The
Hindu: New Delhi: Saturday, 23 August 2014.
Corruption in NREGA works has steadily declined in
recent years. There are important lessons here that need to be extended to
other domains.
One neglected aspect of the debate on the National
Rural Employment Guarantee Act (NREGA) relates to the process aspects of the
programme. In the process of planning works, organising employment, paying
wages or fighting corruption, many valuable activities take place: Gram Sabhas
are held, workers agitate for their rights, social audits are conducted,
technical assistants are trained, administrators find out how to speed up wage
payments, and so on. These activities, aside from being valuable in themselves,
are also a great opportunity to learn.
Prevention of corruption;
One productive area of learning has been the
prevention of corruption. The principal method of embezzlement in
labour-intensive public works programmes is well known: muster rolls are inflated
and middlemen pocket the difference. Before the Right to Information Act (RTI)
came into force, muster rolls were beyond public scrutiny and the crooks had a
field day. Things improved after muster rolls were placed in the public domain,
and even displayed page by page on the internet. Even then, an enterprising
middleman might fudge the muster rolls and hope that no one will bother to
verify them. So, further safeguards were introduced one by one including
mandatory social audits of all NREGA works.
A major breakthrough was the transition to bank
(or post office) payments of NREGA wages. This was a painful affair the system
was not ready for it and the overload led to long delays in payments. Five
years later, banks and (especially) post offices are still not equal to the
task. For the prevention of corruption, however, this was a step forward: the
new system makes it much harder to embezzle NREGA funds since the money now
goes directly to workers’ accounts.
One major qualification is that village post
offices are still vulnerable to capture by powerful middlemen. Extracting money
from someone else’s bank account without his or her knowledge is very difficult
because banks have strict norms of identity verification. But for a suitable
commission, a village postmaster can often be persuaded to use the accounts of
illiterate workers as a conduit to siphon off NREGA money. Over time, workers
learn to collect their wages in person from the post office and verify the
passbook entries. But it will take a while for many of them to protect their
account from fraud. And the crook’s next refuge is to involve workers
themselves in the scam.
How much progress has been made in this
step-by-step battle against corruption? The second India Human Development
Survey (IHDS) conducted in 2011-12 provides a tentative answer. Early
tabulations of IHDS data, kindly shared by project director Sonalde Desai,
suggest that 25 per cent of all rural households did some NREGA work in
2011-12. The average number of days of NREGA work was 49 per employed
households, or 2.53 days per person for the whole sample. Multiplying this by
the rural population total from the 2011 census yields an estimate of 210 crore
person-days of NREGA employment in 2011-12. This compares with 219 crore person-days
of employment being generated by NREGA in 2011-12 according to the Ministry of
Rural Development. In other words, the bulk of official NREGA wage expenditure
is fully reflected in this independent household survey.
Survey findings;
One survey is not conclusive evidence, but it
certainly gives some reason for hope. The IHDS findings are consistent with
those of another recent survey: the Public Evaluation of Entitlement Programmes
(PEEP) survey. This was a relatively small survey (covering about 2,000
households), conducted in May-June 2013 in ten States: Bihar, Chhattisgarh,
Himachal Pradesh, Jharkhand, Madhya Pradesh, Maharashtra, Odisha, Rajasthan,
Tamil Nadu and Uttar Pradesh. In this survey, too, the number of days of NREGA
work reported by the respondents (22 days on average, in 2012-13) was very
close to the corresponding average for the same households (24 days) from
official records.
The picture emerging from National Sample Survey
(NSS) data is a little different. According to recent estimates by Clément
Imbert of Oxford University, 68 to 78 per cent of official NREGA person-days of
work are reflected in NSS data for 2011-12. The corresponding estimates for
2007-08 (prior to the introduction of bank payments of NREGA wages) are much
lower: 42 to 56 per cent. Thus, NSS-based estimates of NREGA employment are
consistently lower than the official figures, but the gap is narrowing over
time. I suspect that the IHDS figures on NREGA employment are more accurate
than NSS data because the collection of social statistics is one of the primary
objectives of the IHDS survey, but not of NSS surveys. There are precedents of
patchy collection of social statistics in NSS surveys, e.g. gross
underestimation of the coverage of midday meals.
The good news is that each of these three surveys
points to a sharp reduction in the extent of embezzlement of NREGA funds in
recent years, at least in the wage component of the programme. However, it is
not clear whether this also applies to the material component. Preventing an
entrepreneur from submitting an inflated bill for materials is much harder than
preventing fake muster roll entries. This problem, of course, is not specific
to NREGA it is endemic in the entire construction sector. This is one reason
why the corporate sector loves government-sponsored “infrastructure” projects:
there is plenty of scope for padding the costs.
Productive value of NREGA;
This point has a bearing on recent concerns about
the productive value of NREGA works. There is a widespread belief that NREGA
works can be made more productive by raising the material-labour ratio, because
material-intensive works lead to the creation of tangible assets instead of
earth structures that get washed away. This belief has no basis. It is all the
more dubious, bearing in mind that material-intensive works are more vulnerable
to corruption. Thousands of useless pucca structures have been built under
programmes such as the Integrated Action Plan (IAP), Backward Regions Grant
Fund (BRGF) and Member of Parliament Local Area Development Scheme (MPLADS) more
for the purpose of siphoning off material funds than to create productive
assets. On the other hand, some labour-intensive works can be very productive,
e.g. land levelling and contour bunding. Even a good earth road is often much
better than a pucca road built with sub-standard material by a corrupt
contractor. Judging from recent experience, there is nothing wrong with the
current 60:40 norm for the labour-material ratio in NREGA works. Lowering the
norm to 49:51 (an odd figure, perhaps borrowed from the stock market) would
severely dilute the employment objective of NREGA without doing anything to
make NREGA works more productive. A far better way of enhancing the productive
value of NREGA works would be to provide more technical assistance to Gram
Panchayats.
Much remains to be done to ensure that NREGA is
corruption-proof not just the wage component but also the material component.
Meanwhile, the transparency safeguards that have been painstakingly built into
NREGA are crying to be extended to other domains. In this and other respects,
the programme is a great learning tool. This process aspect of NREGA deserves
more recognition than it has received so far.
(Jean Drèze is visiting
professor at the Department of Economics, Ranchi University.)