COMMENTARY

Corruption in the MGNREGS

Assessing an Index
Martin Ravallion

There is corruption in the Mahatma Gandhi National Rural Employment Guarantee Scheme, no question about that. But simple indices that claim to measure corruption and make an assessment of interstate levels of corruption can end up offering us a wrong understanding.

These are the views of the author, and need not reflect those of the World Bank or any member country or affiliated organisation. Useful comments were received from Jean Drze, Rinku Murgai and Dominique van de Walle. Martin Ravallion (Mravallion@worldbank. org) is director of the World Banks research department and is based in Washington.

uch concern has been expre ssed in Indias media about corruption on the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) an ambi tious national effort, launched in 2005, to fight rural poverty by providing unskilled work at low wages and on demand. Of course, corruption is hardly unique to this scheme. However, the fact that MGNREGS is intended to fight poverty adds to the indignation about corruption. The relative performance of Indias states in terms of corruption on the scheme is naturally of much interest. Surjit Bhalla (2012) has created an index of state-level corruption on MGNREGS. He claims an overwhelming presence of non-Congress ruled states in the top half of performance (i e, the states with less corruption). He points specifically to two Congress-led states, Andhra Pradesh (AP) and Rajasthan, which have a high value of his index. To those who have studied MGNREGS, Bhallas claims are surprising at first glance. To most observers (the author in cluded, based on my fieldwork since 2005), the administrative processes in AP and Rajasthan have appeared to be quite good. So too have related perfor mance measures. The gaps between survey-based estimates of participation in MGNREGS and the numbers recorded in the official administrative data are much lower for these states than for India as a whole suggestive of lower leakage although some non-Congress states also do well by this measure, such as Tamil Nadu (Imbert and Papp 2011). The ability to meet the demand for work also appears to be well-above average in AP and Rajasthan, though (here too) there are non-Congress states that also do well (again, Tamil Nadu is an exam ple) (Dutta et al 2012).

