Indian Economy: News and Discussion (Jan 1 2010)

[chaanakya]

Sorry, I forgot to quote the list of permissible works. Judge for yourself

(i) water conservation and water harvesting;
(ii) drought proofing (including afforestation and tree plantation);
(iii) irrigation canal including micro and minor irrigation works;
(iv) provision of irrigation facility to land owned by households belonging to the
Scheduled Castes and Scheduled Tribes or to land of beneficiaries of land reforms
or that of the beneficiaries under the Indira Awas Yojana of the Government of
India;
(v) renovation of traditional water bodies including desilting of tanks;
(vi) land development;
(vii) flood control and protection works including drainage in water logged areas;
(viii) rural connectivity to provide all-weather access; and
(ix) any other work which may be notified by the Central Government in
consultation with the State Government.

[chaanakya]

This is exactly what the NREGA does. Yes it is Rs 10,000 max, but that is per family member. Rural combined families often have 5-6 adults. Rs 50,000 is enough for many families to live at the subsistence level for the entire year. It is definitely happening. Around here it is almost impossible to get construction labor anymore(even agriculture labor).

Yes, that's correct. except for the overheads part.Asset creation is for local CON politicians and babuz.

[somnath]

Go read about NHDP and how the funding is done for various phases. I posted it in the early pages of 2G scam.

All major projects are turned into BOT model in the past few years and the funds rarely come from the budget.

RamaY-ji, I thought you would know better! Funds for the NHDP come from 3 main sources:

1. The oil cess revenues that are ringfenced out for exclusive use of NHAI..Supplemented by budgetary allocations...
2. Using the above as equity, market borrowings by NHAI, g'teed by the govt of India..
3. Private sector investments.

Most projects have viability gap funding in order for the project to take off....If there is a bankable project, there is no problem for the pvt sector to invest..Here is the financing plan proposed by the committee under Gajendra Haldea in 2005...

http://infrastructure.gov.in/pdf/NHDP.pdf

Net net, a very large part of the investments in highways still come from the govt....

Now tell me which major project under NHDP has been delayed because of funding?

All subsidies combined, GOI is spending >150,000 crs per year. All I am saying is that this money can be better spent on long term employment creation and that too aligned to national interests

there are 3 major components of the subsidy budget - fuel, food and fertilizer...The first largely benefits people like you and me...The second, on PDS form, is widely recorded to be pilfering out to the middle class, across the board..The third again is disproportionately cornered by the big and medium farmers...

Our subsidy dispensing systems are broke, and much of it goes only to the middle class rather than where they are intended..NREGA is an attempt to break out of that vicious cycle and direct the benefit directly (!) to those who need them...

I don't understand why you have so much trouble understanding this, unless it is just to be argumentative. You make 10 units of stuff and your wages are Rs 100, each unit will be priced at Rs 10. Now you continue making 10 units of stuff and your wage gets bumped to Rs 150, now each unit will be repriced at Rs15. Viola inflation. No need for big words and obfuscation.

Theo-ji, if we really want to discuss (or argue!) it in its purest form, I can explain the theoretical underpinnigns of inflation using both Keynesian as well as the classical monetarist models - on both counts the gaps in the example will be evident - but that would make this discussion too technical...No need for that...

Taking off from your analysis, lets take that as true...So a dole from the govt without creation of any "assets" is inflationary...In which case, the dole of 1.4 lac crores in direct tax exemptions (which too is a direct cash transfer) given to individuals and corporates in this budget is about 4 times more inflationary? Which democratic political economy, rather which half sensitive human being can argue that a 40k expenditure on basics by the BPL is more inflationary than a 1.4 lac expenditure on extra cars and more expensive mobile phones by the middle class?

Without gettign too much into the theory, it doesnt work like that...When you give an extra 10k to the BPL folk, what does he do with it? He buys "superior" foods, say vegetables...He sends his kid to the english medium school...Both these activities stimulate economic activity - first in production of veggies and second in scaling up of capacity in the school..Which in turn stimulates other downstream activities...This is what is called the multiplier impact...Now if the money is spent in building a road, or a factory (the sort of "assets" you are alluding to), the multiplier is higher...when it is spent on consumption, it is lower...And the multiplier is lower for consumption by anyone, BPL or middle class....But there is a multiplier impact and it stimulates economic activity...

Now there in some cases will be a phenomenon of what is termed somrtimes as "flash" inflation in the local region, as more cash, or disposable incomes accrue to people in the community...That will happen REGARDLESS of the type of works been done - low quality earthwork or a high quality road...But it would be temporary, as economic agents dealing with the demanded services will quickly move in and the price levels will normalise...Over the medium term, the inflation levels will align themslves to the trends regionally and nationally as economic agents adjust their operations...You may see the Ugandan case I referenced earlier..

I tried simplifying the basic theoretical basis in the earlier post throuh the C+I+G framework, but if you are interested in basing it on a more mathematical model, I am happy to do so, but really not required...

[somnath]

Better than one can imagine.

Example give earlier by one member is not the only case. You need to visit and see for yourself hundreds of empirical evidence. Currently, it is the hot topic in review meetings( besides subversion of minimum wages act) and one of the main criticism of the scheme, dear Somnath. It is being suggested to include works which provide for durable asset creation rather than providing wage employment. Read the Act , it is pursuant to Right to employment enshrined in the constitution

Sorry Chanakya-ji, you said that a "dole" without asset creation is necessarily inflationary - I asked you for the theoretical/empirical basis of that assertion...You are telling me in response how quality of works in NREGA is poor?!

[chaanakya]

Without gettign too much into the theory, it doesnt work like that...When you give an extra 10k to the BPL folk, what does he do with it? He buys "superior" foods, say vegetables...He sends his kid to the english medium school...Both these activities stimulate economic activity - first in production of veggies and second in scaling up of capacity in the school..Which in turn stimulates other downstream activities...This is what is called the multiplier impact...Now if the money is spent in building a road, or a factory (the sort of "assets" you are alluding to), the multiplier is higher...when it is spent on consumption, it is lower...And the multiplier is lower for consumption by anyone, BPL or middle class....But there is a multiplier impact and it stimulates economic activity...

I tried simplifying the basic theoretical basis in the earlier post throuh the C+I+G framework, but if you are interested in basing it on a more mathematical model, I am happy to do so, but really not required...

Out of touch with reality for most of the part. Arrack shop owner would certainly vouch for that. That is the roaring business ans state revenue from arrack shop auction has just gone up fourfold.

Going by the explanation by sharad powar there is supply side constraint in vegetables despite NAREGA workers eating superior food and producing more "veggies". Multiplier effect is showing only in increase in veg prices besides other items.

