A handout by any other name.

It is the tenth anniversary of MGNREGA, which provides 100 days 'employment' to every rural person who asks for it. Politicians are rushing to take credit for the scheme and abuse each other for not implementing it properly. Over Rs 3 trillion have been spent on the scheme in 10 years and 128.6 million are said to be working under the scheme. It started as guaranteed payment of Rs 100 per day for 100 days and the amount has more than doubled today. Naturally, it is seen as a pure handout by many but for socialists it is a solution to all problems stemming from rural poverty. " While most critics lament the quality of assets created under MGNREGA, there is now increasing evidence based on rigorous studies, which suggest that not only has the asset quality been better than comparable government programmes, they are also used more by the community," writes a professor from JNU. However, he does not give any reference to the said studies or a list of assets created. How many roads were laid, how many bridges built or how many electric poles erected. Then he goes on to give the game away. " Not only has it led to the creation of a class of workers who are using the MGNREGA as a safety net, but these workers are also able to use it as a bargaining tool for extraction of higher wages," he writes. Exactly, it has taken a lot of people out of the rural labor market, raised rural wages, without increasing productivity, and caused food inflation, which is harming the very poor the scheme is supposed to protect. Food prices have been falling globally, grain prices falling by 35% compared to 2011, yet food prices continue to rise at over 6% in India. Why? Two poor monsoons are certainly to blame but the inflation has been worse in rural than in urban areas. High cost of food is contributing to retail inflation of 5.61%. The growth of trading in food is adding to GDP growth, taking it over 7%. Having caused food inflation with one scheme the government is going to announce a food security scheme of Rs 1.30 trillion. Not much point in dishing out wads of cash if there is no food to buy. So the government is going to import vast quantities of food, 2.8 million tonnes of corn, 4.5 million tonnes of oilmeals, 5 million tonnes of lentils and an unknown quantity of sugar. Yet, just a few months back sugarcane farmers were committing suicide because the price had plummeted because of a bumper crop. Spending so much on giveaways means that the government is unable to control its expenditure. Although the RBI has cut interest rate to 6.75% bond yields are at 7.8% because of heavy borrowing by the government. There are calls for the government to allow the fiscal deficit to increase to provide more stimulus to the economy. This is the game that the Congress played and look what happened. Will they never learn?