Guaranteed to disappoint

Of the many promises made by Indiaâ€™s governing coalition, led by the Congress party, in its â€œcommon minimum programmeâ€� last May, one stood out for its scope and ambition. This was the â€œimmediateâ€� enactment of a legal â€œemployment guaranteeâ€�. One member of every poor and lower-middle-class household would be entitled to at least 100 days of work at the minimum wage on public-works projects. On December 21st, the â€œEmployment Guarantee Actâ€� (EGA) was duly tabled in parliament. Neither the schemeâ€™s most virulent critics nor its architects and supporters are pleased with the contents. On one side are those who see the EGA as wasteful and unaffordable, prone to massive and corrupt â€œleakageâ€� and unlikely either to ease poverty or to produce useful assets. They see it as the biggest of the prices paid by the governmentâ€™s economic reformersâ€”such as the prime minister, Manmohan Singhâ€”to the leftist parties on whose parliamentary support Congress relies. On the other are those who see the governmentâ€™s draft legislation as a dilution to the point of meaninglessness of a grand vision that would have lifted millions out of poverty and done much to fix Indiaâ€™s woeful infrastructure. Both sides have a point. Estimates of the annual cost of the plan, if implemented nationwide, are 250 billion-400 billion rupees ($5.7 billion-9 billion), depending on the number of people expected to apply for work. That is between 1% and 1.6% of GDP, a huge sum for a country where the combined deficits of state and central governments have hovered around 10% of GDP for seven years. The government is bound by law to try to reduce the deficit. This will hardly help. Well-founded doubts also exist about whether such schemes really reach the 250m-300m Indians who live below the poverty line. Pessimists expect much of the money to vanish into the pockets of corrupt officials, employing millions of â€œghostsâ€� on invisible projects. Many of the less ghostly beneficiaries would be neither poor nor jobless. Officials at the Ministry of Rural Development, which produced the draft law, do not dismiss these charges out of hand. But they point out that the plan is initially to be introduced in only the poorest 150 of Indiaâ€™s 593 districts, before being extended nationwide. Since it will replace existing poverty-alleviation programmes, the extra cost will be minimal. As to the risk of â€œleakageâ€�, they counter that, by vesting the power to select and monitor projects in the lowest level of elected authorityâ€”village councilsâ€”they hope the poor themselves will police corruption. Such â€œempowermentâ€�, they argue, is one of the planâ€™s main benefits. The government has come under equally fierce fire from the left and from some of the EGAâ€™s staunchest advocates. They worry that the plan has been weakened in crucial respects. In particular, there is no fixed time limit for it to be extended nationwide. Nor is there a reference to the minimum wage under the schemeâ€”allowing it to be wrecked at any time by the setting of an arbitrarily low rate. Thirdly, they complain that the beneficiaries of the scheme are to be picked by reference to official poverty data, out-of-date and unreliable (the 150 districts, for example, are not necessarily the poorest). This jettisons one of the planâ€™s main attractions: that it should be self-selectingâ€”only those who need to, it is argued, will take work at the minimum wage. All of this fuels the suspicion that some leading figures in the government in fact quietly agree with the EGAâ€™s opponents. Faced with the political impossibility of axeing it, they are subjecting it to a slow death by strangulation. The Economist

Guaranteed to disappoint

Of the many promises made by India's governing coalition, led by the Congress party, in its “common minimum programme”

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