Sooner or later, just like the world’s first day
Sooner or later, we learn to throw the past away
History will teach us nothing…
— Sting, ‘History Will Teach Us Nothing‘
India’s coalition government, the United Progressive Alliance, has pushed a quasi-socialist 
employment guarantee through Parliament:
Parliament on Wednesday night approved the historic Bill for providing employment guarantee to all rural households in the country with Rajya Sabha passing the legislation by a voice vote. [Link]The National Rural Employment Guarantee Bill, 2004 promises wage employment to every rural household, in which adult members volunteer to do unskilled manual work. Through this Bill the government, aims at removing poverty by assuring at least 100 days’ employment. [Link]
Like most government handouts, the entitlement was expanded from its original means-tested form to include all rural households, even the relatively prosperous. India needs to build plenty of infrastructure, her villages are very poor, and so I’m all for the UPA’s WPA for a limited period of time. But you do that by first fixing which roads, flyovers and airports you want to build and then figuring out manpower requirements. What you don’t do is guarantee a paycheck regardless of the availability of work, able-bodied individuals in a household or the individual worker’s performance.
The Congress returned to power in last year’s general election largely on its promises of giving the country’s economic reforms a human face and making the process more inclusive so that it benefited the poor in rural areas…“This bill has been tabled in Parliament without proper preparation. The government does not know the exact number of unemployed people. There were six such schemes earlier, but they all failed due to the same reason,” said Singh, who is chairman of the Parliament’s standing committee on rural development. The bill, when enacted, will cover all rural households, not just those below poverty line, as had been provided earlier. [Link]
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p>It’s no surprise that the scheme was designed by a Belgian, backed by an Italian-Indian (Sonia Gandhi) and passed by a coalition which includes communists. The price tag for adding yet another layer of pork and guaranteed corruption atop the Indian economy: Rs. 1.4T ($33B, or ~$100B PPP). It’s just a grander form of the vote-fixing handouts and subsidies which already choke the economy.
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p>This isn’t how you get villages to share in ‘India shining’: handouts rather than actual jobs, fish rather than fishing lessons. One only needs to look a few hundred miles north of Delhi to see what happens when you try to suspend the laws of economics. Seriously, doesn’t reading this make you just want to bang your head against a wall?
Bend over and grease up!
and Atal sniffs early poll
Go UPA, best time to crush NDA!
Ok, way off topic, but I had to scream to the world: Sania Mirza just won the second round of the US Open! Woo hoo!
Can’t wait for some idiot, farther-left opposition party to sieze the opportunity & promise 120 days instead of a measly 100.
A typical knee-jerk reaction without understanding the ground realities. First of all, this is a job guarantee for unskilled manual work. This is targetted for the poorest of the poor. This is not a hand-out of money or subsidy unlike the past programs, but a job which is sustainable in the long run. I am all for ‘fishing lessons’, but that isn’t going to help the current generation. You need to create a workforce, and that is what is provided in this bill and for India Inc. with 8% annual growth finding unskilled manual work (esp. when govt. is coordinating it) shouldn’t be a problem.
Manish: “Like most government handouts, the entitlement was expanded from its original means-tested form to include all rural households, even the relatively prosperous.”
I thought the program was only targeted at the 100 most economically underperforming districts in the country?
Manish writes: The price tag for adding yet another layer of pork and guaranteed corruption atop the Indian economy: Rs. 1.4T ($33B, or ~$100B PPP).
The amount that will be actually reach the target audience: $3.3B or 10%. To get Rs 100/- from the government, the unskilled labourer will have to bribe Rs 90/-.
BJP must be smiling.
M. Nam
No, it’s ass-backward and more like welfare. They get paid even if the jobs aren’t available, and AFAIK even if they don’t have a suitable worker in the household. Did you read the articles? Who’s being knee-jerk now?
The bill states that if an eligible applicant is not provided work, the state government will have to pay unemployment allowance at a prescribed rate.
Not any more, surprise surprise.
