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INDIA NEWSAPRIL 30, 2011
India's Boom Bypasses Rural Poor
By TOM WRIGHT And HARSH GUPTA
NAKRASAR, India—India has its own version of America's Depression-era Works Progress Administration: a gigantic program designed to create jobs through building infrastructure in a developing nation's most-backward rural areas.
India's Flawed 'New Deal' Program
Sanjit Das for The Wall Street Journal
Women work at a site as part of National Rural Employment Guarantee Act at Nazir ka Mandir in Karauli district of Rajasthan, India.
But unlike its American counterpart eight decades ago, the Indian program, its detractors assert, is keeping the poor down, rather than uplifting them.
The Mahatma Gandhi National Rural Employment Guarantee Scheme, as the $9 billion program is known, is riddled with corruption, according to senior government officials. Less than half of the projects begun since 2006—including new roads and irrigation systems—have been completed. Workers say they're frequently not paid in full or forced to pay bribes to get jobs, and aren't learning any new skills that could improve their long-term prospects and break the cycle of poverty.
In Nakrasar, a collection of villages in the dusty western state of Rajasthan, 19 unfinished projects for catching rain and raising the water table are all there is to show for a year's worth of work and $77,000 in program funds. No major roads have been built, no new homes, schools or hospitals or any infrastructure to speak of.
At one site on a recent afternoon, around 200 workers sat idly around a bone-dry pit. "What's the big benefit?" said Gopal Ram Jat, a 40-year-old farmer in a white cotton head scarf. He says he has earned enough money through the program—about $200 in a year—to buy some extra food for his family, but not much else. "No public assets were made of any significance."
Scenes like this stand in stark contrast to India's image of a global capitalist powerhouse with surging growth and a liberalized economy. When it comes to combating rural poverty, the country looks more like a throwback to the India of old: a socialist-inspired state founded on Gandhian ideals of noble peasantry, self-sufficiency and a distaste for free enterprise.
Workers in the rural employment program aren't allowed to use machines, for example, and have to dig instead with pick axes and shovels. The idea is to create as many jobs as possible for unskilled workers. But in practice, say critics, it means no one learns new skills, only basic projects get completed and the poor stay poor—dependent on government checks.
Five years ago, India launched a massive jobs program for millions of its poorest citizens. But critics say it's ineffective and riddled with corruption. WSJ's Rebecca Byerly reports.
"It actually works against the long-term future of the poor because it doesn't give them any long-term solutions to poverty," says Gurcharan Das, an author who has written about India's economic development. "It's a Band-Aid solution."
Indian officials acknowledge that the program is flawed, though they say it has provided an important safety net for the 50 million households, comprising more than 200 million people, that have participated in the past year alone. Proponents of the plan, including left-leaning economists and activists, say that because the pay is often better than other rural jobs, it has given workers a bargaining tool to demand higher wages. Echoing the Gandhian ideals for which the program is named, they say workers are also better off staying in their villages, close to their families, instead of moving to the cities in search of work and winding up in slums.
"The scheme has been a big success in creating employment for rural people," Sonia Gandhi, president of the ruling Congress party, told a meeting in February of officials who administer the program. "However, there have been complaints of irregularities and corruption, too."
Niten Chandra, a senior official at the federal rural affairs ministry, says the aim was never to build major highways or other large infrastructure, but to create work and raise wages. He says that state governments, whose job it is to monitor projects and ensure audits are carried out, are at fault for failing in many cases to guard against corruption and unfinished work.
Some villages have run out of ideas for new projects. In Churu, the district capital a few miles from Nakrasar, senior officials say villagers simply dig new irrigation pits every time one is washed away in the monsoons.
The repercussions go far beyond irrigation projects. India's failure to uplift its poor and improve the economy in rural areas—where two thirds of the country's 1.2 billion people live, mostly untouched by the boom—threatens the country's growth, economists say. India has so far relied on its services industry in cities to fuel growth. But the country is running out of skilled workers and its agricultural dwellers are ill-suited to fill the gap. India's success or failure in boosting the size of its middle class will determine the long-term attractiveness of the market to foreign investors.
Yet the number of people relying on the program is expected to rise after the government earlier this year decided to tie wages to the cost of living, automatically increasing the 100-rupee maximum for a day's work to about 125 rupees in many states. That's higher in some places than the daily wage for farm labor. The result is that many more millions will likely become dependent on the government for income despite a two-decade-old push to reduce the state's role in the economy.
Sanjit Das for the Wall Street Journal
In a village in Rajasthan, workers say they've seen little benefit from the jobs program, with no major infrastructure built and only a few hundred extra dollars a year in their pockets.
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In Haryana, a state that borders New Delhi, workers are paid some of the highest wages anywhere under the program. But Gurdayal Singh, a 56-year-old former soldier who was recently supervising work at a water-irrigation pit, said the extra cash he earns isn't enough to pay for the private English-language schooling his children need to compete for better jobs. "It's not satisfactory," Mr. Singh said. "How will I be able to get my children a good education?"
