NREGS dealing with all kinds of impossibilities

NREGS

Posted: 24 Oct 2011 04:56 AM PDT

I was impressed – or maybe disturbed is a better word – when I read the current issue of Governance Now.  The cover feature is all about the National Rural Employment Guarantee Scheme (NREGS) in Uttar Pradesh and the ridiculous abuses that the magazine has uncovered.  The introductory article summed up the situation well when it said of an audit of the program in UP,

…it was dealing with all kinds of impossibilities: logical (such as Rs. 6.6 crore being spent to erect seven brick enclosures to guard saplings), geographical (such as a road from Taj Mahal to Red Fort being built in Corute village of Varanasi district), mathematical (such as labour being paid Rs. 44 lakh for 19,178 persondays at Rs. 120 per personday) and even astrophysical (such as compressing 1,000 days into six months so that they could pay one labourer for 1,000 days of work between April and September).  Not to forget the supernatural such as roads and drains worth crores laying themselves out without human intervention or help (e.g., a Rs. 10 lakh-road in village which was laid without using any labour)!

The magazine goes on to detail each of these projects and more, highlighting the waste and obvious corruption that officials repeatedly put down to clerical error among the Management Information System (MIS) operators.  It's fascinating reading, well worth picking up a copy.

I found myself laughing as I read.  It is all just so over-the-top.  These aren't minor accounting errors and they're certainly not clerical ones.  This is obvious, wide-spread corruption.  It's projects that don't make any sense (a road from Taj Mahal to Red Fort in a village in Varanasi?), projects that never happened, and budgets that are orders of magnitude beyond the wildest remotely plausible costs imaginable.

But then I had to check myself, and question whether laughter was really at all appropriate.  If it were television satire, it would be funny, but this is real money being spent by the real government and being siphoned off by real corrupt individuals on a massive scale.  It's money that you and I have paid in taxes and that is supposed to be benefiting the rural unemployed.  Instead, it is lining the pockets of someone powerful enough to manipulate the system while life goes on unimproved for the poor.  That isn't even remotely funny.

It is also not surprising.  The problem is accountability and incentives.  There are basically four ways to spend money.

1. Spend your own money on yourself.
2. Spend your own money on others.
3. Spend others' money on yourself.
4. Spend others' money on others.

The first makes you concerned about both cost and quality, the second about cost but less about quality, the third about quality and less about cost, and the forth about neither.  This, like all government programs, is the fourth type.  The government is spending other people's money (i.e. yours and mine) on other people (the rural unemployed).  It is unsurprising then that there is little thought put into either cost of the projects or quality of the product delivered.  Did the money build the road it was supposed to?  Did it hire the right people?  Did it pay the correct wages?  Was more money spent on wages or materials?  Was the project even the right one to begin with?

All of these are areas where the projects highlighted in Governance Now failed miserably.  Whoever was administering the programs at the very least failed to keep tabs on the answers to these questions.  And why should he?  It's other people's money spent on other people.  His incentives are skewed.

Had private business been responsible for these projects, they would have been spending their customer's money on their customer.  The incentives would have been clear and the business would have had to respond to the customers demands.  The customer would want to see good value for the money spent.  Rs. 6.6 crore on seven brick enclosures to guard saplings would never have gotten through.

If we want to see less waste and better use of limited resources, then we need to move away from grand government projects.  When businesses employ people, they create real jobs doing real things making real wages.  People and communities benefit.  When the government attempts to create jobs, we get the abuses of the NREGS.  Better for the government to remove itself from these areas where it doesn't do a very good job and leave the job creation to business.