Monday, August 22, 2005

India's Employment Guarantee Scheme

Poverty is the biggest problem facing 3rd world countries like India. Like almost all governments in these countries, in India too, rhetoric & populism always triumph over practical sensible approach to poverty alleviation. Thus, true to tradition, Indian's coalition government has come up with the idea of providing guaranteed employment to the rural poor (Here is another take on this). If this smacks of long buried communist socialist ideology of yore then this is because it is. If 50 years of India's experimentation with socialist model should have taught us anything then it is that free lunches do not work. How is government going to create those millions of promised jobs out of thin air is anybody's guess. What is really going to happen is, most of the money is going to end up in the coffers of corrupt officials, and whatever is left will go as "salary" for non-existent jobs, thus hardly contributing to any meaningful sustainable employment. It is a pity that we have two of the most brilliant economists heading the government and the ideas they come up with are these socialist nonsenses. They really do not have to look far to find ideas that work. A cursory look upwards towards Beijing or Shanghai is enough to find a model which will assuredly provide much needed employment to millions. India needs to open up its economy more to let retailers and manufactures come in, bring billions of dollars into the economy & give it a much needed boost. Software and outsourcing industries can provide jobs only to high skill english speaking graduates. Inspite of all its hype, this industry provides jobs to only close to a million people out of a potential workforce of 300 million. Manufacturing and retail companies require a large number of low-skilled, low wage people to work at their factories & stores thus automatically creating jobs for low-skilled semi-literate people. If Indian government can just let free market work & get out of the way then those jobs will be accessible to millions of Indian poor. That will be a real "employment guarantee."

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