The ruling Congress party, which swept to power in 2004, has been keen to woo the rural poor because they are a potent voting bloc. In that election, the creation of the rural employment act was among Ms. Gandhi's foremost campaign promises. When Congress was re-elected in 2009, its central platform was the lifting of the "aam aadmi," or common man, out of poverty.
Rajasthan was one of the first places to receive funding when the program started. It is among India's poorest states. Around 50% of women are illiterate. Farmers travel by camel-drawn carts between fields planted with grain. In the year ending March 31, the state received one fifth of all funds dedicated to the jobs program nationwide. And it typifies many of the program's problems.
In Karauli district, a landscape of jagged hills and thorny bushes, locals say they have taken up work under the program as a last resort.
At one site in Kaladevi sub-district, some 40 workers were recently piling up rocks to build a dam to catch rain water. Some 20 other workers on an attendance list weren't present, according to supervisors The site had no medical kit, resting area or child-care facilities, as mandated by law.
"We work because there's high unemployment here and the land is less fertile," said Abdul Jameel Khan, a farmer who was supervising the work. But he questioned the point. "There's no meaning to it. Instead of this they should build proper roads."
Others said the ban on mechanization limits the scope of projects to gravel roads and pits to capture water. Such programs last for only a couple of years and do little to improve village life. Balveer Singh Meena, a 31-year old farmer in the village of Mohanpura in northern Karauli, ekes out a living growing wheat and chickpeas. He eats a single Indian flat-bread known as roti and vegetables for every meal. By selling what little excess food they produce, Mr. Meena and his three brothers are able to make just over $400 per year, which must stretch to pay for an extended family of eight people.
Mr. Meena's modest aim in joining the program, under which he worked 65 days in 2007, earning about $80, was to save cash to help rebuild his family's mud-and-thatch house with bricks and mortar. With rising building material costs, in part due to high inflation in rural areas, Mr. Meena says he couldn't make it happen.
He says the government should offer training in new skills which could help him get a better-paying job. And he's angered at corruption in the program, which he claims has led to village elders giving jobs to family and friends, not to all those who demand work, including himself. "The common man is not getting work easily. There is too much corruption," Mr. Meena said.
District officials confirm that graft in Karauli has been extreme. A 2009 crackdown found that a quarter of 200,000 job cards were fake, according to Niraj Kumar Pawan, a senior government bureaucrat who oversaw Karauli at the time.
A report in 2008 by the Institute of Development Studies in the state capital of Jaipur, one of a number of reports commissioned by the national government to measure the program's efficacy, found that influential villagers in the district got enrolled to work and claimed pay without turning up. Some community leaders used mechanized diggers, which aren't allowed, to finish work quickly and then claim payment for more hours than they actually worked.
These are the very problems the creators of the program sought to avoid. In the past, anti-poverty funds were routinely stolen by the bureaucrats in charge. Rajiv Gandhi, a former Indian prime minister and Ms. Gandhi's husband, who was assassinated in 1991, had estimated only 15% of money spent historically on India's poor had made it to the intended recipients.
The architects of the rural employment program tried to address this by putting village councils, headed by the local mayor, or "sarpanch", in charge of paying workers and deciding what to build. The hope was that these leaders would have a greater incentive than mid-level bureaucrats to ensure funds were spent properly since the local electorate would hold them accountable for wrongdoing. The program guaranteed up to 100 days of work a year at up to 100 rupees ($2) per day for any household that wants it.
But shortly after the program started in February 2006, workers complained that local leaders were docking pay and asking for money in return for job cards. The central government responded in 2008 by sending money directly to workers' bank accounts. But according to workers and auditors, the money takes so long to reach those accounts—up to 45 days—that workers are often forced to accept lesser cash payments from local leaders on the condition that they repay the money at the full amount.
Audits of the program in the southern state of Andhra Pradesh found that about $125 million, or about 5% of the $2.5 billion spent since 2006, has been misappropriated. Some 38,000 local officials were implicated, and almost 10,000 staff lost their jobs.
In one study of eastern Orissa state, only 60% of households said a member had done any of the work reported on their behalf. Earlier this month, the central government gave the green-light for the Central Bureau of Investigation, India's top federal criminal investigation body, to launch a probe into alleged misuse of program funds in Orissa.
In other states, audits are nonexistent or have faced a backlash. Non-governmental groups that have tried to carry out audits in Rajasthan have complained that village leaders often refuse to hand over documents about the employment program. At times, auditors say, they have faced harassment and physical intimidation.
In Nakrasar's one-room village council office, people continue to sign up for the program—many of them women whose husbands have gone to work in urban areas. Shilochandra Devi, a 37-year-old with her program work book in hand, said she could buy more spices because of the program. "And anyway, we're not doing anything else. So why not?"
Write to Tom Wright at
tom.wright@wsj.com
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