> ============================================================ > a) NREGS is not helping and is leading to inflation: FALSE > -------------------------------------------------------------------------------- > > a) NREGS is at the outer end a spend of $2.7 billion annually > (assuming everyone was paid $2 per day) - on India's annual GDP of > $1.8 trillion is < 0.15% and this causes inflation how?
Firstly, inflation isn't dependent on GDP, so let's leave that aside. NREGA is 40,000 cr. in 2010-11(see: http://164.100.12.7/Netnrega/mpr_ht/nregampr_dmu.aspx?flag=3&page1=S&month=Latest&fin_year=2010-2011) which is 0.5% of GDP. It is 3-4% of government spend every year, and about 10% of our fiscal deficit. The way it causes local inflation is that it raises wages without appropriate productivity benefits, so they pay more for the stuff available locally (like food or other goods) and that raises prices. What would be better is if wages rose and more food was available to work with the increased buying power, but the productivity benefits even in the long term are very low so this hasn't happened. At a macro level, what NREGA does is deprives farms of labour during harvest season so produce and sowing is lesser - even the agri ministry has complained. http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Archive&Source=Page&Skin=ETNEW&BaseHref=ETBG/2011/07/19&PageLabel=1&EntityId=Ar00100&ViewMode=HTML It's like Air India getting a taxpayer bailout and then undercutting prices so now everyone has to fight against a mammoth, inefficient taxpayer-backed entity. It saves one airline at the cost of the industry. Either ways the data shows us this - food inflation (at the primary articles level) has gone up 13% per year, annualized, since jan 2008. (Data taken from http://eaindustry.nic.in and put into excel and calculated) Last year's economic survey another post on how the metrics work by Atanu Dey, in 2008: http://www.deeshaa.org/2008/01/11/does-the-nregs-cause-inflation/ NOte: The RBI has, in the last six months or so, printed more than 50,000 cr. to buy government bonds, largely because no one else wanted them, and that was because the goverment was issuing too many bonds, to bridge a widening fiscal deficit, of which NREGA is 10%. We effectively offset our populist measures earlier through selling of stock in government companies and 3G auctions and better tax compliance, but today those avenues are gone. > NREGA is not a failure, in fact it's one of the best things to happen > to India of late: > "Once dismissed as a reckless fiscal sop, the scheme is now lauded as > a timely fiscal stimulus." - Economist, Nov 2009 AH yes, like farm loan waivers, oil subsidy, fertilizer subsidy, no tax on agri income, misaligned incentives for housing etc. Or like the RBI printing money like there's no tomorrow. You will always find takers for short term stimulus, the US fed stimuluses, the Indian cut on excise duty and service tax rate, etc. Like loan waivers. The problem with the loan waivers at that scale (75,000 cr?) then was that now, when we havehad a decent monsoon, there are "strategic" defaults by those who can pay but don't want to because darnit there will be a waiver. http://www.livemint.com/2012/02/16161835/Views--The-farm-loan-waiver-c.html?h=A1 > The Economist is as conservative an establishment source as you can > get, and even from the money supply point of view the economists then > agreed that NREGS is a good thing. Now it's another thing that > Economists of one season cannot agree with the economists of the next. You can get economists to agree or disagree about anything :) > b) Farmer suicides are not important, Sainath hypes it up, other > suicides are more important: FALSE > -------------------------------------------------------------------------------- > > If bankers and stock brokers were jumping out of their tall office > buildings in Mumbai, I wonder if you will still make the case that as > a fraction of annual national suicides they are statistically > insignificant and therefore don't need to be paid attention to. I wonder if it'll make a difference if I say "I will". I have, in fact, been very critical of both banking and broking practices, especially the massive frauds in the banking system. Statistically insignificant are all these compared to, say, train accidents in India. > I can quote sources aplenty to attest to the fact that it isn't merely > Sainath who talks about farm suicides: Oh, I didn't mean just PSainath, there are of course enough others. It is not very emotionally nice to say that 16,000 farmers have committed suicide but also 15,000 employees of various sectors, 25,000 housewives, 40,000 other self-employed