On Wed, Feb 22, 2012 at 6:09 AM, Deepak Shenoy <[email protected]> wrote: >> ============================================================ >> 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.
GDP is useful to point out the scale of money in the economy, and the tiny amount that NREGA/S is adding to the pool. > 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. Citing from the numbers per your link: # It is only 74.57% of the planned government outlay - i.e. 25% of the target audience doesn't know how to obtain the funds. # Wages are only 68.36% of the used budget, or 5 Billion USD - i.e. 0.28% of GDP # If the allegations of corruption are to be believed then only some smaller sum than $5 Billion is being handed to the poor # Mukesh Ambani with a known personal wealth of $22.6 Billion could run the NREGA for 3-4 years on savings - i.e. he has 2-3 times more money than 42 million Indian households put together earn in a year. Most of the West is presently discovering that social programs need money that they don't have, but then again LATAM discovered this in the 80s. India at least still has money for social programs - so it's completely minor in the global context. Even if one believes that merely adding $5 Billion to the rural economy can cause a 13% jump in food inflation, which I don't then it is a scathing criticism of the income inequalities in India - the money is going directly towards food - these are people who are otherwise starving. These 42 million households are not at all like the gentlemen of Aurangabad (and it was gentlemen, not a single woman was present), who ordered 148 Mercedes Benz automobiles together at a reduced 7% (instead of the usual 14% for tractors) interest rate courtesy SBI. Not to be outdone, some other gentlemen, also of Aurangabad, and again only gentlemen, decided the German economy needed a further boost and booked 101 BMWs on the same day. http://www.wheels.ca/reviews/article/791929 http://ibnlive.in.com/news/101-bmws-booked-in-one-day-in-aurangabad/135579-3.html -------- Article 47 in The Constitution Of India 1949 47. Duty of the State to raise the level of nutrition and the standard of living and to improve public health The State shall regard the raising of the level of nutrition and the standard of living of its people and the improvement of public health as among its primary duties and, in particular, the State shall endeavour to bring about prohibition of the consumption except for medicinal purposes of intoxicating drinks and of drugs which are injurious to health -------- I don't see any mention in the constitution of a duty to create more Billionaires, or luxury car owners. > > 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 I don't know when you joined the list, but I was making the case a little earlier in this very thread that the world doesn't truly want to eradicate poverty - http://groups.yahoo.com/group/silk-list/message/37546 It's laughable that we have so many intellectuals, academics and economists pontificating about the usefulness of the NREGA while the idiots of Aurangabad get column inches of praise. If there aren't enough laborers in the villages during harvest season that is truly good, NREGA is pushing up the local wages, and helping the poor to fight established brokers and middle men who keep wages low and exploitative. The weasel words of the article are amazing - the newspaper story is sketching a controversial plan to subvert the law of the land, and it doesn't merit an investigation? > 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. Air India has been looted, raped and pillaged beyond reason - now like an old whore it is dying of disease and infecting everyone else. > 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. This again goes back to my original point that Singh and Co are in love with the western way of doing business and don't really show enough caution. Kids running with scissors. > 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 How many of the Aurangabad brigade will pay back their subsidized loans do you think? These are politically connected crooks who will likely walk out of the loan the same way they got the half price loans in the first place. Our banking system needs to be fixed. The problem isn't NREGA. > You can get economists to agree or disagree about anything :) True that... > 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". And 50,000 people globally die of poverty every day too - the profusion of sadness and loss does not mean we stop solving them. Solve rural poverty or at least let's not undermine attempts that help. > 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 end date is when people don't turn up for the meagre wage and back breaking labor because there are better options available to all. I don't have a problem with improving NREGA to make it more accountable, manageable and all that. It is important to give it a chance to succeed. > 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). Farmers make money once or twice a year during harvests, and then need to spend the money wisely during the rest of the year without spending it all on a wedding or feast. They are trapped between two lifestyles - one that wants to continue the traditions and ways of the past and one that wants to live in the selfish individuality of the future. There are deep sociological issues here that a country of the east like India embracing the economic ways of the west needs to consider. Carlos Fuentes wrote a lot about his home country Mexico in the context of living next to the large successful North American neighbor, India would do well to find its Fuentes. >> c) Real wage decreases are always going to happen, this 25% is that: FALSE >> -------------------------------------------------------------------------------- [...] > 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. And I say that it is wrong to throw up our hands when there is much that can be done. [...] > 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. Thanks, it makes for meaningful discussion and debate. > 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. Again, I point to Article 47 - India has a duty to do this.
