NREGS extension will not help economy, poor

The biggest danger with bad ideas is that they get accepted very fast, and equally fast they spread. The national rural employment guarantee scheme (NREGS) is one such idea, which is likely to reach cities, as the Narendra Modi government is contemplating to extend it to the urban areas.

Bloomberg reported that the scheme, if and when approved, may be rolled out in smaller cities and initially cost about Rs 35,000 crore. The report quoted Sanjay Kumar, a Joint Secretary in the Ministry of Housing and Urban Affairs, as saying, “The government has been considering this idea since last year. The pandemic gave a push to this discussion.”

The pandemic killed jobs. As per the estimates by Centre for Monitoring Indian Economy, over 12 crore people lost jobs in April, the worst month in recent memory in terms of economic growth and unemployment. Thankfully, joblessness has declined since then, but it is still a big problem

While the problem of unemployment is real, the dirigiste solutions like NREGS are unreal; in fact, they do more damage than good. Only economic growth and development can create jobs. When the government is focused more on sops like NREGS, the ecosystem promoting growth suffers, for more burdens (financial and otherwise) are imposed on wealth creators. Fiscal responsibility goes on holiday.

We should not forget the NREGS’ ancestry. It is the result of the Left’s occupation of Lutyen’s Delhi. In 2004, red and pink tyrannosauruses made it a veritable Jurassic Park. They trampled economic reforms, created mechanisms to strangulate business, devised ways to augment public (read wasteful) expenditure, weakened fight against Maoist and jihadist terror, and played havoc with diplomacy.

The 13 years of reforms had bestowed certain resilience to the economy, so it not only withstood the depredations of the communists (who supported the Congress-led United Progressive Alliance regime from outside during 2004-08) and the National Advisory Council (NAC) but even grew at a fast pace for the first four years.

It needs to be mentioned here that the NAC, headed by UPA chairperson Sonia Gandhi, comprised an assortment of professional revolutionaries, green terrorists, bleeding hearts, and downright Luddites. What made them really dangerous was the fact that they were Sonia’s handpicked advisers to shape public policy; and she was the de facto ruler of India.

Most of the time during UPA I, the communists and NAC fanatics planted landmines in the economy. Over the years, much has tripped on the landmines. The proposed food security legislation is one such landmine; the NREGS is another monstrosity, making serfs out of free citizens, who are perpetually looking at askance at the gigantic landlord—the state.

In a nutshell, NREGS is fiscally dangerous, economically ruinous, and morally reprehensible.

Prime Minister Modi was very critical of NREGS. He said in 2015, “Do you think, I will put an end to the scheme? My political wisdom does not allow me to do it. This is a living monument of your failure to tackle poverty in 60 years.”

He correctly called the scheme the Congress’ “living monument.” That was then.

Unfortunately, he has not been very correct in continuing the scheme. Extending it would be downright dangerous..