And of course, there is one eenglish eskool down the road where they send their kids for bitter ejucation. Ever met teacher of one of those eskool?? that's quite revealing.

Searching for basic theoretical basis, get real and get empirical. NAREGA is double edged sword and its impact will be felt not so soon.

[chaanakya]

Better than one can imagine.

Example give earlier by one member is not the only case. You need to visit and see for yourself hundreds of empirical evidence. Currently, it is the hot topic in review meetings( besides subversion of minimum wages act) and one of the main criticism of the scheme, dear Somnath. It is being suggested to include works which provide for durable asset creation rather than providing wage employment. Read the Act , it is pursuant to Right to employment enshrined in the constitution

Sorry Chanakya-ji, you said that a "dole" without asset creation is necessarily inflationary - I asked you for the theoretical/empirical basis of that assertion...You are telling me in response how quality of works in NREGA is poor?!

well you didn't read it fully. empirical and theoretical basis is there for NAREGA. And I have not characterised it as a "dole". It is wage employment and not asset creation. And empirically , I see inflation in CPI and AWCPI and not in theories.

[Theo_Fidel]

Taking off from your analysis, lets take that as true...So a dole from the govt without creation of any "assets" is inflationary...In which case, the dole of 1.4 lac crores in direct tax exemptions (which too is a direct cash transfer) given to individuals and corporates in this budget is about 4 times more inflationary? Which democratic political economy, rather which half sensitive human being can argue that a 40k expenditure on basics by the BPL is more inflationary than a 1.4 lac expenditure on extra cars and more expensive mobile phones by the middle class?

This is not correct. The government taxes as well. The only part of GOI expenditure that is inflationary is the deficit. This is why there has been such a push to reduce the revenue deficit to zero.

Exactly how is a tax exemption inflationary. This is earned income you are talking about. People are productive and earn money. If it stays with them rather than going to government, this is not inflationary. In fact in India due to extremely high household savings this will be deflationary, as people save but GOI spends everything it gets and some.

Again this is a big rock in a very small pond. Honestly get in a car and drive around to see the work these NREGA teams are doing. Its not hard. Talk to any Tea Kaddai owner in a small town and he will direct you to the nearest project.

As long as we are talking BPL, the section of society that triggers all those starvation type statistics is not the one benefiting from the NREGA. The real BPL group is the unskilled migrants, who can not get NREGA work and the hill 'tribal' type peoples. These two groups are between them about 300 million and are completely untouched by administration. Just in the Javadi hills in TN there are about 300,000 various tribal groups who pretty much live as their ancestors lived 1000 years ago. In places like MP & Orissa these groups are often 1/3 of the population. It is these two groups that stink up our statistics. It is also the reason that despite the NREGA poverty reduction is going so slowly in India.

[somnath]

ell you didn't read it fully. empirical and theoretical basis is there for NAREGA. And I have not characterised it as a "dole". It is wage employment and not asset creation. And empirically , I see inflation in CPI and AWCPI and not in theories

Ahh...Which part of your post gives out the theoretical and empirical basis, other than random anecdotes about arrack shops? You see inflation in numbers (not in the daily prices??!), and you have a theory on why it happens (because of NREGA) - but all you can say in support is news on arrack shops doing booming business

This is not correct. The government taxes as well. The only part of GOI expenditure that is inflationary is the deficit. This is why there has been such a push to reduce the revenue deficit to zero.

Theo-ji, sorry but you are making lots of leaps of faith (and economic logic here)...So the only part of govt expdt that is inflationary is the deficit? So in case the govt ran a balanced budget, even a surplus one, and spent every single rupee on NREGA (say), then according to you there would be no inflation? And therefore we need to push "only" revenue deficit to zero? Does the monetarist velocities generating inflation distinguish between primary, revenue and gross fiscal deficits?

Exactly how is a tax exemption inflationary. This is earned income you are talking about. People are productive and earn money. If it stays with them rather than going to government, this is not inflationary. In fact in India due to extremely high household savings this will be deflationary, as people save but GOI spends everything it gets and some.

Again, lots of leaps of logic...Tax exemption is revenue foregone in favour of a group of people, same as the govt collecting the tax and then sending a cheque to that group (as it happens in the US sometimes!)...Neither income, nor taxes discriminate between people and their "productivity"...Govt collects taxes on an aggregate, spends on a bunch of things it deems fit...If you think govt cash transfer for "just consumption" is inflationary, then whether it is to NREGA households or people like you and me, the impact is the same...
And how does a tax credit work as a "deflationary" measure? It can be a palliative against inflation, but how is it deflationary? (of course while a "tax credit" to BPL is inflationary?)...BTW, the govt is not a "dissaver", not anymore, not for the last few years - but that is besides the point...

On the composition of poverty, you are right - SC/STs are a large part of the BPL folk..And therefore look at the NREGA data I have posted...A very large part of the beneficiary workforce is SC/ST!

[chaanakya]

ell you didn't read it fully. empirical and theoretical basis is there for NAREGA. And I have not characterised it as a "dole". It is wage employment and not asset creation. And empirically , I see inflation in CPI and AWCPI and not in theories

Ahh...Which part of your post gives out the theoretical and empirical basis, other than random anecdotes about arrack shops? You see inflation in numbers (not in the daily prices??!), and you have a theory on why it happens (because of NREGA) - but all you can say in support is news on arrack shops doing booming business

Well read it slowly , one word at a time. You will come to some understanding in due course.

NAREGA ( the Act)is for wage employment. and not for asset creation. Which part of it you don't understand??

[somnath]

^^^and it is "inflationary" because?

[RamaY]

Somnath

RamaY-ji, I thought you would know better! Funds for the NHDP come from 3 main sources:

The oil charge approach is applied in only phases I and II under NDA admin.

Pls read this http://en.m.wikipedia.org/wiki/National ... nt_Project

[Suraj]

Without gettign too much into the theory, it doesnt work like that...When you give an extra 10k to the BPL folk, what does he do with it? He buys "superior" foods, say vegetables...He sends his kid to the english medium school...Both these activities stimulate economic activity - first in production of veggies and second in scaling up of capacity in the school..Which in turn stimulates other downstream activities...This is what is called the multiplier impact...Now if the money is spent in building a road, or a factory (the sort of "assets" you are alluding to), the multiplier is higher...when it is spent on consumption, it is lower...And the multiplier is lower for consumption by anyone, BPL or middle class....But there is a multiplier impact and it stimulates economic activity...

I'm curious - how did the BPL person in a village too far away to have effective infrastructure set up get all that ? After all your contention is that NREGA helps put money in the hands of people before GoI can bring goods, services, connectivity and utilities to them. How did quality vegetables and education arrive within reach of them now ?