To begin with, as many as 200 districts, including 150 districts under the Food for Work Programme, would be covered under the Bill. It would be extended to all the 600 districts in the country within five years.
This is not an anti-poverty program. It’s a re-election and bureaucratic bribery program.
I think the annual cost is: $9B, not $33B.
How do you figure?
(1,400,000,000,000 rupees) / (43 rupees/dollar) ~= $32.6B
They get paid even if the jobs aren’t available, and AFAIK even if they don’t have a suitable worker in the household.
But the point is that the govt. is confident that they will be able to find jobs for that number of people. (The welfare part comes in only if they aren’t able to find jobs). That is an umemployment benefit like what most states provide in U.S, but AFAIK for a limited period of time. I read also that it is only for able-bodied people, not just for everyone.
This is not an anti-poverty program. It’s a re-election and bureaucratic bribery program
You can give that label to any govt. sponsored program. While it is true partly, it serves no useful purpose.
As The Economist noted in its current issue, this will most likely result in ghost payrolls and bribes.
“For its promoters, such as Sonia Gandhi, leader of the Congress party, the employment guarantee is nothing less than a visionary scheme that will drastically reduce poverty, help fix rural India’s rotten infrastructure and change age-old social structures by giving power and rights to the very poor. For its critics, the scheme is yet another way of pouring unmeasured pots of good money after bad, into a bottomless pit where ghost workers dig and corrupt officials thrive. But critics and champions alike can agree that it is a vote-winner.”
http://economist.com/world/asia/displayStory.cfm?story_id=4327172
Newsweek International, not exactly a mouthpiece for unfettered capitalism, has a piece this week entitled, “The Death of Reform.”
http://www.msnbc.msn.com/id/9108634/site/newsweek/
Plus, given the sorry state of India’s public finances, it means less money for education and basic health care. When I asked one of my uncle’s in Calcutta about gov’t programs to employ unskilled labor, he replied, “Pledges become hedges.”
Am I too thick ! Are you being sarcastic!
If not, with 8% annual growth, why should the government coordinate is the actual question. I am no supply sider but this is really not needed. Guaranteed pay! By the way, didn’t India try this do-goodism before ! Five year plans, Garibi hataos and other high minded schemes .
Can we please ask the government to stop caring. They are killing the common man with their kindness.
How do you figure?
On the rediff article you linked:
How much will it cost India annually?
The National Rural Employment Guarantee Act will cost about Rs 40,000 (Rs 400 billion) crore annually.
Ah. The HT says Rs. 1.4 trillion. Not sure why the discrepancy.
If not, with 8% annual growth, why should the government coordinate is the actual question.
Because if they end up paying just the welfare without giving a job, work doesn’t get done. Lot of this work is planned through govt. contracts.
Can we please ask the government to stop caring. They are killing the common man with their kindness.
Yeah.. right! If you goto the rural india you will figure what unemployment means, how it is killing the very fabric of communities when the unemployed youth take part in all kinds of anti-social activities. I do think govt. needs to care and countries like China (now, don’t call me a communist, I don’t care two hoots about their regime, but when it comes to eradicating poverty, they have worked really hard) have demonstrated that it is possible to uplift parts of the society with goverment aid.
Sigh! This really doesn’t say much for the ability of the leadership to bargain effectively with the members of its coalition.
Jay: I don’t think you can blame the leadership for not effectively bargaining with the coalition members. The Congress DEPENDS on the Communists for its majority; the latter are less concerned than the Congress with being out of power since they are virtually always out of power. Given that the Congress is in general committed to the same neo-liberal economic programme that the BJP is committed to, they have to compromise on something. Not to mention that the Congress itself championed this sort of thing to fill a political space (i.e. otherwise there wasn’t much except for “secularism” separating them from the BJP, and that just doesn’t cut it these days)…
The system is functional. And no – not wearing rose-colored glasses. Have relatives who’ve benefited from the trickle down effect on the IT boom – appreciate the free economy – but why the doom and gloom man – the government does do things right – I saw green space in Haryana that wasnt there 10 years back thanks to Om Prakash Chauthala as dirty a politician as any – the most successful state in the Indian union is Kerala by many measures, thanks to a commie govt – the new multi-lane highway in Punjab is a joy to drive – the new freeways in/around Mumbai are another govt enterprise. Things are getting better – and the above are things that benefit everyone. The point I’m making is that from the point of view who saw things last year after a lengthy interval – there was tangible motion – ergo the politicans got something right.
