Work to tide India's rural poor over

India guarantees temporary jobs for its poorest citizens to keep them earning in the summer, in a scheme that is helping to improve their lives. But the programme is troubled by corruption and some political apathy.

Women work at a brick kiln in Digha village in Bihar, which is one of India's worst performing regions in the jobs programme.

DEODAHA, INDIA // In the summer heat, a dozen men in dirty loin cloths and women in frayed saris work with spades and ploughs to shovel earth into containers, then dump it out to level off an adjacent dirt track snaking through their remote village.

The muddy road they are building in the Indian state of Bihar may not survive the annual monsoon and floods that maroon this eastern state almost every year. But such work has critical significance in the summer, providing an alternative livelihood to villagers, mostly subsistence farmers and labourers, who usually leave their scorched farms to search for work. The roadwork is part of the Mahatma Gandhi Rural Employment Guarantee Scheme (MGREGS), an ambitious anti-poverty programme launched in 2006. The scheme guarantees 100 days of employment to a member of each rural household.

"Before this scheme, in the summer there would be no farming, no work, no food," says Sunita Beend, one of the labourers. "My children would go hungry." The scheme is central to government efforts to spread the gains of India's economic boom. Much of rural India, home to two thirds of the population, has not felt the benefits of the high-tech economy. Last year, despite concerns of a growing fiscal deficit, the government announced it would spend 390 billion rupees (Dh31.4bn) on the scheme, a 144 per cent increase from the previous year.

This year, the budget has been increased to 401bn rupees. Much of the increase went to raising the daily wage to 104 rupees. In 2006, the daily wage was 65 rupees. Since its launch in all of India's 621 districts, the scheme has provided jobs to 50.6 million households, including the poorest and most socially vulnerable groups, generating 2.63 billion days of employment. But critics warn this huge social scheme is being weighed down by poor governance and corruption.

A report released last month by an Indian parliamentary committee said the scheme was barely able to meet half of its objective. In the latest fiscal year, it provided only 51 days of employment on average, only a slight improvement on the previous year's 48 days. Bihar, one of India's poorest states, is also one of the regions that are the worst performing in the jobs programme. The scheme has barely scratched the surface of poverty and only 10 days of employment on average is provided around the state, says Jean Dreze, a development economist based in New Delhi who recently travelled around the state.

Of the 4.1 million projects undertaken to February this year, only 1.6 million could be completed. The report also notes not all members of rural households who hold job cards, which are provided to all applicants, were given work. More than 65 per cent of those with cards could not find work. Those who did were not employed for the 100 days. "It is not a fact that sufficient funds are not available for MGREGS," says BK Sinha, the secretary of the department of rural development. "There is no limit for the budgetary demand."

The failure to provide 100 days of employment shows how the scheme is plagued by weak management and corruption. In several cases employment registers were falsified and money embezzled by officials. Aid workers demand employment registers be made public to discourage the faking of muster rolls. CP Joshi, the rural development minister, plans to appoint ombudsmen in districts monitored by professional agencies to make audits as transparent as possible.

Mr Joshi also stressed the need to tackle late payments and introduce a system to deal with complaints. But Abhijit Sen, a member of India's planning commission, notes there is much less corruption in the scheme these day due to improved oversight. Last year, 100bn rupees allocated for jobs remained unspent due to discipline in implementation. Despite its flaws, the scheme is widely credited for lifting the wages of farm workers and their bargaining power in the labour market.

Before the scheme came to Deodaha village, villagers had no option but to accept unfavourable terms from landowners. For Ms Beend, a landless farm labourer, that meant she would get only one of the 12 sacks of rice she cultivated in a village landlord's paddy farm. "After MGREGS, I negotiated one for every eight," she says beaming. "Now the landlord is well aware that I have another source of income."

A third of all the scheme's jobs are reserved for women, and their participation rose to 50 per cent in the latest year. The participation of other marginalised sections of Indian society, such as the scheduled castes and tribes, also rose, by 52 per cent in the same period. The rural employment scheme was praised by a UN report released in February as being more effective in battling poverty than the government's other social initiatives, such as the below poverty line (BPL) cards, which are more selective.

Under the food distribution system, each BPL family is provided with 35kg a month of subsidised rice and wheat. The jobs programme "is much more value for money than targeted schemes like BPL cards", the UN said. "It does not entail identifying the poor and is more universal for whoever wishes to take up a job." [e-mail]

Budget funding India's budget for the current fiscal year has increased funding for the programme to 401 billion rupees (Dh32.29bn). Rural benefits A study of rural markets ­commissioned by the Rural Marketing Association of ­India and conducted by MART, India's rural economy has not been affected by the global economic slowdown. Market demand The rural consumer market, which grew 25 per cent in 2008 when demand in urban areas slowed due to the global recession, is expected to reach US$425bn (Dh1.56 trillion) this year with between 720 million and 790m consumers, according to a white paper prepared by CII-Technopak. That would be more than double the size of the 2004-2005 market of $220bn. Market growth The rural market is seeing a 15 per cent growth rate, the study showed. Sales of so-called fast moving consumer goods are up 23 per cent and telecommunications sales are growing at 13 per cent. Retail market The rural retail market is estimated to be worth $112bn, or about 40 per cent of India's entire $280bn retail market, according to a study by the Associated Chambers of Commerce and Industry of India.