Is India Rural Poor Employment program contributing to high Gold Prices?

Last updated on: March 5, 2012 at 4:58 am by Desh Kapoor

Is India Rural Poor Employment program contributing to high Gold Prices? 2012-03-05T04:58:17-06:00 Desh Kapoor

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Ironically, the money set aside for the poorest of the poor in India – in Billions of Dollars – could very well be contributing their bit to high Gold prices in the world!

We have talked a lot about the level of plunder that has been orchestrated by the Rural Employment Program named as Mahatma Gandhi National Rural Employment Gurantee Act (MNREGA) in several articles – India Budget Special: Poverty Programs – the ideal tool of National Plunder! / Quantum of Corruption Money Earned by Public Officials – buut somehow the information on the extent of plunder by the Government seems to get worse and worse!

An article by Surjit Bhalla reveals 5 facts about the scheme, which are simply mind blowing!!

Fact 1: Sixty per cent of the beneficiaries are non-poor.

Fact 2: The non-poor receive 17 per cent more workdays than the poor.

Fact 3: The MGNREGA non-poor are in the top third of the consumption distribution of rural Indians — at the 66th percentile compared to the 14th percentile for the poor beneficiaries. The poor who do participate are right in the middle of the poverty distribution, so at least this aspect of the programme is working well. Presumably, they are also doing whatever work is being done. It is unlikely that someone belonging to the top third of the distribution is indulging in desperate backbreaking work for low wages.

Fact 4: The expenditure patterns of the poor and non-poor beneficiaries are revealing. The poor spend Rs 62 per household per year on jewellery. The non-poor MGNREGA beneficiaries spend close to eight times that amount, or Rs 487 a year. For the MGNREGA non-poor, fully 14 per cent goes towards purchase of jewellery, compared to only 2 per cent for the MGNREGA poor.

Fact 5: On an all-India basis, some Rs 8830 crore were paid as wages to the MGNREGA non-poor; and some Rs 1260 crore went towards jewellery purchases.

Worth looking at are the Facts 1 and 5.

The Indian tax payer is seemingly financing roughly $260 million Jewellery Purchases under this scheme which is ostensibly billed for the “poorest of the poor”. No wonder, the Gold prices are so high.

I understand that Bhalla’s analysis is statistical based on proportions of expenditure basket of the group the money goes to. I also understand that my question may be rhetorical in the title of this post. But the level of plunder that is orchestrated by this scheme by the UPA Government is NOT.

It doesn’t matter what the money is being spent on, but the money isn’t going where it should. It is probably doing worse than fueling World’s Gold Prices – its fueling India’s runaway inflation and bankruptcy.

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