Like the NREGA, the RTE helps destroy whatever is left

The NREGA, as feared, has caused tremendous harm and will continue to play havoc on the Indian economy. The Right to Education (RTE) is another act that will surely help destroy whatever little there is left of the Indian education system. It is as if the UPA led by the Congress has sworn to destroy India. Go read what Manish Sabharwal has to say about the RTE in the Economic Times of Jan 12th. An extract below the fold, for the record:
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Google for Missing Details

Sunita Narain’s article “Missing Details” in the Feb 26th edition of Business Standard talks about the National Rural Employment Guarantee Scheme (NREGS). (Hat tip: A Sarda.)

Creating productive assets such as forests and reservoirs is good for the economy, and should be done in any case. The goal of providing some income to people in financial distress in rural areas can have the valuable side-effect of the creation of productive assets. But when even that side-effect is forgotten and only employment is the goal, then there is a problem. It really becomes a total unmitigated waste when even that substandard goal of employment is subverted by corruption and theft of the financial resources.

Narain says that the details of the implementation of the scheme is missing and laments the failure of what she says was founded on a good idea. I think that NREGS is itself not a good idea to begin with because it puts the cart before the horse. I will go into the details later.

You may ask, why “Google for Missing Details” is the title of this post. The link to Narain’s article will take you to the BS article but only to a truncated version. The rest is behind a subscription wall. Here’s how you get the article if you aren’t a subscriber: google “sunita narain missing details” and you click on the version that is cached by Google.

I am clever like that 🙂

Does the NREGS Cause Inflation?

It makes sense to know a bit of economics, just as it is good to know how to do arithmetic. You don’t need to get yourself a PhD in mathematics in some area like topology or Lie groups. You just need to know basic arithmetic so that you can do your everyday figuring by yourself, so you know whether someone short-changed you or not. Thus spoke Joan Robinson: “The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.”
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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.
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The Great White Hope — Our Beloved Leader

The Hindu of 27th May carried a news item ( “Tell all job scheme is Congress brainchild“) which crystallizes the idea of India like nothing else I have come across of late.

It quotes Dr. Singh: “I request that you should carry the message across to people that this right [to employment] has been given to them by Soniaji. This right has been given to them by the Congress party… If you assist in implementing this law in a proper manner, you will be able to lay a strong foundation for creation of goodwill for our party and our beloved leader, Ms. Sonia Gandhi.” [Emphasis mine.] Continue reading

The National Rural Employment Guarantee Scheme

In a land where reportedly every generalization is trivially true, one generalization holds non-trivially and with overwhelming force. It is this: Indian governments are pro-poor. Every policy that any government ever espouses, fundamentally it always is pro-poor, irrespective of any minor variations such as pro-market or pro-planning or pro-industrialization or pro-globalization or pro-self sufficiency or whathaveyou.

My claim is that this pro-poor policy is not mere rhetoric. The policy works and how. I argue that all other policies have not yielded their expected results but the pro-poor policies have delivered as could be reasonably expected.

Pro-industrialization policies are expected to lead to an increase in industrialization. If India ever had such policies, they have had only marginal success because India is arguably not an industrial economy. Pro-poor policies are expected to promote the number of the poor, and there has been a monotonic increase in the number of poor in India.

The percentage of people below the poverty line is estimated to be around 25. That is, India has about 250 million people who are so unimaginably poor that they can’t cross the poverty line that is set way below what can be considered necessary for a human existence. Around 33 million were added to that role in 2001-02 alone For comparison, that is more than the entire population of Canada in 2001 (30 million).

Let’s put the number of the abjectly poor in perspective. Consider the number of people below the poverty line at the time of India’s independence. We had about 350 million people then. Assuming that 50 percent of them were below the poverty line then, there were 175 million abjectly poor people then. Now, about 57 years later, we have 250 million abjectly poor people. There has been an increase of 75 million in the ranks of the abjectly poor in the nearly six decades of pro-poor policies..

India’s pro-poor policies have succeeded in increasing the number of poor in the past and while past performance is not a guarantee of future results, the most probable outcome of current pro-poor policies can be expected to lead to increase in the number of the poor. The “Employment Guarantee Scheme” (introduced by the National Rural Employment Guarantee Bill) is pro-poor and the result will be as before.
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