News just in – even Rahul Gandhi feels that the Sonia Gandhi flagship in the name of the poor programme

, the National Rural Employment Guarantee Scheme (NREGS), needs better monitoring and review. This is a movie several of us have seen several times before. Indeed, it was the UPA government that along with the NREGS programme, brought with it the slogan of "Outlays and Outcomes". Unfortunately, the buck stops at Outlays.

But what is wrong with the NREGS? Worst case, surely it is just a cash transfer program. Indeed, the Finance Minister and others have described it as such. A booming economy and inclusive growth (desirable objectives) both demand a significant amount of redistribution to the poor.

But two questions need to be answered: first, are cash transfers the best way to help the poor; second, how effective have employment schemes been in providing jobs, and transferring incomes, to the poor. Considerable debate has occurred on the desirability and efficacy of cash transfers. There is the traditional conservative view that cash transfers are bad - better to teach a woman to fish than to give her fish. This view, while acceptable in principle, may be significantly outdated in today's world. In particular, this view assumes that cash transfers will "spoil" the recipient; that she will drink all the cash away and won't have anything left to buy a fishing rod. In my view, this liberal conservative view is out of tune with reality, condescending and arrogant. The view presumes that the poor are a special breed of people who after consuming a minimal amount will be satisfied. It assumes that the poor are not ambitious for themselves or their children; that they don't want to take the cash transfers and invest in the education of their children. It assumes that the poor do not have red blood. This view is wrong.

Surely the correct policy is to find a mechanism of transferring incomes to the poor in an efficient manner. The NREGS does not appear to be such a policy. Unknown to many cocktail liberals, employment guarantee programs are as old as India itself, with the first formal scheme having started in 1973 in Maharashtra. In 2004/5, the year before the start of the NREGS, the government of India was spending some Rs. 11068 crores on various employment schemes.

There is some outcome monitoring data for that year. The National Sample Statistical Organization (NSSO) conducted a large survey (more than 120,000 households) in that year and an explicit question was asked as to whether an individual had worked in a government work program. The answers are revealing - the survey suggested that 26 crores mandays of work were generated in 2004/5; of this, poor individuals got work for only 13 crores. The Government (Ministry of Rural Development) claims that jobs created, via its employment programs, were 93.5 crores.

There are thus two outcome problems with jobs programs for 2004/5. First, there is "missing work" of close to 72 percent i.e. 72 percent of Government claimed job creation is, like the invisible hand, nowhere to be seen. Second, there is missing work for the poor. These jobs are meant for the dirt poor; yet half of the food for work beneficiaries are not poor. Surely, there is less leakage, even including leakage in alcohol, with cash transfer programs.

It is wrong, therefore, to conclude that NREGS is a cash transfer program and therefore if leakages are there, such leakages are "desirable" because the accrual is to the poor. This is the politician apology for what is manifestly a scheme tailor made for guilt-less corruption. An alternate, and more realistic view, is that the NREGS is a scheme to benefit political functionaries and supporters. The leakage is most definitely not to the poor or even the near poor. While the above data pertain to the period before NREGS, the new NREGS data, at least as examined by the government's own auditors, confirm the old pattern - not much reach to the poor, and when there is reach, the poor have to pay the administrators for getting the job card.

How long can this corruption go on? A resident of India, hardened by years of cynicism, will say forever. I am more optimistic. With globalization, a new set of checks and balances have arrived. Information travels fast, and reporters are in constant search of a juicy, corrupt story. The very fact that the pet and ill-thought program of Ms. Sonia Gandhi has received so much criticism from even members of her own party suggests that such blatant examples of corrupt programs have a half life of just a few years. In a few years, the NREGS will deservedly find its rightful place in the dustbins of history.