people, and 20,000 "others" have as well. http://ncrb.nic.in/ADSI2010/table-2.6.pdf Or that 134,000 people have died in road accidents, 24,000 in railway accidents, 20,000 of "causes not known". While it's easy to get outraged about farmer suicides, it seems to me that the suicide incidences (and accidents) in other areas should be just as much of our concern. > These are preventable deaths - rather easily in fact. Stop the > companies that deceive farmers, create alternative sources of > employment in the villages and allow farmers to defer debt repayments > in case of dire economic peril. Well, where they are preventable, they should be prevented, but not by creating NREGA. Roads, water, power, electricity. even if you do an NREGA, it must have an end-date, with stated goals; that way we know how much we are paying and for what. The deferring of debt repayments - it happens anyway, even without loan waivers. Agri loan restructuring is given a wide berth by the RBI. What happens is that these people go and borrow from moneylenders who are not part of the formal system, and the lenders twist arms. The Microfinance world tried to plug that gap but it turned out to have issues (though I think that is the real solution, expanding access to cerdit). Alternative sources of income: in the longer term, you need sustainable sources, which means the guys need to get more productive locally. Give access to formal credit, loosen up land laws, increase connectivity etc are slow, steady and more powerful methods of reducing poverty. > Suicide rates in India are on the rise - up by 2-3% points just in the > last decade. If you think other suicides are more important please > make your case about preventing thoose deaths citing data - however > that still doesn't diminish the importance of tragic economic > performance in certain industries that are leading to direct deaths. Absolutely, the nature of any suicide is tragic and perhaps has enough preventable causes. From the NCRB you are indeed right - I had only looked at data till 2009 when I'd looked earlier, and that shows a dipping or flat suicide rate: http://ncrb.nic.in/ADSI2010/table-2.1.pdf It's now 11.4 per lakh, when it used to be 10.8 or so in 2000. It was in the 9's in the 90s, but much of that was also about how data was collected - standards improved in the 00s. > c) Real wage decreases are always going to happen, this 25% is that: FALSE > -------------------------------------------------------------------------------- > > In your earlier email you said "Real wages aren't falling in India at > all, no matter how you look?" > > I've pointed out reports that indicate that's wrong, there's 25% at > least of the economy that is doing badly. "Real wages" is a macro statement. Even in a company where the average wage is up 10% you'll find some fellow with stagnant income. Let me point you now to reports that can demonstrate, how statistics are like bikinis: Salaries up 12% in India: http://timesofindia.indiatimes.com/tech/careers/job-trends/Indian-salaries-to-rise-12-fastest-in-Asia/articleshow/11979698.cms India struggles to cap wage inflation: http://www.ft.com/intl/cms/s/0/37b742de-7cb4-11e0-994d-00144feabdc0.html Look at the "nominal" wages: http://www.business-standard.com/content/general_pdf/101411_11.pdf ("Real" includes impact of inflation, which is wrong to compare with GDP growth - for the same profession you don't really get more money beyond inflation, you get more money because you do a better job, you use machinery, or you manage people. Sweeper, Mason and Unskilled Labourer don't really come into this picture, and their wages have risen far more than inflation - you can crosscheck) > Not true - this is not a case of some poor performers in the lowest > quartile. You make it sound as if it is the lazy and the ineffective > who are making less money - it isn't. Eekus. No, I say that the distribution isn't fair, and it isn't consistent. It doesn't mean the lazy/ineffective aren't making enough, it means that some people will always be left behind in any given year. > You are attempting to ignore realities by using sweeping > generalizations. Please cite facts to make your case. > > I'm sorry to be so direct - but please show me facts. Oh, I suppose if we're doing link level arguing or using excel sheets, I'm happy to do that - that is my daily bread and I am happy to admit where I'm wrong. I've given you some links, figures and facts; and if we need more data, I'll gather and provide. Some of the aspects I've mentioned have generalizations because that's what it is - the long term effect of NREGA can only be known in the long term, and no amount of "data" will satisfy an observer.
