladesh than in India. To illustrate, the proportion of children who are fully immunised, get vitamin A supplements, are treated with oral rehydration therapy when they get diarrhoea and were breastfed within an hour of birth was above 80% in each case in Bangladesh in 2007. The corresponding figures for Indian children were uniformly below 50% in the same year.
The contrast in sanitation coverage is even sharper. To catch up with this deficit, a consolidation of pro-poor schemes may help, but more importantly, core interventions need to be improved and expanded -public health is a prime example. The new government seems to hold the odd view that India can send rockets to Mars and run bullet trains, but is bound to remain a Third World country as far as public services are concerned.
atmadip.ray@timesgroup.com
The new government appears to be caught between conflicting demands from the public and its corporate sponsors. People, especially the poor, want more social support and better public services. The corporate sector, however, tends to oppose social spending, because it means more taxes, or higher interest rates, or less public money for infrastructure and so on. Employers are particularly averse to NREGA, for obvious reasons. A government that prides itself on being pro-business was bound to take a fresh look at this programme. However, my sense is that the government is yet to make up its mind on the issue.
A major chunk of NREGA money is said to be siphoned off by middlemen.
What is your experience?
If leakages alone were a good enough reason to wind up government programmes, a lot of things would beg to be shut down: the university system, the defence establishment, the Ganga Action Plan, and so on. Leakages actually raise two questions: is the programme worth it despite the leakages, and can the leakages be reduced? In the case of NREGA, I would answer `yes' to both. Official employment genera tion figures are increasingly consistent with independent house hold survey data, suggesting leakages are going down. This is also plausible in the light of various steps that have been taken to plug leakages, from bank payments of NREGA wages to social audits and proactive display of all essential records on the web. More needs to be done, but there is no reason to capitulate.
NREGA seems to be the driving force behind financial inclusion. Payments through banks and post offices were meant to safeguard against corruption. But what's the scene on the ground?
What are your suggestions to reduce the level of corruption related to NREGA?
The most vulner able link at the moment is the post office. It is not a reliable payment agency as things stand. Village post offices are vulnerable to being captured by corrupt middlemen, especially in the poorer states. The postal system also seems to be unable to pay wages on time. Yet many states continue to rely heavily on post offices for NREGA wage payments, because of the limited capacity of the banking system in rural areas. One option is to modernise the post office, another is to expand the capacity of the banking system. Both raise difficult operational issues and the solution may differ between states. For instance, some states have been able to use business correspond ents to expand the reach of rural banks, but in other states, this arrangement has not worked, at least so far. There are real possibilities of major advances in this field in the next few years.
Even if we admit that corruption played a part in NREGA payment, top economists including you have argued that NREGA should stay in its current form. What is the trade-off here?
We did not argue that NREGA should “stay in its current form“. We argued that workers' entitlements, including the right to work on demand, should not be curtailed.Speaking for myself, I am very much in favour of reforming NREGA. To start with, I believe the programme should be simplified. For instance, there are needless complications in the planning process and the work measurement system. Aside from stifling the programme, these complications affect the transparency of NREGA. So there is no trade-off between reforming NREGA and fighting corruption.Alas, the new government seems absolutely clueless as far as constructive NREGA reforms are concerned.
What is your view on the Jan Dhan Yojana?
Is it possible for banks to open at least one savings account for every household given the existing infrastructure bottlenecks like power and rural road connectivity?
Opening accounts is not difficult -it was done on a large scale under NREGA much before Jan Dhan Yojana was launched. The difficulty is to provide adequate services to t the account holders, including, for instance, prompt and convenient payment of wages or pensions. How Jan Dhan Yojana is sup posed to help in that respect is not clear s as things stand. Some people think cash transfers are seamless, but flow-of-funds problems affect most social programmes in cluding NREGA, social security pensions and even midday meals.
The government runs about 22 pro-poor schemes but you and Prof Amartya Sen have argued that India has fallen behind its neighbours in South Asia in every social indicator -from literacy to child malnutrition to access to toilets. What is going wrong? Is there a need to consolidate the schemes for a better result
It is not quite true that India has fallen behind “in every social indicator“. But this certainly applies to many social indicators, including some very important ones such as infant mortality and sanitation. The contrast with Bangladesh is particularly telling, and we also know something about why, say, infant mortality is lower in Bangladesh than in India. To illustrate, the proportion of children who are fully immunised, get vitamin A supplements, are treated with oral rehydration therapy when they get diarrhoea and were breastfed within an hour of birth was above 80% in each case in Bangladesh in 2007. The corresponding figures for Indian children were uniformly below 50% in the same year.
The contrast in sanitation coverage is even sharper. To catch up with this deficit, a consolidation of pro-poor schemes may help, but more importantly, core interventions need to be improved and expanded -public health is a prime example. The new government seems to hold the odd view that India can send rockets to Mars and run bullet trains, but is bound to remain a Third World country as far as public services are concerned.
atmadip.ray@timesgroup.com
