Impact of employment programs

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This brief review of employment generation and food-for-work type of

targeting in India paints a fairly bleak picture, and highlights several

problems in implementation. Some of these problems are well known,

such as the importance of appropriate wage setting in affecting screening

effi ciency. In the case of SGRY in Andhra Pradesh, Deshingkar and Johnson

(2003) document that wages were too low in relatively prosperous villages,

leading to the use of migrant labor and machinery, while in poor villages

the wages were much higher than prevailing rates, leading to crowding

out of the really poor. A well-designed scheme of self-selection (without

quantitative rationing) should lead to virtually negligible levels of type

one and type two errors, in that only the really poor would be willing to

work at wages below prevailing rates, and all those willing to work at these

rates would be accommodated. With only quantitative rationing (a ceiling

on total funds available), some needy poor may not be able to access wage

employment leading to undercoverage (a type one error in targeting). In

relatively prosperous villages, with wages set too low, local labor may not

have participated but presumably the migrant poor willing to work at these

wages were a justifi able target, implying little leakage. In contrast, in poor

villages where the targeting was really needed, the higher than prevailing

market wage rates created room for leakage (type two error), with the poor

crowded out by better off migrant workers.

However, problems other than wage setting are of deeper and greater

concern, stemming from institutional and governance constraints, and

magnifying both types of targeting errors. While the government has

sought to decentralize scheme implementation to create greater ownership

of resulting assets, the local level administration and the Panchayti Raj

institutions are strongly susceptible to corruption. This has resulted in

fl agrant violations of government guidelines, including use of contractors

and intermediaries, excessive reliance on labor-displacing machinery,

payment in cash instead of kind, and doubtful quality of the assets created.

Greater reliance on labor-displacing machinery and payment in cash rather

than cash in kind magnifi es type one errors leading to the exclusion from

benefi ts of those who are really poor at the expense of funds diverted to

owners of the machinery and middlemen. Other corrupt practices magnify

type two errors by diverting funds and benefi ting corrupt offi cials and

middlemen who are not the intended benefi ciaries of the program. Thus,

even the most well-designed scheme, relying on self-selection, will fail in

implementation if employment rolls can be falsifi ed, assets shown as created

when they actually are not, and payments made that are below those legally

mandated. Although employment generation using food-for-work continues

to be a critical element of poverty targeting in areas adversely affected, the

leakage of funds, corruption and poor governance result in the impact of

these interventions on poverty being substantially diluted.

Self-employment Schemes – Swarn Jayanti Gram Swarozgar Yojana

(SGSY) and Others

SGSY or the Golden Jubilee Rural Self Employment Scheme is the main

national scheme for rural self-employment and was launched by the

government in April 1999 as a single, holistic program to cover all aspects

of self-employment for the rural poor. The funding of the scheme was to be

shared by the center and the states on a 75:25 basis and a central allocation

of Rs 26.7 billion was provided for the period 1999–2002.