We need to take a closer look at Bhallas corruption index to see why it is higher in some states than others. His index is the sum of (i) the participation rate for the non-poor less that for the poor, and (ii) the share of wage expen diture on the scheme going to the non-poor less that going to the poor. So we can write the Bhalla index for state i as: CiBhalla=(PiNon-poorPipoor)+(SiNon-poorSiPoor) Component (i) Component (ii) Here PiNon-poor is the participation rate in MGNREGS for the non-poor (the pro portion of the non-poor who participate), poor Pi is that for the poor, while SiNon-poor and SiPoor are the shares of wage expen ditures going to the non-poor and poor in state i respectively.1 The poor are de fined by Bhalla as those households with consumption per person (as measured in the National Sample Survey for 2009-10) below the Tendulkar poverty lines pro duced by the Planning Commission, up dated for inflation by Bhalla to 2009-10. Confusing Mistargeting with Corruption Let us first consider Component (i). We can all agree that a high participation rate on MGNREGS for poor people, relative to those less poor, is desirable. That is what Component (i) measures. In fact Compo nent (i) minus one is known as the Targeting Differential (TD) in the liter ature, and it is thought to be a relatively good indicator of performance in reducing poverty (Ravallion 2009). The TD for MGNREGS of 0.12 (on a scale from 1 to +1) is not high. (For example, Chinas Di Bao programme a cash transfer pro gramme targeted explicitly to those with income below the (locally-deter mined) poverty lines has a TD of 0.22; see Ravallion 2009.) However, there is nothing corrupt about people living above the Tendulkar poverty line participating in MGNREGS. The Act that created the scheme does not bar those living above any poverty line from participating. Rather it says that anyone who wants work at the stipulated wage rate should get it (up to 100 days per household).
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11% living below the Tendulkar line) may Kerala well be understated by 60 the Tendul kar lines. Karnataka 40 The nationally nonAP TN Unbroken line: Bhalla index using instead the all-India poor in Kerala may Mah 20 Rajasthan parameters for MGNREGS well be considered Gujarat WB 0 poor in Kerala. And it Dashed line: Smoothed should not be forgo scatter plot for Bhallas UP JhK -20 data points tten that MGNREGS is Bihar Orissa -40 MP implemented at the state level. Chhattisgarh -60 The upshot of these 5 10 15 20 25 30 35 40 45 50 55 60 Headcount index of rural poverty (% below national poverty line) observations is that The figure is based on Bhallas (2010) estimates for all data, based on the NSS many factors influence Employment-Unemployment Survey for 2009-10. (Bhallas estimates differ slightly from those in Dutta et al (2012) due to a difference in how the Tendulkar poverty lines were participation in a applied.) AP = Andhra Pradesh; Jhk = Jharkhand; MP = Madhya Pradesh; scheme such as the Mah = Maharashtra; UP = Uttar Pradesh; TN = Tamil Nadu; WB = West Bengal. MGNREGS, besides the The self-targeting mechanism of a average consumption of the family rela scheme such as MGNREGS tends to mean tive to the Planning Commissions na that families with a relatively high tional poverty line. That does not mean consumption will be less likely to want the scheme is corrupt in any meaning to do this kind of work at low wages. ful sense. Nor should Bhallas calcula But some people in families above the tions convince us that there is a very poverty line may still want the work. large amount of leakage to the nonFor example, they may have been hit by poor when we allow for defensible, a shock that will lower their incomes, broader, concepts of what it means to but this is not yet evident in their con be poor. sumption (possibly thanks to the Maybe Bhallas numbers are just scheme). Or the family as a whole may remin ding us of the limitations of meas have a consumption- expenditure per uring poverty by a households current person above the poverty line, but one consumption per person. There is no individual in the household needs help doubt that consumption is hugely impor from the scheme. tant to economic welfare in India, but it There is unmet demand for work on can never claim to capture everything MGnREGS, as shown in Dutta et al (2012). that matters to welfare, and that This creates scope for corruption through matters to participation in a scheme the power of local officials to decide who such as MGNREGS. gets work and who does not. However, using the same NSS round as Bhalla, What Then Is Driving Dutta et al show that, on balance, the the Bhalla Index? rationing process on MGNREGS generally We have seen that there are good rea favours the poor, not the non-poor. Of sons to question the relevance to corrup course, there are some local exceptions tion of Component (i) in Bhallas index. to this generalisation. But overall it is However, it turns out that this compo the non-poor who are more likely to have nent is not what is driving his index. unmet demand for work on MGNREGS. Indeed, it is easily verified that if there There are undoubtedly important were no differences across states in the relative-poverty effects relevant to all TD then one would get pretty much the these calculations. The Tendulkar lines same values for his index. The correla were designed for making consistent tion coefficient between Ci Bhalla and the interstate comparisons nationally. So Bhalla index one would obtain if the TD they try to adjust for cost-of-living differ was identical across all states is 0.98. ences between states, but not differences Observant readers of Bhalla (2012) in relative poverty. What it means to be may have already the main clue to what poor in a state such as Kerala (with only is really driving the interstate differences
Figure 1: Bhallas Corruption Index Plotted against the Rural Poverty Rate
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in his index, namely, its high (negative) correlation with the poverty rate (r =.92). Figure 1 plots the Bhalla index against the rural poverty rates across states (using Bhallas estimates). Judged by Bhallas index, corruption on MGNREGS is pretty much a measure of lack of poverty! In fact this correlation is not surpris ing when we look more closely at the in dex. Consider now the second compo nent, which is simply 100 2Sipoor. By definition we have: Poor P Poor WiPoor Si = Hi. i . Pi Wi

Bhallas corruption index for MGNREGS

( )( )

Here Hi is the headcount index of poverty in state i, Pi is the participation rate in the programme for the population as a whole, Wipoor is the average of the wage earnings from the scheme received by poor participants, and Wi is the overall average for all participants. As we have seen, the participation rate for the poor is greater than that for the population as a whole. This is true in every state. While Bhalla does not give the wage ratio (the last term in parentheses in the above equation), it is possible to back it out from the numbers he does give. The wage ratio for India as a whole is 0.90, and it does not vary much across the states either. And the wage ratio turns out to be negatively correlated with pipoor/Pi (r = 0.64). So the two effects in parentheses are partially offsetting each other. The main thing driving the differ ences between states in the share of wage expenditure going to the poor is thus the poverty rate; the correlation co efficient between Sipoorand Hi is 0.89. As one would expect, the states with a low share of wage expenditure going to the poor when judged by a common national poverty line are by and large the states with low poverty rates. Figure 1 also gives the value of the index for each state if MGNREGS had the same performance attributes as the all-India parameter values reported by Bhalla. Then the only reason for differ ences in the index is the poverty rate, and the index declines smoothly with the latter. By comparing this version of the Bhalla index with his original we see something new: the scheme is

