Monday, August 22, 2005

Rural Employment Guarantee Scheme – Yet another “Garibi Hatao”?

Let us see - we are talking here Rs. 240 Billion scheme. It will mostly cost Rs. 400 Billion in the first year. States are expected to contribute Rs. 40 Billion. Again even that small figure from states is doubtful. But the worry is how is this money funneled? If it is the same State Gov. plus District Admin; we have a problem. It is proven beyond doubt that if those distribution systems are left as they are; we are very likely to see lot of money wasted in bureaucracy and corruption. The question is where is the oversight? PM being Economist with so many years as RBI Governor, he should know what happens to such funds. NGO’s and Local Governments are expected to take part in the implementation, but still as long as there is no clean and lean mechanism with direct link to FM and PM at Center; the fear of loosing lot of resources seems realistic. The more scary part is, as many have sounded, if such large sums wreck havoc on GOI’s finances; that will be double whammy – lose the money and create even larger deficit! As such GOI runs one of the largest Deficits in the world (oh yah, larger than USA in percentage terms). The point is at this point the credibility of Indian State to distribute substantial resources to needy sections of people is very low. If PM and Congress intends to implement a scheme with such large resource outlay, they better plan for a better alternative structure. Same will not do.

An article by Devesh Kapur in Harvard Magazine “India’s Promize?” pin point this weakest link for India – the Indian State Machinery.
The Rural Employment Guarantee scheme may fall victim to the same problem.

Umesh Patil
San Jose, CA
August 22, 2005.

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