Column : Corruption by another name

Less talked about, actually hardly, is in the name of the poor corruption. This is corruption in programmes meant for the poor. Indeed, when reference is made to the possibility of corruption in schemes like MGNREGA, the refrain is, ?Why are you criticising money spent on the poor? What about telecom licences, diesel subsidies and other expenditures in the name of the rich?? These questions are worthy of an answer; perhaps not, because corruption is corruption, no matter in whose name it is pocketed.

This year, 2012, is also the six-year anniversary of MGNREGA, the heartship of the UPA government, both Mach I and Mach II. In a recent interview, the rural development minister Jairam Ramesh admits to corruption in MGNREGA and points to the introduction of MGNREGA 2.0 in the near future. He points to the great success of Andhra Pradesh in performance; ?traditional communities who were expected to kowtow to the local elites to the dominant castes today have a certain sense of empowerment. They are getting money ? they have an assurance of employment ??. Also, in places like Andhra, ?we have strong management information systems, where we can track the flow of funds?. Andhra is repeatedly mentioned by Ramesh, and always glowingly, a total of five times. It is also the only state whose performance is lauded by Ramesh.

It may be a coincidence, but Andhra is also a Congress-ruled state. Ramesh?s boss Rahul Gandhi has made pointed references to corruption, particularly MGNREGA corruption, in UP, where important elections are under way. This is a state ruled by Mayawati, a CM who has often been accused of rampant corruption. Of course, the Congress shares this dubious honour, especially now that the ?honour? has the imprimatur of the apex court.

A reasonable assumption is that all political parties are corrupt. But who is more corrupt? This question can be answered, in a narrow sense, by examining the relative performance of the different parties with respect to MGNREGA. The NSS Employment-Unemployment survey for 2009-10 included specific questions pertaining to household participation in the employment guarantee scheme. As the Congress, and Ramesh, has repeatedly stressed, this employment programme involves back-breaking work and is available on demand by those really poor, and really in need of employment.

The NSS survey has the advantage that it not only asked questions on employment but also on consumption. It is the only survey that has detailed information on the participation in the MGNREGA programme and the poverty and caste and other characteristics of the household. If the programme is only availed of by the really poor, the data will show it. If the non-poor are benefiting from the programme, the NSS data will show it. And if the non-poor are participating, then questions need to be asked?why are the non-poor availing of such low paying, minimum wage and lower jobs? Are they so desperate for low wages? Most likely not, otherwise they will not be dirt absolute poor.

If the non-poor are benefiting from an exclusive pro-poor programme, then one has the beginnings of an index of corruption. There are two separate indices of corruption that can be objectively defined. The first is the difference in participation of the poor and the non-poor in the programme. The second is the difference in expenditure on the poor and the non-poor. The sum of the two differences is the corruption index.

The table ranks the different states in India according to this index. The second and third columns list the political party administering the programme and the fraction of rural population that is poor according to the Tendulkar poverty line. The computation is illustrated with respect to the best performing (least corrupt) state, Chhattisgarh. The fourth column shows that 58% of the poor in the state benefited from participation in MGNREGA; but a third of the non-poor, 35%, benefited as well. The difference in these two percentages, 23%, is the net performance gain. In terms of expenditure, of every R100 spent on wages, R63 accrued to the poor and R37 accrued to the non-poor. The difference, 26 percentage points, is the second component of the index. Adding the two differences yields 49 as the corruption index for Chhattisgarh. (Note that the index is computed such that large values mean less corruption). In contrast, the worst performing state, Kerala, has a net difference of minus 64. In this erstwhile Communist-ruled state, an overwhelming amount of money?84%?went to the non-poor.

Ramesh?s comments about the great performance of the Congress-ruled state of Andhra Pradesh can now be put in perspective. Three-fourths of the ?well administered? and well-monitored money went to the self-confessedly non-poor! The much Congress maligned performance of Mayawati turns out to be a case of pure politicking. In reality, UP MGNREGA administration was significantly better than the average. The distribution of wages went equally to the poor and the non-poor. Its net index of 13 is 30 index percentage points better than the national average of minus 17.

A casual perusal of the second column shows an overwhelming presence of the non-Congress-ruled states in the top half of performance. The only Congress-ruled state that performs better than the bad national average is Maharashtra, a state that the Congress administers jointly with the NCP. Rajasthan, the flagship Congress state, of its flagship pro-poor programme provided more than twice as much in wages to the non-poor than to the poor. Maybe the Supreme Court and/or the CAG would like to look at these corruption numbers as well?now that the case is closed on the telecom scandal!

The author is chairman of Oxus Investments, an emerging market advisory firm