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LATEST NEWS UPDATES | World Bank calls NREGA a stellar example of rural development

World Bank calls NREGA a stellar example of rural development

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published Published on Oct 10, 2013   modified Modified on Oct 10, 2013
-The Economic Times


NEW DELHI: For the beleaguered UPA government, here are some words of praise. The flagship rural employment guarantee scheme has comes in for praise from the World Bank, five years after it described the programme as "policy barrier" to economic development and poverty alleviation.

The World Development Report 2014 has described the Mahatma Gandhi National Rural Employment Guarantee Act as a "stellar example of rural development". At the heart of the World Bank's endorsement is the direct cash transfer (to bank and postal savings accounts) component of the rural employment programme.

NREGA has been described as the perfect example of government to person payments. "In 2008, India's National Rural Employment Guarantee Act made more than 45 million payments to poor people living in rural areas. People can receive their G2P (government-to-person) payment from post office saving accounts, bank accounts, and village officials".

The latest edition of the World Bank's annual report credits the government's flagship rural employment programme for not just unleashing a "revolution in rural India" but establishing a model of inclusive development. "India's Mahatma Gandhi National Rural Employment Guarantee Act illustrates how good governance and social mobilization go hand-in-hand," the Bank's report states.

"This law creates an entitlement of 100 days of unskilled employment per year, at minimum wage, to all workers in rural areas who demand it. The law also provides for social audits and redress of grievances," the report states, while noting that the programme served as an instrument of providing a safety net for the poor.

"One of the key achievements of the Mahatma Gandhi NREGA has been that it has provided the rural poor with a safety net during times of adversity such as droughts, floods or a failed harvest. Demand for work is massive, mostly from poor and disadvantaged groups, and at times of the year where no other work is available. Not only does the programme offers a useful safety net, but it also helps spread awareness of rights and promotes dignity. The most significant aspect which makes the Mahatma Gandhi NREGA stand out as an employment creation and poverty alleviation scheme is the fact that work is provided as a legal right and not just a one-time scheme," states the report. This is a complete about turn from the Bank's earlier assessment.

The 2009 edition of the World Development Report described the rural employment programme as a "policy barrier" which was hurting economic development and poverty alleviation. At that time, the Bank had argued that programmes like NREGA impede internal mobility. The World Bank was of the view that internal mobility to be necessary, as "lifting people out of poverty requires shifting populations from villages to cities". It maintained that the process of migration should be encouraged.

For its part, the government has consistently stressed the importance of the programme as an instrument to prevent the rural to urban migration, an area in which it has registered a level of success. The World Bank's change of heart can be attributed to the programme's model of financial inclusion worthy of emulation, especially the manner in which the wages are directly transferred into the bank accounts of the workers.

"To promote financial inclusion, the government can lead by example through innovative practices. An interesting case is India's NREGA, which has improved outreach to poor people living in rural areas through the introduction of government-to-person payments using a bank account," the Bank says.


The Economic Times, 10 October, 2013, http://economictimes.indiatimes.com/news/economy/policy/world-bank-calls-nrega-a-stellar-example-of-rural-development/articleshow/23850985.cms


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