Further you put money in the hands of people without addressing supply side bottlenecks, and what happens is that the limited supplies of goods and services in their village will see inflation. Why would any seller not raise prices when he sees that the people in the village are all getting a ready dole from GoI ? If I were the roadside vegetable seller I would be bananas not to raise the price of my bananas... So what if it is cruel and heartless on the part of me, the seller ? If past performance is any clue, GoI will call me a hoarder and have me prosecuted or pay me to keep prices fixed

You pretend the RBI is making some other point from my own. They are not - they're stating the above - put money in the hands of people scattered around the country's villages before they've enough access to quality goods and services, and the value of that money will be eroded, both because they've few avenues to utilize the cash, and the sellers will raise prices since they can constrain supplies without much effort. The sellers have no incentive to magically provide all the new goods and services you claim these BPL folks will suddenly have access to, unless supply side bottlenecks are worked out.

The nature of tax exemptions to the middle class and to BPL folks are not a matter of the relative Rupee amounts alone but their productivity levels. A middleclass citydweller has access to goods and services that enhance his/her productive capacity in a manner that BPL folks don't. Unless NREGA generates productive assets, improving connectivity and QoL, building schools, teaching skills, that is just money disrupting the equilibrium of the largely disconnected local economy and driving inflation locally.

As far as studies go, if you throw $30 billion at millions below poverty level, a lot of people will benefit. But that alone is not a sufficient condition for claiming success, unless the approach is sustainable. The ones who benefit earliest and most prominently are those best equipped to circumvent the limited access to goods and supplies, not the neediest, whom you state as the basis for the current nature of the scheme.

As it stands, NREGS is not sustainable, and the NREGS administration itself admits this, to it's credit. Rather than do the good thing by combining NREGA with Bharat Nirman and PMGSY (both creatures of the last NDA administration) at the outset, they spent 5 years avoiding doing so, just for the sake of avoiding confusing people and ensuring their flagship program could be seen as distinct from that of a former administration - at the cost of ~$30 billion.

[Theo_Fidel]

On the composition of poverty, you are right - SC/STs are a large part of the BPL folk..And therefore look at the NREGA data I have posted...A very large part of the beneficiary workforce is SC/ST

Somnath,

I'm trying to take you seriously. But please get beyond your catch phrase fetish. There are no 'leaps of logic' necessary.

When money generated is not put to productive use, to find ways to generate more goods for less, it will trigger more inflation. The deficit is the government printing more money, enlarging the money supply. There are many push and pull factors to inflation. We discussed this earlier on this thread. Think before you speak.

The migrants and the tribals are NOT registered SC/ST. As I said before the administration does not touch them. Where is there question of them being registered. I sense that you don't understand the nature of rural Indian communities and how the different classes are organized and structured. Talk to somebody in your family about the nature of rural India before making assumptions. I say again the NREGA system supplies money to already gainfully employed families and smooths out their cash flow. Those outside the rural economic system do not benefit. I see this with my own eyes. Not some PDF report.

Tax exemption is not revenue forgone. Taxes are a progressive transfer of wealth from one part of the country to another. If this wealth is not put to productive use it will generate inflation, loss and waste to the nation. The money left in the pockets of people will mostly be put to productive use. Can the NREGA match that. The consensus is no.

Government by definition is a dissaver. What you are seeing as government savings is actually the deficit. Government expenditure is classified as public savings. At least that's the way I understand it from my Dad's explanation, who is the finance guru in my family. Maybe Suraj can explain a bit more?

[chaanakya]

^^^and it is "inflationary" because?

While that is not the point I was arguing, I find myself in substantial agreement with theo.
Increasing Money supply in the system (increase in demand side equation)without commensurate increase in asset creation ( leading to increase in supply side equation) is always inflationary. What is being pointed out is that Fiscal deficit ( not revenue deficit) leads to inflationary pressure.

Those who subscribe to Keynesian theory would find such inflation and fiscal deficit useful. but certainly not more than 4-5 %.

[chaanakya]

This is what you have written in one of your earlier post

What Jean Dreze "thinks" is less important - it was only a reference - question is what is the empirical facts on the ground...And by the sheer composition of expenditure, the assets being created cannot be very durable..But thats not the point...the objective of the programme, I have said before, is to create a safety net for the 400 million BPL folks...Its a bootstrap strategy to pull substantial numbers of them out of poverty (the wage rate you see is just above the 2 dollars/day benchmark!)...

It isnt "either or", the development of infrastructure should continue apace...But that has happened for the last 60 years, including 20 odd years post reforms...The data shows (I have posted above) that it isnt catching up fast enough..And structurally India is evolving far too rapidly for a lot of people to even have a chance of catching up..Employment elasticities are down almost across the board, and agriculture if anything will employ less and less people...

As Amit's anecdotal instance displayed, infrastructure is struggling to catch up, it will continue to struggle to catch up...And the BPL folks get impacted a LOT more on account of this than either the middle class or the corporate sector...There isnt a good govt school? No problem, my kid anyways goes to St Xavier's or St Mary's (both Calcutta )...she doesnt miss out..But the kid of the BPL folk in Poilan (thats a village right on the outskirts of Calcutta) cant even afford the "english medium" school near RAichak...With NREGA, at least some would be able to do that...

I would put NREGA as a social security equivalent of "viability gap funding" that we have for PPP projects...In a host of infrastructure projects (mainly urban transport related), the projects themselves are not viable on a stand-alone basis..Therefore, the govt pitches in with a certain amount of support that makes the project viable for pvt sector participation..NREGA creates the viability gap funding for millions to access pvt sector services (like health and education and even nutrition) where public sector either doesnt exist or is decrepit...

So I don't think you are in any disagreement with either theo or myself. Perhaps inflation part of the equation is what you might need to comprehend as theo and others point out. Personally I have no issues with objectives of NREGA. Its implantation may be faulty, there may not be any durable asset creation but it certainly improves rural demand. In absense of increase in supply, the impact could well be imagined. Its no rocket sciece as you would like to make it.

And what you refer to anecdotal ( seems your takia kalam ) are realities on the ground , observable fact , empirical considerations and not arm-chair analysis by some e CON o mist.

If inflation is not contained, the befits conferred by NREGA would simply be eroded while pushing folks, who are out of this safety net ( as theo says), into subsistence level existence ans suicide.

[chaanakya]

Without gettign too much into the theory, it doesnt work like that...When you give an extra 10k to the BPL folk, what does he do with it? He buys "superior" foods, say vegetables...He sends his kid to the english medium school...Both these activities stimulate economic activity - first in production of veggies and second in scaling up of capacity in the school..Which in turn stimulates other downstream activities...This is what is called the multiplier impact...Now if the money is spent in building a road, or a factory (the sort of "assets" you are alluding to), the multiplier is higher...when it is spent on consumption, it is lower...And the multiplier is lower for consumption by anyone, BPL or middle class....But there is a multiplier impact and it stimulates economic activity...

