PMGSY vs MGNREGS

Over the last twenty years Government of India has launched a series of Centrally Sponsored Schemes (CSS) with a view to promote development, reduce poverty, and reach basic services in education and health, etc to the common people. While the individual programmes have been evaluated several times showing that in general these are better implemented in states with stronger political leadership and better capacity for delivery, no comparative study is available to my mind that will explain why in the same state some programmes are more successful than others in achieving their goals or why some schemes do not work well even in states associated with better governance. For instance, supplementary nutrition under the ICDS does not reach the intended beneficiaries (six months to two year old children) even in the better governed states such as Gujarat, Maharashtra and Karnataka, whereas the mid-day meals programme is able to provide hot cooked meals every working day to at least 80 per cent children even in states such as UP, Jharkhand and Odisha, where administrative capacity for delivery is considered constrained.

The central hypothesis that I wish to explore in this paper is that when a programme is well designed, adequately funded and frequently evaluated, it does well even in so called BIMAROU or backward states. On the other hand, if the design is flawed programme does poorly even in better governed states. ICDS is designed to target children mostly after the age of three years when malnutrition has already set in. Very little of the ICDS resources, in terms of funds and staff time, are spent on the under-three child, and this low-priority must be reversed, otherwise its impact on reducing malnutrition will remain illusory. The primary responsibility of initiating correction in the design of such faltering programmes is that of the central Government.

Carrying this argument further, let us closely examine two somewhat similar programmes–PMGSY (Pradhan Mantri Gram Sadak Yojana) and MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme)–both initiated and supervised by the Ministry of Rural Development and discuss how their design affects their outcomes at the ground level.

[tie_index]Pre-fixing state-wise allocations is more equitous[/tie_index]

Pre-fixing state-wise allocations is more equitous

PMGSY is a CSS with the objective to provide all-weather road connectivity to all eligible unconnected habitations in rural areas of country with a population of 500 persons and above in plain areas, and 250 persons and above in Special Category States, Tribal and Desert areas, etc. A total of 178,184 habitations have been identified state-wise to be targeted for providing road connectivity under PMGSY. States have so far provided connectivity to 112,550 habitations and constructed 4.54 lakh km road length. The programme also has an upgradation component with a target to upgrade 3.75 lakh km of existing rural roads including 40 percentage renewal of rural roads to be funded by the States in order to ensure full farm-to-market connectivity.

Unlike MGNREGS, PMGSY fixes state-wise allocations based on pre-determined gaps in infrastructure, and funds are released accordingly, thus benefitting states with poorer infrastructure more. For instance, during 2015-16, of the total allocation of Rs 23,807 crore, the combined share of Chhattisgarh, Rajasthan, Jharkhand, Uttar Pradesh, Madhya Pradesh, Odisha and Bihar was almost 60 per cent. The allocation of all major states in PMGSY is shown in Figure 1, clearly showing that more benefits accrue to poorer states.

 

On the other hand, MGNREGS follows a ‘free-for-all’ strategy with the result that better governed states corner most of the funds irrespective of low incidence of poverty in those states. Having better banking systems may be one of the reasons why richer states spend more in MGNREGS. Wages are delayed in poorer states where banks are far away from the worksite which acts as a disincentive for the poor to work in MGNREGS schemes. For instance, the total expenditure on MGNREGS in Bihar in 2014-15 was Rs 1,073 crore, in Tamil Nadu it was almost four times at Rs 3,908 crore, whereas the number of rural poor in Bihar is more than six times the number in Tamil Nadu. On the other hand, as Tamil Nadu already has a much better road infrastructure it could receive and spend only Rs 581 crore in 2014-15 as opposed to a staggering Rs 2,259 crore in Bihar (see Table 1). The combined share of Bihar, Jharkhand, Odisha, MP, and UP in the total expenditure in MGNREGS was only 25 per cent.

	Bihar	Tamil Nadu	All India	Bihar	Tamil Nadu	All India
2012-13	1,891	4,121	39,268	1,992	21	8,387
2013-14	1,990	3,876	37,847	1,845	383	13,095
2014-15	1,073	3,908	35,780	2,259	581	16,538

It is not only in Bihar but MGNREGS funds do not reach other poor states too, such as Odisha, Assam, and UP and hence its impact on overall poverty reduction is marginal.

Another way to study inter-state disparity is to look at total wage expenditure in each state under MGNREGS and divide it by the total number of rural poor in that state, as has been done in Figure 2 for 2014-15. It is interesting to note (Table 2) that whereas in richer states such as Tamil Nadu, Kerala, and Andhra Pradesh the number of HHs doing wage employment is far in excess to the number of poor households, the reverse is true of poorer states, such as Bihar, UP, and Odisha. This leads to a bizarre situation where government spends Rs 9,673 on each rural poor in Kerala – the least poor state in India – against a paltry Rs 165 in Bihar!

