India passed its most ambitious antipoverty program in decades
Tuesday in an effort to spread more widely the spoils of the
country's rapid economic growth.
Social welfare spending, it seems, is staging a comeback here,
after 15 years of focus on privatization and encouraging the high-
tech sector. Presenting the bill in parliament, Congress Party
President Sonia Gandhi said, "An economy growing at 7 percent per
year, can and must find the resources ... to improve the lives of
its millions of poor."
Much of rural India, home to two-thirds of the population, has
not felt the benefits of the new high-tech economy, and voters in
these areas handed the reins of power to the Congress Party in a
stunning election upset last year.
The new National Rural Employment Guarantee Act is widely seen as
Under the new legislation, rural poor are guaranteed 100 days of
work per household every year. One-third of these jobs will be
reserved for women. The mammoth program, which will be implemented
in the 150 poorest districts over the next four years, comes with a
whopping price tag of $9 billion a year.
The new jobs include construction of roads and embankments,
cleaning up polluted water supplies, and wasteland restoration for
agriculture, among other rural improvement efforts.
Ila Patnaik, business editor of The Indian Express, says this
employment guarantee act has the potential of becoming India's best
antipoverty program - if implemented well. "Out of all the myriad
subsidy programs that exist in India at the moment, a much higher
proportion of the total taxpayers' money spent by the government can
reach the targeted - the poor."
But some experts say the program will probably not result in self-
sufficiency among the poor with the paltry daily wage of little more
than a dollar a day, and no sustained vocation. Critics also
question whether India can afford such an expansion in public
"Fighting poverty is not a matter of good intentions, it's about
good policies," argues Jagdish Bhagwati, a professor of Indian
Political Economy at Columbia University. "The socialists in the
government and its communist allies are holding up privatization of
public enterprises, and ... they're diverting scarce funds into this
employment program that has led to little productive investment in
The government's rural spending budget for this year has already
amounted to $2.6 billion, a significant 33 percent jump over last
year. The additional $9 billion in public spending comes at a time
when India's fiscal deficits are already hefty, says Arvind
Panagariya, an economics professor at Columbia University. The jobs
program, he says, will divert funds away from developing
infrastructure to support India's growing economy. …