A very insightful interview with Kalpana Kochar, the Chief Economist for South Asia at the International Monetary Fund (IMF). She tackles the employment schemes and also the abysmally low levels of nutrition in India.
Are job schemes, such as NREGA, are causing labour shortage ?
All I have are these anecdotes where everybody complains that they can’t get people to work in the farm. We don’t know the full extent of what is happening. I suppose it is true.
The other thing I hear is even though NREGA covers a smaller group of people, there is a spillover effect with others not wanting to go for work pushing up wages, or not wanting to go to work at lower wages. In terms of the scheme providing a security net for around 500million people, I think it is a good thing. It would be even better if it came with training and skilling people.
Do you think NREGA raises income and adds to inflation?
How do you argue with somebody who thinks it is wrong for people who didn’t have any money earlier to now have some disposable income? That can’t be wrong. That can only be a good thing. There is a lot of evidence that consumption is growing in rural areas. Problem is on the supply side.