http://www.telegraphindia.com/1070904/images/04operationbig.jpg

do take a note of the other participants

Daniel, Err. small nit… but its VT ( Victoria Terminus) that is Now Chhatrpati Shivaji NOT Churchgate

I have no absolute views (assuming what I think matters at all) on the role of the government or the ‘market’ and in fact am all admiration for the much maligned US Federal Government. Purely market based economies do not exist. Further only a capitalist society can generate enough surpluses to run a welfare economy. Government intervention works best in times of poor demand, deadlocked markets (as happened with the stagnant US aircraft industry at the eve of WW1), and in fields where uncertainty outweighs risk (which is why you have NIH, NSF, etc.).

• too centralized
• has high overheads
• employment to productivity ratio in agriculture is high and this scheme just adds more manpower

Is my understanding of what you are saying right?

I am not sure if it is that centralized as some other scheme where the big boss controls everything. Primarily because it’s the people who are most affected and have the power/knowledge to decide what they need to do to improve their lot, decide so, do their thing and then get paid. I am not as convinced it is such a big issue from the perspective of the people. Sure the money comes from the central coffers and thus plenty of room for things to be less efficient or go wrong. But to think of it, the way the system is can it really change overnight?

Similarly, in comparison to a complete inaction and no productivity or Govt. doing anything, people doing their own thing albeit not as efficiently may be high overheads to you, but I feel an inefficient system is still better than a system doing nothing or being inexistent.

Lastly, with the way the agro economy is with a gap between seasons, this scheme provides for 100 days in a year, the days which are spent doing nothing between seasons by farmers. Thus you are not really employing more people into the agro economy, you are getting those people who sit idle for some amount of time to do things that will improve their efficiency (think canal system development, etc etc) when it comes to main agriculture seasons.

I think the difference is you are coming from a systemic approach which I agree, the Govt. needs to do a lot better. But knowing our Govt. I’ll take what it gives and use it to it’s full potential. I am coming from a peoples perspective – to me this is at least better than the Govt. doing absolutely nothing. Thus people on the ground are trying to use it to the maximum, they are finding projects that villages can take up which will help the villages themselves in the long term either agriculturally or to improve their own quality of life, they are carrying out peoples audits using RTI to make sure that the money paid in the Govt.s sheets is actually being paid out. To me, this 100 days of Govt. employment for things that the people need most coupled with transparency through RTI is better than schemes that the Govt. came up with in the past.

What are the problems with the NREG? The scheme simply ignores endemic problems. Where shall we start? Leakage due to an 85% overhead being the norm in centrally funded developmental projects – the lopsided employment:sectoral GDP in agriculture (IIANM 60%:30%) – broadcasting from the highest level; worsening an already lopsided economic balance that heavily leans towards the centre; doing nothing about the diminishing ability to manage revenue as one moves from the centre to the periphery; being yet another yojana; coming out of the self-same give-away-hand-out-let’s-hold-no-one-accountable school of thought that everyone seems to forget. What difference does it make in spending more on primary health centres or primary schools if the employees who are supposed to run them never turn up for work?

In #53 that should have read

In the early days of the Republic the planners believed that the economy would arrive at this stage sometime by the mid-60s.

Can you please elaborate on the same since I am curious to hear why you feel the NREGS is such a bad idea. I would concede that it has potential for exploitation in terms of corruption (like everything the great minds of Indian polity come up with), but I would guess your opposition to it has to do with other things. Reasons such as ‘It is just an income redistribution scheme and thus bad’ or else ‘It does not add to the productivity of the nation’ do not convince me. Plus I am not as convinced it is a free money giving scheme, based on my conversations with on the ground activist and rural folks using the NREGS.

Ardy your sentiments are appreciated, but they are still just that, sentiments. I have no use for terms such as libertarian or neo-liberal or conservative for that matter. At present much of the criticism concerning free-money schemes like the NREG is simplistic BS that you would expect to find on the OpEd pages of the LiveMint and the WSJ, the Mint’s elder cousin. But there is a lot of stupid ideology and method at the core of these schemes that is worth criticising that I hope will draw the attention of better informed folk and not simply sports and music writers.

VKrishna,

If anything the NDA has simply followed the ‘hawkish’ Indian security policy formulated around the late 1940s championed by founders such as Patel and Ambedkar among others. To be secure on land, we must be supreme at sea so said Jawaharlal Nehru, over 50 years ago, and not Vajpayee in 2000. Nobody in the political or administrative establishment has ever believed that India’s interests can be secured by force of arms alone. Defence spending is a big chunk of the union budget because even in a mixed/public-sector dominated economy like India’s the military sector is the largest cost centre for the union government. But when you look at the GDP that gives you a measure of total national economic activity, defence spending as you can see accounts for 2-3%. But unlike some other economies, development spending too accounts for about as much. Even assuming someone could think of a way for the Centre to spend as much on education and health as it does on defence, no one would know how to spend that much of money! Because at present the Indian government’s involvement with the primary education sector is minimal, much of the money being spent by the States and local governments. So the GDP ratios give us a better idea of what we could be spending. But now that revenues are buoyant and the economy is growing there may be more money for everyone. In the days of the Republic the planners believed that the economy would arive at this stage sometime by the mid-60s. Better late than never.