Limitless Corruption Possibilities

Mint, in its editorial today, looks at NREGS statistics and concludes:

Local officials have found a way to create “limitless” corruption possibilities from a limited scope of work. The demand-driven nature of the programme (instead of the usual targeted approach) makes this possible. In the latter way of doing things, work ceases to be available once an asset, for example a road, has been created. In a work demand approach, the demand for work becomes a right that a villager can ask for.

As a result, a constant increase in the number of person days of labour demanded while the number of assets to be created is limited, is a sure recipe for corrupt practices. This is not to argue for a targeted approach (which in any case leads to corruption) but to seriously rethink such approaches to removing poverty.

Everybody who supports the NREGS supports it on the basis of intention and wishful thinking. The evidence for how it’s working out gives absolutely no basis for wanting to continue it. The way the incentives are aligned, the way our system works, it cannot possibly be anything other than a grand waste of taxpayers’ money—as I had predicted in my WSJ piece two years ago, “Good intentions, bad ideas.”

Also read: My October WSJ Op-Ed evaluating the NREGS, “How Not to Help India’s Rural Poor.”