I'm curious - how did the BPL person in a village too far away to have effective infrastructure set up get all that ? After all your contention is that NREGA helps put money in the hands of people before GoI can bring goods, services, connectivity and utilities to them. How did quality vegetables and education arrive within reach of them now ?

Further you put money in the hands of people without addressing supply side bottlenecks, and what happens is that the limited supplies of goods and services in their village will see inflation. Why would any seller not raise prices when he sees that the people in the village are all getting a ready dole from GoI ? If I were the roadside vegetable seller I would be bananas not to raise the price of my bananas... So what if it is cruel and heartless on the part of me, the seller ? If past performance is any clue, GoI will call me a hoarder and have me prosecuted or pay me to keep prices fixed

You pretend the RBI is making some other point from my own. They are not - they're stating the above - put money in the hands of people scattered around the country's villages before they've enough access to quality goods and services, and the value of that money will be eroded, both because they've few avenues to utilize the cash, and the sellers will raise prices since they can constrain supplies without much effort. The sellers have no incentive to magically provide all the new goods and services you claim these BPL folks will suddenly have access to, unless supply side bottlenecks are worked out.

The nature of tax exemptions to the middle class and to BPL folks are not a matter of the relative Rupee amounts alone but their productivity levels. A middleclass citydweller has access to goods and services that enhance his/her productive capacity in a manner that BPL folks don't. Unless NREGA generates productive assets, improving connectivity and QoL, building schools, teaching skills, that is just money disrupting the equilibrium of the largely disconnected local economy and driving inflation locally.

As far as studies go, if you throw $30 billion at millions below poverty level, a lot of people will benefit. But that alone is not a sufficient condition for claiming success, unless the approach is sustainable. The ones who benefit earliest and most prominently are those best equipped to circumvent the limited access to goods and supplies, not the neediest, whom you state as the basis for the current nature of the scheme.

As it stands, NREGS is not sustainable, and the NREGS administration itself admits this, to it's credit. Rather than do the good thing by combining NREGA with Bharat Nirman and PMGSY (both creatures of the last NDA administration) at the outset, they spent 5 years avoiding doing so, just for the sake of avoiding confusing people and ensuring their flagship program could be seen as distinct from that of a former administration - at the cost of ~$30 billion.

These are the points which CON party would not be able to understand. Unintended effect of NREGA is EU PEE AAI -II.
And of course, NREGA would be unsustainable in the long run unless it is able to improve supply side which it is not yet designed to do. However it would be difficult to do away as it is not exactly the scheme of govt but flows from the Act and hence state is bound to implement it one way or other.

NREGA criticism , even constructive ones, are un-digestable by the current dispensation and its supporters.

[RamaY]

NREGA would be unsustainable in the long run unless it is able to improve supply side which it is not yet designed to do. However it would be difficult to do away as it is not exactly the scheme of govt but flows from the Act and hence state is bound to implement it one way or other.

The biggest problem with NREGA type programs is that once started it is impossible to cancel them; it amounts to political harakiri.

[chaanakya]

On the composition of poverty, you are right - SC/STs are a large part of the BPL folk..And therefore look at the NREGA data I have posted...A very large part of the beneficiary workforce is SC/ST

Somnath,

I'm trying to take you seriously. But please get beyond your catch phrase fetish. There are no 'leaps of logic' necessary.

When money generated is not put to productive use, to find ways to generate more goods for less, it will trigger more inflation. ( why it is so hard to understand) The deficit is the government printing more money, enlarging the money supply. There are many push and pull factors to inflation. We discussed this earlier on this thread. Think before you speak.

The migrants and the tribals are NOT registered SC/ST. ( this is empirical fact as I understand) As I said before the administration does not touch them. Where is there question of them being registered. I sense that you don't understand the nature of rural Indian communities and how the different classes are organized and structured. Talk to somebody in your family about the nature of rural India before making assumptions. I say again the NREGA system supplies money to already gainfully employed families and smooths out their cash flow. Those outside the rural economic system do not benefit. I see this with my own eyes. Not some PDF report. ( ahh this is what he would say anecdotal)

Tax exemption is not revenue forgone. Taxes are a progressive transfer of wealth from one part of the country to another. If this wealth is not put to productive use it will generate inflation, loss and waste to the nation. The money left in the pockets of people will mostly be put to productive use. Can the NREGA match that. The consensus is no.

Government by definition is a dissaver (and governance by Eu Pee AAI-II is disaster , scams after scams with mini scams like NREGA thrown in to quiten the folks ). What you are seeing as government savings is actually the deficit. Government expenditure is classified as public savings. At least that's the way I understand it from my Dad's explanation, who is the finance guru in my family. Maybe Suraj can explain a bit more?

We used to read a couplet

Karat karat abhyaas se, jadmati hot sujan, rasari aawat jat se sil par parat nisaan. So let us keep on trying.

[chaanakya]

NREGA would be unsustainable in the long run unless it is able to improve supply side which it is not yet designed to do. However it would be difficult to do away as it is not exactly the scheme of govt but flows from the Act and hence state is bound to implement it one way or other.

The biggest problem with NREGA type programs is that once started it is impossible to cancel them; it amounts to political harakiri.

If it is plan scheme you can always mutate to something better or dispence with it in one way ot the other. Like earleir FOOD for Work Programme launched during 70s . But NREGA is , as you say , difficult to mutate as main purpose is wage employment flowing from right to work. Yes it would be political harakiri. Even opposition was not able to oppose when launched just before general elections.That is what e CON o mist intended it to be. But leave it to babuz and see what comes out of it finally.

[chaanakya]

Somnath ji

Would you analyse this data and tell us what one should look for , in the long run given the nature of works, as indicative of improving rural infrastructure or supply side equation or the real productive benefits other than wages.

http://164.100.12.7/netnrega/writereadd ... _1011.html
And while you are at it , read the following report for support
http://nrega.nic.in/circular/Report_to_the_people.pdf

[somnath]

The oil charge approach is applied in only phases I and II under NDA admin.

Pls read this http://en.m.wikipedia.org/wiki/National ... nt_Project

RamaY-ji, why go to wiki when there are primary sources available?
http://indiabudget.nic.in/ub2011-12/eb/po.pdf

The total outlay this year for NHAI is >8000 crores - this is of course just the equity, and outside NHAI's borrowing programme, which is g'teed by the govt...

BTW, the NDA/UPA comparisons are substantially fallacious on grounds of economics...the GQ programme was started by NDA,using the oil cess...the current PPP financing plan for highways, for example, is a UPA-I job - its the Gajendra Haldea plan, which I referenced earlier...