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actually working to bring down his in dex in poorer states, relative to what one would expect if the scheme worked ex actly the same way everywhere. While this is not a message Bhalla found in his data, it is there. It is not the fact that AP and Rajasthan are led by the Congress that leads to a high value of Bhallas corruption index, but their lack of poverty relative to other states. As is clear from Figure 1, his index is not in fact any higher, or lower, for AP

and Rajasthan than one would expect, once one controls for the poverty rate. There is clearly corruption in MGNREGS, as in many public programmes, and in countries at all stages of develop ment. But let us not pretend that Bhallas index has taught us anything credible about that problem.
Note
1 I write the index the way Bhalla describes it. In his table he multiplies it by minus one, but this is potentially confusing so I will not do so here.

References
Bhalla, Surjit (2012): No Proof Required: Corrup tion by Any Other Name, Financial Express, 4 February. Dutta, Puja, Rinku Murgai, Martin Ravallion and Dominique van de Walle (2012): Does Indias Employment Guarantee Scheme Guarantee Employment?, World Bank. Imbert, Clement and John Papp (2011): Estimating Leakages in Indias Employment Guarantee in Reetika Khera (ed.), The Battle for Employment Guarantee (New Delhi: Oxford University Press). Ravallion, Martin (2009): How Relevant Is Tar geting to the Success of the Antipoverty Pro gramme?, World Bank Research Observer, 24(3): 205-31.

Turmoil in Syria
Prelude to Wider Battles in the Arab World
Sukumar Muralidharan

The Syrian civil war is not merely about that country any more. If it continues for any further length of time, it could draw in virtually every country of consequence in the wider region. In this, it could well be the prelude to a civil war involving the entire Arab world. And that would be potentially a fatal challenge to the key principles of western geopolitics in the region: to keep Iran out, Arab nationalism down and Israel on top.

Sukumar Muralidharan (sukumar.md@gmail. com) is a freelance journalist based in New Delhi.

n early February of 2012, the United Nations Security Councils effort to stamp its approval on an Arab League peace plan for Syria foundered on the dual veto of Russia and China. Fears were freely expressed that Syria was sliding towards civil war. Using terms rarely heard in recent diplomatic exchanges, the US ambassador to the UN vented her disgust at the collusion of two global powers in the Syrian blood bath. The US Secretary of State Hillary Clinton denounced the stance of the two Security Council recalcitrants as a trav esty. Freedom-loving people every where, she declared, should join the effort to sustain and arm the Syrian lib eration struggle. By the standards of the last two dec ades, this has been a rare moment of dis cord among the Security Council gran dees. Yet, the breakdown of the oppres sive consensus that allowed the US and its allies to interpret every UN resolution in a manner of their convenience was long foretold. Estimates of the number of casualties caused by the year-long turmoil in Syria, even as the Security Council broke up in acrimony, stood between 6,000 and 7,500. Of these, between a quarter and a fifth were thought to have been from the

ranks of the state security forces. It was disproportionate warfare, but not quite as bad as the US war in Iraq, which has killed just under 5,000 US servicemen, while claiming upwards of a hundred thousand Iraqi civilians, not to mention an untold number of those who could be classified as insurgents. Yet the grim statistics from Syria would establish that civil war is very much the accomplished reality there, not merely the potential outcome of a failure to intervene. A Conflict without Witness Syrias civil war is a conflict without wit ness. Information has been sporadic and images sparse, allowing no basis for a considered judgment. The global com munity sees images of a country in tur moil with ordinary people fearful for their lives and no longer sure of their daily routines. The dominant global nar rative puts this down to the desperate effort by the Syrian regime to suppress a wholly legitimate upsurge of political protests. Harsh repression has turned a peaceful mass movement into an urban guerrilla operation, with poorly organ ised but highly motivated groups of partisans seeking to bring to account the seemingly eternal dictatorship of the al-Assad dynasty. Inured to a high degree of control over citizen loyalty and having for long trusted in repression as a fair alternative to widening the circle of consent, the alAssad regime for its part has responded to the new realities by striking heavy hammer blows at civilian centres, often targeting entire urban populations for collective punishment, as in the city of Homs. The strategy has served the regime
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