social security and medicare are expensive, I agree – and most of those on this blog probably will never use it – but a lot of people need the net – the system works man… just dont be perpetually snarky .
that being said – “guaranteed jobs” – erm… – yea, sends warning bells – once you get the mouth on the teats of the government, it’s hard letting go – nothing wrong with the idea – it’s the implementation – Gogol’s ‘dead souls’ is an interesting case study – Mao’s nutty revolutions are another example – a scenario (extrapolating from Rohinton Mistry’s fine balance) – a farmer has his crop destroyed because a politician wants to boost the numbers on his “garibi hatao” list.
I thought the recent growth would be an argument to reduce welfare not create guaranteed jobs. As was said, didn’t we try the guaranteed jobs (atleast pay) route before… public sector and all that.
Me! snarky ? I thought my wife was the only one who thought so. But even she did not say perpetually.
While I do not know the programs that you are refering to, I feel guaranteed jobs at the central level , based on prior experience, will not work.
As opposed to some free marketers, I do feel limited government involvement is a good thing.
I think it was Marx who said everything repeats in history , first as a tragedy and then as a farce. Did we enter the farce stage ?
This is like not learning from your own mistakes (mistakes made just yesterday), which is just stupid. But actually, its not stupid. Its pandering politics at its best (or worst) and in my view “COST” of democracy to India.
India needs a pro-business government and she needs it fast. Gujarat is the most pro-business state in India and it enjoys one of the highest income levels. (It doesnt matter which party rules.. In Gujarat you just cant be anti-business)
RC said
I understand the emotion – but high income level does not translate to quality of life – crime on seniors has increased, so have kidnappings, sexual assaults, armed robberies – and the social scientists say it’s a result of a widening gap between the have’s and have-not’s.
As an aside … From what I know of Ahmedabad, a 12+ year old memory, that city at least wears its wealth well – in particular women seemed to be better off with respect to mobility than most other parts of india – there was respect for the environment, green spaces – and of course there was this dude runnign a shop outside IIM ahmedabad who would make these amazing tandoori chicken (that was before I turned vegetarian) 🙂 Hope this extends to the rest of Gujarat… maybe my next big tour of India … hmmm…
Hi Umair. While I agree that the UPA does depend on support from the communist parties, this need not mean pandering to their economic agendas which belong to another age – surely people like Manmohan and Chidambaram know better. It’s a sad play for political stability, both at the party and popular level.
Unfortunately for Gujarat they are also seen as being kinda fundie zealots of late, religious riots are not good for business.
On the subject of economic growth rates/Gujarat:
http://us.rediff.com/money/2004/aug/05spec.htm
BTW, I liked the picture with this post. Hammer and sickle in the flag 🙂 sums it up.
“I think it was Marx who said everything repeats in history , first as a tragedy and then as a farce. Did we enter the farce stage ? “
Nope its darker version of GroundHogs Day
now, now…i’m a huge fan of the “f” bomb, but when i say that, i mean “fuck” not “faggot”. please don’t use the latter. if you want to say “fucking”, be my guest, i’ll totally support that. i even spoke at a panel at BlogHer on potty-mouthed blogging, so i’m a huge supporter of the discipline. 😉
all i’m saying is if you hate commies, fine, but be kind enought to not diss gay people while you’re at it. thank you. 🙂
Why? Are commies any more reprehensible than gay people?