[somnath]

When money generated is not put to productive use, to find ways to generate more goods for less, it will trigger more inflation. The deficit is the government printing more money, enlarging the money supply. There are many push and pull factors to inflation. We discussed this earlier on this thread. Think before you speak.

Theo-ji, unfortunately you make too many erroneous assumptions, which leads to erroneous conclusions - I am only pointing them out! I have had (and continue to have) soemthing to do with inflation by education, training and profession - so I usually do "think" before I comment, (though I retain the right to make mistakes )

Govt of India DOES NOT print money to fund deficits - monetising deficits stopped 15-16 years ago in India..Deficits "can" cause inflation, but in India the channel is not printing money...It is through increased govt borrowing pushing up interest rates that translate to higher costs of production leading to higher nflation - very broadly...I pointed out in the earlier post, inflation does not look at the "definitional colour" of the deficit - revenue, primary or fiscal - the monetarist velocities, if they have to lead to inflation are reasonably agnostic to those..Net net, GOI funds its deficits by tapping into the domestic savings pool, and not by printing more money..

Tax exemption is not revenue forgone. Taxes are a progressive transfer of wealth from one part of the country to another. If this wealth is not put to productive use it will generate inflation, loss and waste to the nation. The money left in the pockets of people will mostly be put to productive use. Can the NREGA match that. The consensus is no

Tax exemption is not revenue foregone!? You can argue (around vertain assumptions) that on Laffer curve basis for tax rates - but exemptions? And money "left" in the pockets of the middle class through tax exemption will be put to more "productive" use than money left in the pockets of BPL? Any empirical/theoretical basis of this assumption? The extra 50k in your (and my) pocket on tax breaks will be more productively used than the extra 10k in the pocket of the BPL fellow?! In fact thre are numerous studies now that debunk hypotheses like that - th poor utilise their money as efficientl and productively as the rich..

Government by definition is a dissaver. What you are seeing as government savings is actually the deficit. Government expenditure is classified as public savings

Why should the govt "by definition" be a dissaver? Govt savings are "deficits"?! go through the Economic Survey...Compare the amounts listed under "public savings" and "govt expenditure"...Govt expdt (state+centre) accounts for nearly 25-30% of GDP, public savings hovers around 2-5%....What one can argue is that of late, in the last 7-8 years, the centrl govt has been funding its deficits substantialy through public sector savings...

[somnath]

The nature of tax exemptions to the middle class and to BPL folks are not a matter of the relative Rupee amounts alone but their productivity levels. A middleclass citydweller has access to goods and services that enhance his/her productive capacity in a manner that BPL folks don't. Unless NREGA generates productive assets, improving connectivity and QoL, building schools, teaching skills, that is just money disrupting the equilibrium of the largely disconnected local economy and driving inflation locally.

------------------

As it stands, NREGS is not sustainable, and the NREGS administration itself admits this, to it's credit. Rather than do the good thing by combining NREGA with Bharat Nirman and PMGSY (both creatures of the last NDA administration) at the outset, they spent 5 years avoiding doing so, just for the sake of avoiding confusing people and ensuring their flagship program could be seen as distinct from that of a former administration - at the cost of ~$30 billion.

Sorry, there is no empirical evidence that extra cash in the pockets of the middle class is used "more productively" than the same with a BPL folk...

What you are referring to as inflation is a case of "flash inflation" that I spoke of...It is temporary, and not a contributor to struictural inflation...And that would happen in a local community regardless of whether the rise disposable income came out of NREGA or Bharat Nirman.......It is instructive to study what the RBI really said, rather than take press reports..

It is the half-yearly outlook statement from RBI - here is the section on prices..
http://www.rbi.org.in/scripts/Publicati ... x?id=13046
This focuses almost exclusively on the supply side issues - both imported and domestic structural...

What the press picked up was this (from another section) -

The persistence of inflation at an elevated level and the significant pick-up in December 2010 suggest the amplification of upside risks to inflation. Going forward, factors which may exert further upward pressure on inflation are: (a) higher international commodity prices, especially oil, (b) increase in global food prices and the regional outlook suggesting continuation of the trend, which could further limit the import option as countries may ban/ restrict exports to ease potential pressures on their domestic inflation, (c) return of pricing power to corporates, (d) improving bargaining power of both organised and unorganised labour, with MGNREGS contributing to the wage pressures in the farming and unorganised manufacturing sectors, (e) capacity constraints in several sectors, particularly farm products, where supply response to high prices may continue to be slow, (f) continuous upward revision in minimum support prices reflecting rising input costs, (g) risk of suppressed inflation becoming open, resulting from revision of diesel and other administered petroleum product prices, when the implicit subsidy burden increases significantly and (h) prevalence of high inflationary expectations.

They are basically referring to (again) supply side factors and demand side factors resulting out of rapid growth...NREGA is mentioned specifically as an input that is driving up demand in the unorganised sector.......Standrd IS-LM frameworks, right? RBI is pretty text-bookish...The media then takes this as RBI saying "NREGA pushing up prices"...

this is what RBI had to say in conclusion..

The challenge is exacerbated by the fact that inflationary pressures are emanating from sources that are not very sensitive to monetary policy measures. Growing demand-supply imbalances in several non-cereal food items have led to sharp relative price changes, which in turn have pushed up the headline inflation. While non-food manufactured inflation has been stable in a range of 5.1-5.9 per cent, the month-overmonth increase in price index in recent months reflects emerging demand side pressures as well as rising input costs. In an environment of high food and fuel inflation, the risk of spillover to the core inflation through higher input costs and inflationary expectations, remains. As long as the structural factors underpinning the relative price pressures persist, the impact of anti-inflationary monetary policy could remain dampened

The focus is sharply on supply side strctural imbalances...

I said before, look at the maths....Putting it in any framwork - Keynesian Phillips Curve, or the classical monetarist, the amounts in NREGA are too small to make a big diff...

Rather than do the good thing by combining NREGA with Bharat Nirman and PMGSY (both creatures of the last NDA administration) at the outset, they spent 5 years avoiding doing so, just for the sake of avoiding confusing people and ensuring their flagship program could be seen as distinct from that of a former administration - at the cost of ~$30 billion

Perhaps politics played some part in it...The NDA govt too floated new "Bharat Nirman' (Gram Sadak Yojana -found out that BN is a UPA programme!) programmes rather than using the "Congress" programmes like "NREP" etc and scale them up, didnt they? So this comparison is fallacious...More substantively, combining large programmes with outlay is a horrendously complicated job, especially if the core objectives are different...We see that even in commercial organisations with much limited scope and better systems...In the govt, it will be much more complicated...More so as implementaion is at the level of state govts....

