Surjit S Bhalla: MPs on the Loot Highway

JADU ECONOMICS

Employment guarantee scheme "" never was a more ingenious get-rich scheme for political parties invented

The Rural Employment Guarantee Scheme (REGS) is now a reality. It is noteworthy that when this outrageous Bill was discussed in Parliament, all MPs, of all hues, supported it. The universal appeal of the scheme then raises another question "" if it is so popular, so how come no politician thought of it before?

There is an alternative explanation "" maybe no political party was as brazen, or as shameless, or as corrupt, as the Congress party. Once the Bill was introduced, the other politicians most likely thought it fit to accept the "manna" from the Congress that would fall into their laps (the states they rule), once the scheme was implemented.

If one were to look in the dictionary for the meaning of a scheme, one encounters the following definition: "a plan or program of action; especially: a crafty or secret one" (Merriam Webster online dictionary); also, the word scheme "stresses calculation of the end in view and may apply to a plan motivated by craftiness and self-interest (a scheme to defraud the government)".

But wait a minute "" isn't it the case that the noble (or noblesse oblige?) feature of the present government's approach to curtailing wasteful expenditure is its commitment to both outlays and outcomes?

The government has recently introduced an "Outcome" Budget "" and hopes that by doing so, money will no longer be wasted à la the Rajiv Gandhi theorem (that only 15 paisa of every rupee meant for the poor actually reaches the poor). Unfortunately, the Outcome Budget practically ensures that the Rajiv forecast would remain true.

The Outcome Budget does not contain guidance on how REGS will be evaluated, but we can infer the likely outcome from the guidelines stipulated for the evaluation of job creation schemes currently in operation.

The "quantifiable deliverables" for these schemes are the number of lakhs of mandays of employment generated. Seems appropriate, does it not? I mean, how else can you measure employment generation other than through employment generation?

By measuring outputs instead of inputs. By measuring the assets created (roads, wells, ditches and so on). One does not assess the performance of the finance minister, or your favourite MP, on the basis of the number of hours he claims to have worked. Or your employee on how many hours she shows up for work. No, one evaluates them on what they have delivered.

The government is recommending that employment generation schemes be evaluated on the basis of what the government states the number of days of employment generated is. Who provides the data on the number of days of employment? The government.

Now I know it is very unlikely, and even preposterous to mention it, but assume for the moment that the government were to set out to fraud its people via this scheme. How would they go about it?

First, in order to fool all the people all the time, they would prepare a sheet of accounts which state that the requisite number of days of employment was generated. This will be shown to the public under the Right to Information Act.

These set of accounts will, of course, be fictitious, but they will satisfy the liberal sleuths who want the money to be well spent "" and who believe, in all their decent innocence, that the Right to Information Act will prevent the government from successfully implementing fraudulent schemes.

In reality, (the real second set of accounts) the money will be siphoned away by politicians and their appointed contractors; and only a few showcase jobs will be created. And the "created jobs" will go mostly to friends of the contractors, all in the family if you believe.

What? Did I hear you say that this was all far-fetched, and the rantings of a cold-hearted lunatic who does not want to help the poor? Well, I got this idea of how these schemes work from none other than the person everyone (including myself) loves to call the most decent of persons "" Jean Dreze, author of the Employment Guarantee Scheme, and adviser to Sonia Gandhi.

In an article entitled "Loot for Work Programme", (The Times of India, July 2) , Dreze laments how, (according to a survey he had conducted in areas where the pilot REGS programme had been implemented), false balance sheets had been created and how very few jobs were created.

There is more concrete evidence to suggest that the REGS will be worse than the designer's worst fears. In 1999/00, the government claims (in a fashion identical to Chidambaram's not so new Outcome Budget) to have spent Rs 5,124 crore on employment programmes, and created 54.7 crore mandays of employment.

According to the National Sample Survey for the same year, only 32 crore of mandays of jobs in "public works" programmes were created. And of these 32 crore mandays, the poor participated in only 7.9 crore mandays. Expenditure on wages of the poor "" Rs 310 crore.

So, in order to deliver Rs 310 crore to the poor, the government spends Rs 5,124 crore. A major problem with Rajiv Gandhi was that he was an optimist "" only 6 per cent of the money meant for the poor actually reaches the poor.

ssbhalla@gmail.com