My my, aren’t we getting a bit riled up over economic policy? Especially one that might gasp create more industry and secondary jobs?! Defecit spending, read all about it. Sometimes it takes water to prime the pump. Its pretty sad this discussion devolved into anti-commie venom. Actually devolve is not the right word, it started off that way.
sigh.
you know what i was trying to say.
i have no opinion on commies, but i do have a rather strong one on a certain epithet which i will not have tossed around my “home”. i don’t care if people find commies reprehensible, that’s their right. they don’t have the right to do so by using language i found objectionable, and that was ALL i was trying to state.
“commie” is not hate speech AFAIK. “faggot”, is.
Defecit spending, read all about it. Sometimes it takes water to prime the pump.
If you actually knew a thing or two about India’s economy instead of reflexively spouting Keynesian talking points, you’d know that the pump is already very primed. The country’s government debts amount to over 80% of its GDP, and over half of the federal government’s revenues are now allocated to servicing its debt. Yet these imbeciles still keep running annual federal deficits totaling more than 4% of GDP in the name of financing their populist boondoggles. Economically, India is another Argentina in the making.
But seriously, what can you expect when the country is led by a moronic Eurotrash socialist; run by corrupt bureaucrats left over from the license-quota days; and supported by full-blown, unrepentant Communists?
Btw, if the Indian government really wanted to “create industry”, it would make its first priorities the building of half-decent transportation and electrical infrastructures, and the repealing of its socialist labor laws. But, surprise surprise, the government’s indifferent to the first objective and downright hostile to the second.
eh don’t have the energy today.
I will dispatch you with the following:
Prime Minister “Manomar” Singh is a moronic Eurotrash socialist? Despite a doctorate in economics from Oxford?
If you meant Sonia Gandhi, she’s not PM and hence is not the leader of the country.
Gee I don’t suppose they have an educated economist amongst the lot of them, those backward Hindoos.
Eric I think you are the answer to India’s woes.
That is it … the religion/ethnicity card has been played. end of debate. vurdlife, what a magnificent victory.
Eric, what u christian (assumption from the name) understand about us Hindoos. You either convert (atleast give yourself a nice hindu name on this blog) or stay out.
OK back to actually debating the point on it’s merits. I thought the whole Oxford angle was good enough and you didn’t have to pull out the Hindoo card.
I have a slight problem with the Euro-trash part but everything else was on the mark. Actually the other economic policy maker went to college on the other side of the pond. What does that make him.
Eh you win some you lose some. Sometimes you shoot bunker busters, other times you shoot duds. Main to sirf insaan hu yaar!
Gee I don’t suppose they have an educated economist amongst the lot of them, those backward Hindoos.
Yes, they do. The Finance Minister is no fool either. Too bad they wield as much political power as the national cricket team.
Eric I think you are the answer to India’s woes.
Any slack-jawed twit who stayed awake through an econ course would be better than the current set of clowns. Provided that they were actually running the country and not a hapless figurehead like Dr. Singh.
Eric, what u christian (assumption from the name) understand about us Hindoos.
A pretty lame assumption. Both of my parents are officially Jain, and in reality (like many Jains) practice a syncretic blend of Jainism and Hinduism. Ever heard of Indian immigrants giving non-Indian names to their kids?
You either convert (atleast give yourself a nice hindu name on this blog) or stay out.
Would you actually be pompous and arrogant enough to suggest that Indian Christians (and there are quite a few of them) not post here unless they use a “Hindu name”? Sorry, rhetorical question.
I was being sarcastic. I thought everyone would get that. I do apologize for the lame assumption.
Nah it doesn’t really make sense here… India shouldn’t have a deficit at a time when the economy is booming (8% growth rate).
If they want to implement Keynesian style counter cyclical fiscal policies they should be cutting government spending not increasing it.
I am not a fan of keynesian economics but the bottom line is that this doesn’t really make any economic sense no matter how you look at it.
The bill by itself isn’t a very big deal so long as they keep liberalizing other parts of the economy. Unfortunately it seems in the past year or so econmic reform in India has stalled, this bill is a sign that the government is regressing back into their socialist ways.
Apology accepted. Sorry for not noticing the sarcasm.