According to the World Bank, almost 30 per cent of theIndian population is living on less than $1 a day, and thepercentage of rural poverty is likely to be much higher. Whilethere have been many attempts to combat poverty, their limitedsuccess implies that we need a new and innovative strategy.The National Rural Employment Guarantee Act may be justwhat we need. It certainly has the potential to improve thelivelihood of millions of rural poor, but the Government musttake some steps to ensure that this programme does not becomeyet another chapter in India's history of unfulfilled promises.A National Rural Employment Guarantee Act whichguarantees 100 days of employment to every household couldgo a long way in reducing rural underemployment, animportant contributing factor in rural poverty. Some critics,such as Surjit Bhalla, point to the official rural unemploymentestimates of less than 3 per cent in 1999 to support the claimthat rural unemployment is not a serious concern in the contextof rural poverty.But such an argument is clearly flawed. First, it overlooksthat these statistics are misleading, as there is significantdisguised unemployment due to low workforce participationrates and chronic underemployment during slack agriculturalseasons. More significantly, as studies of the MaharashtraEmployment Guarantee Scheme have documented,participation in such schemes does indeed replaceunemployment.