India Uncut

I suspect the most sustainable way of reducing poverty is to provide all-weather roads, power (without subsidies) and telecom to every village in India. Then the rural economy will take off, thanks to new economic opportunities. Reducing corruption, ensuring attendance, and improving the administration and courts will reduce poverty too. But this approach will not please politicians and NGOs who want to be seen giving the poor palliatives, rather than curing their ailment.

Swaminathan Anklesaria Aiyar’s take on the Employment Guarantee Scheme. In my earlier post on this, I’d pointed to Surjit Bhalla’s opinion, which is similar to Aiyar’s. Both of them are against the EGS on two grounds: firstly, it leads to too much wastage, as most of the allocated amount will not reach the intended recipients; secondly, that the EGS amounts to giving a hungry man a fish instead of teaching him how to fish. And even if you want to go ahead and give him fish, they say, you might as well hand out cash to the recipients directly. I agree.

In an episode of “We the People”, the NDTV 24x7 show, a week ago, this was the topic being discussed, and one young man, in response to Bhalla, said something to the effect of (I translate here) “We don’t want dole from you. We want to work and get paid for it. We are not asking for charity. We are proud people.” All of which is nice Hindi-filmi rhetoric, but what the gentleman couldn’t fathom was that every “job” generated under the EGS is, essentially, the same as dole. The job is not naturally generated from the economy, it is an artifice created to give him a certain sum of money. So why the disguise? If it is dole, call it that and hand it out.

Read Aiyar’s full article, it has some startling facts that demolish many of the assumptions behind the EGS.