Thursday 16 February 2012

Indian Economy’s Reverse Loop

An economics professor at the Indian Institute of Technology Delhi brought to notice that the government’s Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) or rather the haphazard way in which the scheme is being carried out has cost a little girl her life in Manika, Jharkhand on February 15. This is a serious issue because the MGNREGA is one of the flagship programmes launched by the Congress-led United Progressive Alliance (UPA) and it is plagued with problems. If this programme continues with these flaws, by around a few years or a decade the burden on the then government would be to undo the damage done by the scheme.
There is no doubt that this scheme, in spite of the massive corruption that has been taking place, has been a blessing to lakhs of people in the rural areas. But the merits it possesses are not substantial to overlook the flaws it has deep embedded in it. To highlight one of the problems: The scheme has drained the labour pool and has led to an alarming shortage of farm hands, mainly in Punjab and Maharashtra (especially around harvest time).

If such a scheme has been continuing with little scope of reform from the government’s side, the blame should be squarely put on the Opposition, especially the BJP (one can’t expect the Congress to highlight the flaws in the scheme it has introduced). For all the noise and grandstanding it does, including that it is a viable alternative to the corrupt Congress, the ‘party with a difference’ has not been able to highlight the flaws in a scheme that will probably lead to the wrecking of the country’s economy. 
The government seems unlikely to change its stand, partly because the scheme has reaped benefits (for the people as well as for the party) and partly because it is a prestige issue for the government. A rollback at this time, especially with many State Assembly elections around, is unlikely.
The scheme at this point, with the flaws in it, is acting as a reverse loop in India’s economic algorithm; like a go-back-to-square-one button. Not many in the ruling Congress might agree with this view; but I’m sure there is one gentleman, sitting huddled over books in the South Block and pulling out the little hair that’s left on his head, who will concur with this in the deepest recesses of his mind – Union finance minister Pranab Mukherjee.

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