The Broad Mind | MGNREGA badly needs overhaul

A proposal to ensure that the rural jobs scheme boosts productivity in farm and textiles sector.

Prof Mukul Asher, Councillor of the Takshashila Institution, and V Ramakrishnan in the Business Line:

There is some academic recognition that the MGNREGA and similar entitlement programmes, as currently formulated and implemented, are detrimental to the overall welfare of households. This is because these programmes tend to consume massive amounts of cash, increase fiscal deficits and public debt, and reduce ability to reorient public expenditure towards more pressing priorities, without providing commensurate economic or enduring social gains. Their aim appears to be for presumed political gains.

There is only a slight recognition that the success of MGNREGA is better measured by the extent to which the number of households needing it decreases overtime, and so that ultimately there is no need for it except for in a few districts. Unfortunately, current policies continue to be geared towards spending taxpayers’ money, without sufficiently taking into account national benefit, at the expense of fiscal consolidation and future fiscal flexibility, and therefore perversely measuring success by the extent to which the size of the MGNREGA increases.

It is in the above context that this article advances a proposal, which has the potential to make the MGNREGA result in skills formation. This will be conducive to more inclusive economic and social development.[Business Line]