Substantively, I dont think there is much daylight between the two positions...NREGA is useful, massively so, and like everfything else, it can be made better....What is not acceptable is the premise that somehow m oney to poor is useless dole while tax breaks to rich is "productive"...

[Suraj]

Hardly fallacious. Bharat Nirman and the much older National Rural Employment Programme have little in common. If anything NREGS and NREP are far more related. Further, if your argument 'A did it, so B should be able to' is just a cop out, particularly when $30 billion is involved. That we have the economic means is not sufficient reason to throw that much into a program that cannot sustain itself by generating fixed asset and capital formation, skills development and local infrastructure. Instead, what was done is a hasty cash disbursal program for political gain.

The NREGA has received unprecedented amounts of criticism and controversy for a welfare program, something Bharat Nirman or any other did not. There's a good reason for it - it's a fundamentally flawed program that was also implemented poorly. It's not an employment program but a wage guarantee program, with until recently little thought towards productive activity underlying those wages. Those whom you view as those benefiting from it, aren't - as Theo described too - the ones who are benefiting.

[somnath]

Bharat Nirman and the much older National Rural Employment Programme have little in common. If anything NREGS and NREP are far more related. Further, if your argument 'A did it, so B should be able to' is just a cop out, particularly when $30 billion is involved.

Suraj-ji, too many ulterior conclusions being drawn to justify (what seems to be) an ideological position...

First up, Bharat Nirman was NOT an NDA programme...It was launched by UPA-I...So much for the assumption that NREGA ws done separetly by UPA to "distinguish" it from an "NDA programme"....Lets not have ideology trump facts and data, and logic alongside...

Second, the objectives of the two programme are different...NREGA is an unconditional cash transfer scheme t o the "targeted" segments, Bharat Nirman is about buildign rural infa....There CAN be complemenarities, as are being tried now, but the objectives around the outlays are very different...Can be attempted, but not easy to implement...Try coordinating two large programmes within a commercial organisation - one gets the idea of how complicated it would be for the govt...But its being tried now, so there is movement...

Third, the criticism of the NREGA is never about the objective, its about the so-called "opportunity cost" of using the money "better"...And in that argument, really given 60 years of experience at remving poverty, incl the last 20 years, I would be in favour of trying something new...At least the mistakes will be new, and we will gain new insights...

Last, dont think anecdotal instances are replacement for empirical evidence...Warts and all, there is no empirical evidence that the "targeting" of NREGA has been grossly faulty - and there is enough evidence already - I have referenced some above..I am yet to see any substantive empirical data that NREGA wages are being paid to those who dont "deserve" it...

[chaanakya]

^^ one can't really argue with confused mind
empirical data vs empirical evidence

Relying too much on statistics as empirical data and then talking about no evidence of grossly faulty.

The point simply is in absence of asset creation ( quality or not) wage employment would lead to inflation as I understand thr formulation by others. My point was that NREGA mandate is only 100 days wage employment and asset creation , at best , is incidental.
There are other side effects of such a scheme which can be observed if you ever visit rural area instead of relying on arm chair statistics.
And yes , it may be targeting unorganised sector and meeting the SC/ST requirement but then large chunk is being left out due to various reasons , one being under funding. It should not have been so as it is statutory right to get work.
Perhaps some comparison with NEW DEAL would be in order.

[Ambar]

Taken OT from the TSP dhaga :

80% of monetary transactions in India are electronic? Do we have a report to back this number? My experience has been exactly the opposite. In most non-metro cities/towns, transactions are always through cash and nothing else, and this includes big ticket items like consumer durables etc. In metros, most small retailers hesitate to accept cards (although they proudly display 'visa/mastercard' sign outside) mostly to avoid taxes.

retail consumer level monetary transactions far smaller in amount compare to FDIs, loans, capital market, salaries disbursals etc. And about consumer spending, thats why I said that we are not there yet but fast developing and approaching the electronic money age. The number you are referring to is challenged by the RBI press release. The release exactly emphasis my point of the fake money must not be transacted via the financial institutes. Here is the link High Level RBI Group suggests Steps to check Menace of Fake Notes
retail consumer level monetary transactions far smaller in amount compare to FDIs, loans, capital market, salaries disbursals etc. And about consumer spending, thats why I said that we are not there yet but fast developing and approaching the electronic money age. The number you are referring to is challenged by the RBI press release. The release exactly emphasis my point of the fake money must not be transacted via the financial institutes. Here is the link High Level RBI Group suggests Steps to check Menace of Fake Notes

With a 400 billion $+ retail sector, we cannot afford to ignore the impact of fake currency on money supply. Those salaries are drawn from ATM machines and spent at stores. The question is, how does a higher unit of account impact the velocity of money?

[Prem]

http://www.hindustantimes.com/India-s-2 ... 69562.aspx
India’s $2-trn tryst

The Indian economy would grow to $2 trillion in 2011-12 joining the elite league of the US, Japan, Germany, China, UK, France and Italy as the mass of economic activity shifts to Asia. Budget 2011-12 has forecast that India’s gross domestic product (GDP) at the end of March 2012 would reach Rs 89,80 860 crore or nearly $2 trillion at an exchange rate of Rs 45 to a dollar. India also is set to outpace China as the world’s fastest growing major economy in 2011 after the latter lowered its economic growth target to 7% over the next five years to ease pressures on environment
Experts, however, said India will only fully realise this great potential if it continues to pursue growth-friendly economic policies of the last two decades. Prudent fiscal policy stance, extending its openness to foreign trade and investment, increased investment in transport and energy infrastructure, and improved educational standards are likely to hold the key for India’s growth prospects.Even with a GDP of $2 trillion, we will remain one third of China and one seventh of the US,” said Rajiv Kumar, director-general, FICCI.

[Theo_Fidel]

Not erroneous at all Somanth.

Revenue foregone is something the Government does not tax. Say Agricultural income or the ever hated black money. A tax exemption is merely an adjustment of the taxation rate. By your definition all of our income belongs to the government and is all revenue foregone. Laughable.

As far as monetisation even borrowed money has to be monetized somehow. This is done by printing more money and increasing M3. There is no way around this. Admittedly there is a collateral base to back this up but to spend it you must monetize the borrowings. If the government does not print more money why does money supply increase well in excess of the growth rate.

The way I understand it is that GOI financed investment (roads, bridges, etc) is counted as savings. Governments are dissavers because they spend money today in the belief of income to come tomorrow. This is the nature of their borrowings and their deficit. Since Governments are not required to generate a profit, they by definition will dissave.

[Suraj]

First up, Bharat Nirman was NOT an NDA programme...It was launched by UPA-I...So much for the assumption that NREGA ws done separetly by UPA to "distinguish" it from an "NDA programme"....Lets not have ideology trump facts and data, and logic alongside...

