In an article entitled "Loot for Work Programme" (The Times of India, July 2, 2005), National Economic Council member and prime designer of the Employment Guarantee Scheme Jean Dreze reports on a survey of how such schemes have worked during the past year.
This survey covered one district each in six states. "The picture emerging from this survey is alarming," Mr Dreze boldly and candidly states; corruption is rampant.
"The national food for work programme clearly states that the muster rolls should be available for public scrutiny. This is very important since fudging of muster rolls is the principal method through which funds are siphoned off from public employment programmes" (emphasis added).
Muster rolls, for the uninitiated, is a record entry book containing the names of the workers and the payments made to them.
The "fudging of muster rolls" most likely happens as follows. Funds flow to a district for payment to poor people for work done in asset-generating programmes.
This policy has been practiced in India for decades. And for decades, the created assets have disappeared into thin air faster than you can say "invisible hand".
What most likely, allegedly, happens is that a very large proportion of the funds, say upwards of 60 per cent, accidentally suffer a leakage.
Who are they leaked to? The funds are controlled by the political party in power at the Centre, so it is not unlikely that political parties use these resources to replenish the funds lost in winning elections.
Payback time, if you will, and thank you to the poor for having elected the politicians in power. The NDA or the Congress -- corruption in "in the name of the poor programmes" practises no discrimination.
In a series of articles, I have documented that the kind of corruption now observed by Mr Dreze is widespread.
Government officials, including Mr Dreze, dismissed these warnings as the rantings of a "crazy man". It is good to know crazy explanations are endorsed by surveys conducted by sane men.
The larger issue remains, however. Should the Employment Guarantee Act, introduced with much fanfare by the government last December, be junked -- cut the people's losses (and politicians' gains) if you will? Mr Dreze clearly does not think so.
He believes that the fault is not with the design, nor with the planning, but "political will". The fudging of muster rolls is just "one illustration, among many, of the systematic failure to enforce the NFFWP guidelines. Another important example is the failure to pay minimum wages".
My knowledge of political economy is a bit hazy, so excuse my lack of understanding of Mr Dreze's logic. The NFFWP guidelines, I am sure, state that jobs should be given to the poor, the needy, and the unwashed.
The "political will" is to gain money for the political party -- so how do jobs for the poor help? Also, if for the few jobs that are doled out, workers turn up to work for less than minimum wages, then how does the enforcement of the higher minimum wage help the poor?
If a higher than market minimum wage is paid, then the poor would certainly not get the jobs, either on the basis of merit (for being poor) or patronage (ability to influence the local politician).
It will be the non-poor, probably the CPM cadre in West Bengal, and Congress cadres elsewhere, who will get these much-sought-after "jobs".
The Planning Commission, not unlike aid agencies around the world, feels that the problem with poverty reduction schemes is not lack of political will but lack of resources.
In its Mid-Term Appraisal report, it states that the "implementation of the scheme depends critically upon whether the necessary resources can be provided the likely cost of introducing an employment guarantee for rural areas only [is estimated to be] Rs 21,000-40,000 crore (Rs 210-400 billion)".
The outlay for this programme at present is about Rs 12,000 crore (Rs 120 billion), a jump of more than 100 per cent from the resources provided {approximately Rs 5,500 crore Rs 55 billion)} in the previous year.
A quadrupling of resources from the 2003-04 levels will presumably allow minimum wages, in theory, to be paid, unemployment to be eliminated, and poverty to become (theoretical) history.
Mr Dreze's "in the name of the poor" demands for minimum wages and maximum jobs will also be met. So very politically correct.
But will the poor get jobs; will the poor be paid for the jobs?
Some perspective on the resources asked for by the Planning Commission can be obtained by examining the money required to make Indian poverty history, on an ongoing basis.
According to the Planning Commission, a 5 per cent reduction in the poverty level -- to 21 per cent of the population -- is expected to occur by the end of next year.
This means about 230 million people. The mean consumption level of the poor is about 20 per cent, or Rs 1,030, less than the poverty line (at the 2005-06 prices) of about Rs 5,160 a year.
So in a perfect world (not much different from the "political will" world envisioned by the designers of poverty reduction policies) India would need Rs 1,030 a year per poor person, or approximately Rs 24,000 crore (Rs 240 billion) to eliminate poverty on an annual basis.
In other words, the minimum amount asked for by the approach paper, and half the amount asked for by Jean Dreze for the EGA programme, is sufficient to make poverty history in India today -- and has been sufficient to make poverty history in India for the last decade!
It also bears emphasis that the government has several programmes, besides the EGA, to remove poverty.
Let me see -- there is the food subsidy programme, the fertiliser subsidy programme, the power subsidy programme, the petrol subsidy programme, the transport subsidy programme, the education subsidy programme, the
Expenditures on these "in the name of the poor" programmes are close to Rs 100,000 crore (Rs 1000 billion) annually, or about four times the money needed by the poor to be non-poor.
It is okay to be politically correct, but not okay when with full knowledge, the well-meaning policy makers know that the money meant for the poor will not only not reach the poor but are actually not even meant for the poor.
Time has come for the honest policy makers to reject policies with large leakage, no matter how much of mother's milk they contain.
The time for treating the poor in a feudal fashion -- they know no better and will keep voting for us as long as we make liberal garibi hatao noises -- is long gone.
The time for helping the poor directly, with what they most need, is now. Time for introducing a policy of cash transfers to the poor.
If "loot for work" evidence is not convincing, then can one ask the government, and Mr Dreze, as to what evidence they require for junking their feudal 19th-century ideas of helping the poor?