	Expenditure on unskilled wages (crore Rs)	Number of rural poor in crore	Expenditure per rural poor in Rs
Bihar	529	3	165
UP	1,971	5	411
Odisha	716	1.26	568
AP (includes Telangana)	2,857	0.62	4,197
Tamil Nadu	3,123	0.59	5,276
Kerala	1,499	0.15	9,673

Figures on wage expenditure per rural poor for major states is given in figure 2. Bias in expenditure in MGNREGS in favour of the richer states has continued even in 2015-16, as shown in Figure 3.

The Comptroller and Auditor General of India (CAG) – has also questioned the crucial linkage between MGNREGS implementation and poverty alleviation. “It was also seen that Bihar, Maharashtra and Uttar Pradesh, which together account for 46 per cent of the rural poor, utilised only about 20 per cent of the Central funds,” it stated. This design flaw can easily be fixed by allocating resources to the states proportionate to the number of rural poor in that state.

[tie_index]Monitoring assets should be part of the design[/tie_index]

Monitoring assets should be part of the design

The other big difference between the two schemes is in their approach to creation and maintenance of assets. Three Tier Quality Assurance Mechanism is institutionalised in the design of PMGSY to promote independent monitoring of assets. Periodic inspections are required to be conducted by independent State Quality Monitors (SQMs).

Each PMGSY project is inspected by the SQMs at least three times during the process of execution. All the SQM inspection reports are to be mandatorily uploaded with at least 10 digital photographs. State Technical Agencies provide outsourced technical support to the projects. They would vet the District Roads Plan and scrutinise the Project Reports prepared under the Annual proposals. In addition, reputed Technical and Research Institutions such as the Indian Institutes of Technology are designated as Principal Technical Agencies for groups of States to provide technical support, take up research projects, study and evaluate different technologies and advise on measures to improve the quality and cost norms of Rural Roads. This procedure ensures that the required works are actually carried out and are not completed on paper only.

These important functions for MGNREGS are delegated to elected institutions at the village level. As both implementation and social audit is to be done by the same panchayat, conflict of interest develops. Some years back Rajasthan government tried to involve outside agencies in social audit, but the elected Sarpanches went on strike against this decision, forcing government to withdraw the order. Besides, there is practically no emphasis in MGNREGS in the field to ensure that the programme objective of drought proofing is achieved through creation of productive assets.

All PMGSY roads are covered by a five year maintenance contract to be entered into along with the construction contract, with the same contractor, as per the Standard Bidding Document (SBD). Hundred per cent of construction and maintenance cost for the first five years is borne by GOI. At the end of five years, the PMGSY roads are placed under Zonal Maintenance Contracts for another five years and these maintenance costs are budgeted by the State Governments and are placed with a specially created agency, called State Rural Roads Development Agency (SRRDA) in a separate Maintenance Fund Account. These provisions are based on the identified need of having an improved technical and administrative capacity for planning and managing maintenance issues. Though some states have not been judicious in effectively releasing funds to target post five year road maintenance, as states like to build new roads rather than spend their money on maintenance, yet evaluations show that many roads were still in good condition even after five years. The States are required to conduct Pavement Condition Index (PCI) Survey and prepare Road Inventory once every two years, for prioritisation of roads for upgradation and maintenance. The States have been asked to regularly release requisite funds required by SRRDA for maintenance and its utilisation is monitored by GOI. Thus the scheme’s distinctive management system and provision of composite construction contract including maintenance have resulted in better quality rural roads across the country.

[tie_index]The objective of drought proofing is not being achieved in MGNREGS[/tie_index]

The objective of drought proofing is not being achieved in MGNREGS

Although the stated objective of MGNREGS is to accomplish drought proofing and increase agricultural production on marginal holdings, especially in semi-arid regions and uplands, but the sustainability and productivity of assets created is never monitored with the result that the programme is reduced to creating short-term unproductive employment with no focus on asset creation or soil and water conservation. Its impact on agriculture may even be negative, as alleged by the Ministry of Agriculture.

[tie_index]High percentage of incomplete works[/tie_index]

High percentage of incomplete works

A CAG report in 2011 concluded that less than half of the projects in NREGA begun since 2006—including new roads and irrigation systems—have been completed. A study commissioned by UNDP with Action for Food Production (AFPRO) revealed that the progress of implementation was very slow, as in many cases the schemes could not be completed in the same fiscal year and took longer time, even two to three years in some cases. This resulted in lack of interest from the beneficiaries’ side. The works carried out under the schemes are more target oriented than community centric in terms of sustainability of benefits in the long run. The infrastructures created do not have any linkages with beneficiaries beyond the employment generation during the execution of particular scheme. Almost fifty per cent of the schemes were found incomplete in 2010, even though many of them started during the year 2006-07 & 2007-08. This raises a serious concern, not only because these are not serving the purpose for which envisaged, but these cases negatively impact through soil erosion as the soil gets exposed and is left loose without proper dressing & compaction.

A major weakness of water-related works under MGNREGS has been the excessive concentration on excavation and desilting of ponds without corresponding work on treating their catchment areas or on the construction of dams based on earthen engineering. As works are left incomplete, bunds are washed away during the monsoon, which gradually accumulates as silt in the river bed downhill, which in turn affects the nearby check dams with negative impact on agricultural productivity.