No it wasn't. It was just lipstick on the NDA's projects with the ubiquitous SG/MMS pictures to go with it:
Bharat Nirman: New label for core reforms

Senior government sources said today Bharat Nirman would aim at giving the “big picture” to works undertaken by the government in line with its ‘Aam Aadmi’ campaign that propelled the Congress to power in 2004.

More than that, it would address the issue of how to put a UPA stamp on programmes initiated during the National Democratic Alliance regime, like the rural roads programme, the sources said.

A slew of infrastructure projects for rural India is part of this scheme. These projects include rural health, repackaging the NDA's pradhan mantri gram sadak yojna for rural roads, water and irrigation, and housing and rural telecom.

Bharat Nirman will be on for the next four years, 2005-09, and is envisaged as the one that repackages many existing rural and urban programmes of the government.

As Theo mentions, there remains a gulf between what NREGA intended to accomplish and what it did. Though it targeted the absolute weakest parts of society, that's not the segment that benefited. That weakest segment is devoid of skills, education & knowledge, and generally the basic needs to integrate themselves with the rest of society and economy. Attempting to put money in their hands either will not reach them, or is easily taken away from them. As I said, there's a good reason why NREGA has been continuously criticized to such an unprecedented extent that no other welfare/subsidy program has been. At least, unlike you, their own administrators now acknowledge the shortcomings of the program, and are integrating it with others that will drive economic activity and capital formation.

PS: Please, no 'ji' for me

[sanjaykumar]

Budget 2011-12 has forecast that India’s gross domestic product (GDP) at the end of March 2012 would reach Rs 89,80 860 crore or nearly $2 trillion at an exchange rate of Rs 45 to a dollar. India also is set to outpace China as the world’s fastest growing major economy in 2011


Okay sundry burdenwallahs, keepers of the holy truth and other general a$$holes of the world, here we come.

[somnath]

No it wasn't. It was just lipstick on the NDA's projects with the ubiquitous SG/MMS pictures to go with it:
Bharat Nirman: New label for core reforms

Non sequitor..In case the UPA anyway "stamped" Bharat Nirman on existing programmes (no evidence barrign one opinion piece, but let that pass), it is not sharing the political credit with NDA, is it? Bharat Nirman is positioned as a flagship programme of the UPA, much like the NREGA...So if it was possible, they could have clubbed the two programmes toegther even at the begining without having to worry about "sharing" any "credit"...Its onyl with experience, and the programme in its nationally rolled out avatar is only about 3 years old that pitfalls and weaknesses are being identified...Clubbing parts of Bharat Nirman with NREGA therefore are being tried out now...the "NDA credit" connection therefore is not tenable..

BTW, even if Bharat Nirman is "lipstick" on NDA's projects - thoguh like most newspaper reports, there is only a claim, no analysis on how the numbers stack up -it is hardly a first..ALL govts reallocate monies from existing programmes to "new" programems of their choice...

As Theo mentions, there remains a gulf between what NREGA intended to accomplish and what it did. Though it targeted the absolute weakest parts of society, that's not the segment that benefited. That weakest segment is devoid of skills, education & knowledge, and generally the basic needs to integrate themselves with the rest of society and economy. Attempting to put money in their hands either will not reach them, or is easily taken away from them. As I said, there's a good reason why NREGA has been continuously criticized to such an unprecedented extent that no other welfare/subsidy program has been. At least, unlike you, their own administrators now acknowledge the shortcomings of the program, and are integrating it with others that will drive economic activity and capital formation

What Theo have narrated is a personal anecdote..Can well be true, but no substitute for empirical data...And there is no merit in extrapolating trends out of anecdotes...All data presented till now -and there is quite a bit I have referenced earlier - show that NREGA has worked far better (with a capital F) on targteing than any other welfare programme tried out till now, especially incl the subsidies programme...

Can NREGA be improved? Tautological, just like anything else in life...I myself brought up the possibility of clubbing it with some of the other projects like BN and GSY, before my "R&D" pulled up that the govt is already talking along those lines...Ditto for things like leakage and corruption - which is precisely why there is so much emphasis on paying through bank accounts and UID now...So it is a works in progress, but a worthy enterprise nevertheless...

[somnath]

Revenue foregone is something the Government does not tax. Say Agricultural income or the ever hated black money. A tax exemption is merely an adjustment of the taxation rate. By your definition all of our income belongs to the government and is all revenue foregone. Laughable.

Theo-ji, I am sure you dont have a background in economics...that isnt a problem, but one should be careful with some of the economic concepts and terms - the mass media uses them loosely, and very often erroneously...It is often useful to consult the primary document of the data, and the theoretical basis..

Anyway, tax...Most modern tax administrations are based on the famous Laffer Curve axiom...It assumes, tautologically, that taxes collected are near 0 when tax rates are either 0% or 100% - there is an inverted "U" connecting the two dots...the shape of the "U" of course depends ont he country...At a certain inflexion point of tax rate, the tax collected is expected to have been optimised..Any further reduction, and total tax collected will fall...In India, the massive exercise to get to an "optimised" level (on direct taxes) was started by MMS in PVNR's time (per a report by Raja Chelliah), the process was pretty much culminated in PC's "dream budget"...since then, all direct tax changes have been tinkering at the margin, the basic stucture has remained the same...Mostly, these tinkerings do not yield any increase in tax revenues, as they are too small to be of structural impact anyways, and actually result in a decrease in overall taxes collected, ceteris paribus...

However, the point about "revenue foregone" is not about changes in tax rates, but in "exemptions", as I mentioned before...And exemptions are NOT the same as a reduction in tax rate...Exemptions are discretionry (so some industries get certain exemptions, and some dont - for example, IT gets an STPI tax waiver that other industries dont..Or deductions on business income available to the self-employed but not to salaried individuals ) and hence distortionary...they are supposed to be temporary kick starts or crisis-driven palliatives, but they typically continue ad infinitum...And many exemptions are simply given to pander to middle class demands - for example, the tax exemption on Sec 80c investments, or exemptions for senior citizens, or women, or even exemptions on HRA(!) - and dont have major structural impact on the economy or taxes collected anymore...

I had referenced this before - doing so again...the "revenue foregone" statement in this year's budget...Just going through it should give you an idea..

http://indiabudget.nic.in/ub2011-12/sta ... nnex12.pdf

Most of the revenue foregone, via direct as well as (to a limited extent) indirect taxes, is nothing but more money in the pockets of selected segments, mostly the middle class....Not very different from a cash credit into their pockets, a la NREGA!

As far as monetisation even borrowed money has to be monetized somehow. This is done by printing more money and increasing M3. There is no way around this. Admittedly there is a collateral base to back this up but to spend it you must monetize the borrowings. If the government does not print more money why does money supply increase well in excess of the growth rate.

