Editorial: PMGSY better than NREGA

By: | Updated: March 12, 2016 12:41 PM

Former better monitored and focused on poor states

As the debate rages over whether MGNREGA was a monument to the UPA’s failure or whether saying this was a monumental blunder on prime minister Narendra Modi’s part considering he too needs to scale it up due to his inability to create jobs, various experts have added valuable perspective to the debate. FE columnist Surjit Bhalla has shown (goo.gl/8jGe1u) that 48% of workdays created under the scheme are fictitious and 58% of payments go to the non-poor, making this one of the most expensive anti-poverty schemes in the country. In FY12, the government spent Rs 40,500 to make one individual not poor as compared to the poverty gap—the difference between the poverty line and the average income of the poor—of a mere Rs 1,700 a year. Using data from former Planning Commission member NC Saxena’s article in Inclusion (goo.gl/0UXV8c), Swaminathan Aiyar points out, in the Times of India, that richer states tend to benefit more from MGNREGA while the poorer states get more out of the Pradhan Mantri Gram Sadak Yojana (PMGSY)—that leads Aiyar to conclude it is capital-intensive programmes (goo.gl/cmfVZA) like PMGSY that have a better shot at reducing poverty; Aiyar draws attention to the sharp rise in Bihar’s spending on PMGSY in recent years—as our front-page graphic shows, in FY15, PMGSY-spend in the state was more than double that on MGNREGA—and in overall plan spending as well. Though there is no official data on poverty to capture the impact of this change in spending over the past few years, given various studies across countries, it is safe to say infrastructure-spending has the highest impact on poverty reduction.

Apart from the impact that road connectivity has on poverty levels—workers can travel faster to get jobs in cities, as can farmers to sell their produce—Saxena has other important explanations. Given the large component of multilateral funding from the World Bank and the ADB, PMGSY has a rigorous independent monitoring of assets—a PMGSY project is inspected at least three times during its execution—along with a five-year maintenance contract baked into the original bid. In the case of MGNREGA, however, these functions are all delegated to the panchayat which, given its dual role as an implementer and an auditor, is seriously conflicted, apart from not having the same ability to conceive/execute larger projects. As Saxena points out, if the success of a project depends on how good the state’s administration is, the project is badly designed. What kind of an anti-poverty programme gives a Tamil Nadu more than three times the amount given to Bihar when the latter has far more poor people—once you take into account the fact that wages for unskilled workers are a fraction of the total spending, Saxena points out that Bihar spent Rs 165 per poor person under MGNREGA in FY15 as compared to Rs 5,273 in Tamil Nadu and Rs 9,685 in Kerala (see front-page graphic). Even without getting into the relative merits of MGNREGA and PMGSY, it is absurd that anti-poverty spending in an MGNREGA is not explicitly linked to the levels of poverty in a state. What is even odder is that despite all the evidence against MGNREGA, the government is now going out of the way to extol its virtues especially when there is a much better alternative available in the form of PMSGY.

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