Irregular flow of funds was another reason for incomplete works, as concluded by a study in Meghalaya and Sikkim. In Mandla, Madhya Pradesh and Narmada, Gujarat, a report found that while people started to work on MGNREGS, due to delay in wage payments they shifted back to lower paying works. Though payments through banks and post offices helped to curb corruption, they brought problems of their own.

[tie_index]Trickle down and spin-off effects[/tie_index]

Trickle down and spin-off effects

The third big difference between the two schemes is in its medium to long-term impact on inclusive growth. MGNREGS in its present form at best creates employment for the poor with little bearing (though the Ministry of Agriculture fears that the impact is negative) on other aspects of village economy. Construction of all-weather roads on the other hand has directly or indirectly contributed to improvements in connectivity, transportation, government services, livelihood, commerce, education, health, land value, infrastructure, social interactions and gender empowerment. Roads are a lifeline for rural communities, linking them to markets, education, health and other facilities.

Perishable commodities like fruits and vegetables require faster road access to markets and shift to such crops due to good road communication leads to major increase in both productivity and employment as these crops are more labour intensive than cereals. In many cases it was seen that road construction attracted complementary investments made by people in tempos, shops, and real estate. Roads also facilitate labour movement to better paid jobs in nearby semi-urban regions. PMGSY roads allow government workers—including health workers, teachers, and agriculture extension workers—to have easier access to the habitations to provide services and information to rural communities. These changes ultimately create more prosperity and sustainable employment than MGNREGS.

[tie_index]Involvement of external funding agencies[/tie_index]

Involvement of external funding agencies

Lastly, PMGSY has attracted huge resources from the World Bank and the Asian Development Bank, which have not only augmenting overall funds for the scheme, but have also resulted in more frequent external and better quality evaluations. Three externally aided projects namely Rural Road Sector Project I and II with the assistance of Asian Development Bank (ADB) and Rural Road Project I with the assistance of World Bank have already been completed in various States. ADB provided about $2 billion loans through its long-term investment programmes to build and improve over 31,000 km of rural roads in five states of Chhattisgarh, Madhya Pradesh, West Bengal, Odisha and Assam. More than 12,500 previously unserved habitations have been connected in the five states through building new stretches of rural roads. Presently, Rural Road Sector III Project under ADB has been negotiated for providing assistance under programme. Under Rural Road Project II of World Bank, a loan of $1.5 billion was signed on 14 January 2011. The project is being implemented in seven States. Improved rural connectivity is already showing results in the form of more employment opportunities, better remuneration for farmers’ produce, improved health indicators and better school enrolment in
rural areas.

Unfortunately there has been no interest from the large donors in funding MGNREGS.

[tie_index]Summing up[/tie_index]

Summing up

Unbiased and objective analysis would show that the scheme though well intentioned has been poorly designed and therefore has not been able to achieve its stated goals of either creating employment in poorer states or improving land productivity through drought proofing measures. Ministry of Rural Development does not monitor asset creation under MGNREGS, which tempts ground staff to create jobs only on paper.

MGNREGS works are not leading to drought proofing, effective afforestation or watershed development because there is no monitoring to see if these works are indeed being done and then maintained properly. For instance, spending on planting – a labour intensive activity – should focus on survival of the trees. Women can be employed to do all these activities. Thus, employment can be the by-product of such labour-intensive economic development programmes. Similarly for drought proofing and watershed programmes, one needs to involve gram sabha, social workers, and professional organisations, and focus on building and maintaining the assets created. However many studies show that there was hardly any effort to involve people in protection and maintenance of assets.

Richer states are doing better than poorer states in creating jobs. It makes no sense to run the programme in the labour scarce districts of Kerala, Punjab, Haryana, Himachal Pradesh and the north-east. On the other hand, the upper limit of work guarantee of 100 days should be enhanced to 150 days per household in the poorest 200 districts, with assets such as ponds, bunds, check dams and planted saplings being monitored for at least five years. Rural Connectivity (e.g., village kuchha roads, etc.) form about 19 per cent of total works under MGNREGS. These should be reduced and Water Conservation and Water Harvesting (e.g., farm ponds, percolation tanks, etc) should be increased.

State-wise allocations should take into account the number of rural poor in that state and the prevailing agricultural wages for unskilled work in the off-season, just as in PMGSY release of funds is linked with the number of unconnected habitations in that state and hence states, which have a good road network such as southern and western states cannot ask for more funds. The Central government has often got away with poor performance of the schemes by asserting that implementation is the responsibility of the states. While the administrative problems associated with implementation are well known (such as frequent transfers, poor accountability, irregularities in identifying the beneficiaries, corruption), problems relating to strategy and the very design of programmes are hardly questioned. Unfortunately, many central programmes such as MGNREGS and ICDS have a serious design flaw, besides being tarred by inappropriate policies and a total lack of outcome orientation.

(N C Saxena is Distinguished Fellow, Skoch Development Foundation. The views and opinions expressed in this article are personal and do not reflect the views of INCLUSION.)