Money supply 101! Samuelson is a good source...The central bank has multiple ways of increasing money supply:
1. Reduce reserve ratios of banks, enabling them lend more
2. Purchase of foreign exchange coming into the country
3. Repo/reverse repo - borrowing securities from banks to lend them money

M3 does not "increase" just by "printing" more money...Borrowings of the govt is not "monetised", not anymore in India...the RBI simply auctions off govt debt to people willing to invest - basically funding it out of the nation's savings pool...

The rate of increase in M3 broadly corresponds to nominal GDP growth...The blips are created by RBI to take care of tactical situations of either tight liquidity conditions or high inflation..Some liquidity expansions are self-created by the "system" by an increase in the velocity of money - which again is a different concept altogether - wont get into it, just read Samuelson!

RBI's latest update on monetary conditions..
http://www.rbi.org.in/scripts/Publicati ... x?id=13044

This should give you some idea on how RBI manages "money supply", as well as some of the basics (like components of M3, various measures of systemic liquidity - M1, M3, broad money (M3), Reserve money etc...

The way I understand it is that GOI financed investment (roads, bridges, etc) is counted as savings. Governments are dissavers because they spend money today in the belief of income to come tomorrow. This is the nature of their borrowings and their deficit. Since Governments are not required to generate a profit, they by definition will dissave

As I said, go trough the Economic Survey - do the numbers on various heads (govt investment, savings etc) there match up to your asumptions?

Even if you forget the numbers, intuitively if govt investment=govt savings, in years when the govt had negative savings rate, did the govt do no investment, or rather was a net "disinvestor"?

the govt finances its investments through a mix of tax/non-tax revenues and borrowings...The public sector each year of course generates some "returns" out of all these investments..Lately, these returns outweigh the "losses", and hence the public sector has a positive contribution to the savigns rate of the country...About 2-5%, depending on the year.....I said before, the govt can claim that it finances its deficits substantially out of public sector savings these days!

Anyway, enough of econ 101! I repeat, I retain the right to make a mistake, so everyone else has the same right - hopefully you take this in the right spirit

[somnath]

^^ one can't really argue with confused mind
empirical data vs empirical evidence

Relying too much on statistics as empirical data and then talking about no evidence of grossly faulty.

Chanakya-ji, prefer to remain a bit confused, helps!

BTW, I do rely on statistics substantially for empirical data...what do you rely on for your empirical data? Anecdotes?

[Airavat]

80% of monetary transactions in India are electronic? Do we have a report to back this number? My experience has been exactly the opposite. In most non-metro cities/towns, transactions are always through cash and nothing else, and this includes big ticket items like consumer durables etc. In metros, most small retailers hesitate to accept cards (although they proudly display 'visa/mastercard' sign outside) mostly to avoid taxes.

Don't know about that but the major cash transactions take place in real estate transactions, particularly agricultural land. And that's one place where forged currency notes first make their appearance.

[somnath]

With a 400 billion $+ retail sector, we cannot afford to ignore the impact of fake currency on money supply. Those salaries are drawn from ATM machines and spent at stores. The question is, how does a higher unit of account impact the velocity of money?

Well, the actual % of "transactions" would be impossible to gauge..But "cash in the form of currency" is typically a small % of outstanding money supply - ~15%...So tinkering with our money supply dynamics with fake notes is a bit difficlt, not least because of the sheer size (M3 is 63 lac crores)...Fake notes is more of a "criminal" issue - facilitates terror txns and such...

[chaanakya]

^^ one can't really argue with confused mind
empirical data vs empirical evidence

Relying too much on statistics as empirical data and then talking about no evidence of grossly faulty.

Chanakya-ji, prefer to remain a bit confused, helps!

BTW, I do rely on statistics substantially for empirical data...what do you rely on for your empirical data? Anecdotes?

Its your choice if it helps. There needs to be something between two ears to have clarity.

Youn should have gone through the tables of statistics given in link posted by my which is data by NREGA website on status of NREGA and you can read minutes of various meetings. Also read well the objectives contained in the Act itself. It would make clear that asset creation is not the objective , that is incidental. You should also see the works that are covered. Works that are completed and works that are yet to be completed. It would also help you to understand better it you see the cases of pending wages.( reference to under funding).

Having a vote gathering scheme with catchy phrases and laudable objectives is not enough. Implementation is equally or more important.While you keep reading those of your reports , I indeed see the impact on the ground and that how it is being implemented and what is the impact.

I can now understand why it is incomprehensible to you that money supply without asset creation is inflationary. After all e-CON-o-mists (to borrow the formulation from one of the fellow members) have only doomed this county with profusion of scams. Anyway I have no wish to indulge in flames. So period.

[somnath]

^^^Chanakya-ji,

I would have gladly swapped ideas on the issue with you, as well as corrected the gross mistakes in your assumptions, but for this line

There needs to be something between two ears to have clarity.

I have a visceral dislike for people who trade in personal insults...So I would leave you to your wisdom

[chaanakya]

Well , Sorry if I hurt your feelings.

You have studiously ignored the actual statistics link posted here containing NREGA data. You have also overlooked the reference to the objectives
which is in the Act itself.
You want some numbers to crunch but ignore when pointed to.The observations , what you refer to as anecdotal are mostly from proceedings where reviews take place and minuted. Some were quoted as well.

Out of 721908 works only 56885 are reportedly completed.
973505 people registered but no job card issued.
Delayed Allocation 1696296 man days. Pending demand 145188 man days.

Against 11,56,85,508 household registered only 4,42,54,386 demanded job and 4,36,37,734 were given job. ( the word demanded is something I would be skeptical of)

Rs. in Lakhs
Fund available= Rs.39,26,755.67
Fund released by centre (sanctioned)= Rs. 9,96,181.21
Expenditure= Rs. 22,89,264.83 (represents unpaid wages as well due to non release of funds)

So much for success of NREGA

There are some more data there which one can go through.

Poverty estimates indicate 37.5% ( going by Planning Comm data) are poor in India so you can deduce how many are out of the net cast by NREGA.

Now if you provide money (as wage and not dole) without asset creation , how could it be non inflationary that you have failed to explain with all your verbal gymnastics which points to your confusion.

And I have no likings for blinkered persons either. Thanks.

[chaanakya]

And anecdotes are listed here (in data form) which indicates that it is being implimented as anyother normal scheme of GOI , nothing great to tom tom about.

Majority of complaints are against GP
In details section Mr Dreze's complaints ( anecdotal of cource) are also there and being forwarded to state govt for action and
usual action. I I remember , Mr Dreze, member of Central Council is quoted approvingly. Perhaps his anecdotes may carry more weight
http://164.100.12.7/netnrega/writereadd ... d_rep.html