Jean Drèze is a real piece of work. He writes a “response” to criticism of the NREGS, half of which involves attacking the motives of the critics, and the other half involves admitting to everything that the critics are saying.
In particular, this paragraph is brilliant:
The latest wave of anti-NREGA propaganda in the mainstream media focussed on a draft report of the Comptroller and Auditor General (CAG). This report was highlighted in two successive front-page articles published in one of India’s leading dailies, with headlines such as: “It’s Official: In Poorest States, Job Funds Don’t Reach the Poor.” This statement, and variants of it printed in this article and elsewhere, give a very misleading picture of the CAG report. Indeed, the report does not present any evidence of massive leakages in the NREGA, nor was this the objective of the investigation. The main focus of the report is on the conformity of the programme with the provisions of the Act as well as with the operational guidelines. The report points out, quite rightly, that the guidelines are routinely violated. This applies, in particular, to the transparency safeguards, making the programme vulnerable to leakages.
Quite right. Accurate, but fake. Obviously, the Comptroller and Auditor general is an auditor. His job is not to determine the facts on the ground, but to check whether the internal mechanisms to determine the facts on the ground are followed.
Let me explain with an example. Organizations maintain inventories – of raw materials, finished products, etc. An auditor will not physically visit the factory floors to check if the inventory recorded is correct. He will check for records of inventory. He will check if the policies for periodic inventory-taking are followed. He will try to determine if the checks and balances are adequate and are adequately practised.
If an auditor finds massive gaps in the records, in theory it does not mean that the organization’s employees are swindling it. It could mean that everyone is honest, but a bad record keeper.
In practice, such an explanation would be rightly laughed off. In fact, we would rightly consider the situation to be much worse than what the auditor’s report says. That is because in a company where most employees are dishonest, they could all collude to prepare fake records which are consistent with each other. If the records are perfect, the auditor will never know that the facts on the ground are rotten. This is much more true in non-profit situations than in profit-seeking companies, because it is much tougher to fake your bank accounts or sales revenues.
So, when the CAG says that the average job-seeker gets only 18 days of work instead of 100, we should realize that this is only what the records say. In practice, much of those 18 days will be fake, but consistent records of payments to the poor. So, the situation is likely to be much worse than what the CAG’s report says. It is utterly shameless of Drèze to accuse critics of exaggerating the import of the CAG’s report, and it is utterly shameless of him to say “A large proportion of these funds does reach, and makes a big difference to the lives of, the rural poor.” – with absolutely no evidence, of course.