MUMBAI - In a major embarrassment for the government, the Comptroller and Auditor General of India (CAG) has sharply criticized the country's US$4.5 billion National Rural Employment Guarantee (NREG)project as a corrupt, inefficient exercise doddering along on fudged data.
The preliminary findings of the report have big political implications for the central government still unsure if it will last its full five-year term until May 2009.
The NREG, the flagship anti-poverty scheme launched in 2006 by the ruling United Democratic Alliance (UDA), operates in 330 rural districts. Finance Minister Palaniappan Chidambaram granted an additional $1 billion to the program in December 2007 to enable it to cover the entire country later this year. The scheme is the largest of its kind in Asia, if not the world.
Prime Minister Manmohan Singh, when he inaugurated the program in February 2006 in Anantapur district, Andhra Pradesh, described NREG as a "landmark in our history in removing poverty from the face of the nation". Stakes are high for the program to succeed, but the CAG preliminary report suggests it is actually creating historic landmarks in political and bureaucratic corruption.
The Ministry of Rural Development is in denial, claiming that NREG is in good health, with its latest data saying it provided 25.4 million jobs out of 25.8 million households who demanded work under the scheme.
The Rural Ministry said it shared the CAG data with the state governments for discussion before the report was finalized, but was worried enough to call a meeting of the state rural development secretaries on January 17 to discuss the CAG report findings.
"The NREG program is shocking and disastrous in its scale of corruption," an angry Parshuram Ray, director of the New Delhi-based Center for Environment and Food Security, told Asia Times Online. "Over 70% of the funds have been looted and the program has made little impact to rural people at the ground level. And now the government refuses to accept the findings of its own auditors."
Ray admitted to being so upset at the large-scale abuse of taxpayers' money that he shouted at Rural Development Minister Raghuvansh Prasad Singh during a TV discussion on the controversy in a leading English news channel, NDTV.
Ray, talking to Asia Times Online while touring rural districts of Maharashtra state in western India, alleges that many non-governmental organizations executing the program are also guilty. "They [NGOs] get NREG program funds for creating awareness and so on and the most shocking part is they have become part of the corruption. We have filed a public interest litigation in the Supreme Court and a hearing is due on January 20."
If NREG flops, the ruling UDA risks getting booted out of power much as the previous National Democratic Alliance did for ignoring India's rural poor, even as the NDA unsuccessfully chest-thumped through the last election campaign on an "India Shining" theme. Shuddering at a similar fate, the government hurriedly unleashed NREG as its supposed multi-billion trump card.
The rural employment scheme, enabled by parliamentary legislation to be called the National Rural Employment Guarantee Act, promised one adult member of every rural family a maximum of 100 days employment every year at wages not below 60 rupees ($1.50) a day.
The six-month internal central government audit of the program says the NREG Act barely covered 3.2% of the registered households in the financial year between February 2006 and March 2007; in other words, NREG failed to deliver to 97% of intended beneficiaries. The report covered 513 sample villages across 68 randomly selected districts in 26 Indian states.
The NREG scheme was to provide employment through rural development works such as water conservation, irrigation, flood prevention and road construction. But the CAG findings, first exposed by the English news daily Indian Express, highlights corruption, including payments to people already dead and for non-existing work.
Rural poverty is the looming dark side of the "India Rising" economic story, and agriculture comprises 18% of India's gross domestic product; 65% of India's population live in villages, and the agriculture sector is facing critical challenges, such as from cheaper imported farm produce as the Indian economy has opened to global competition.
India's growing agrarian crisis has also been attributed to farmers being lured to give up traditional farming methods and use expensive genetically modified seeds, such as the controversial Bt cotton seeds, pesticides and fertilizers, with disastrous results.
Successive Indian governments have failed to execute land reforms to enable small farmers to own tilling land. NREG ignores these core issues. More damningly, NREG has not stopped indebted farmers killing themselves. Over 10,000 cotton-growing farmers have committed suicide since 2004 in Vidharba district, Maharashtra, due to individual debt sometimes amounting to $250. Over 100,000 farmers have killed themselves since 1993, a number acknowledged in Parliament by India's agriculture minister, Sharad Pawar.
"The NREG program is the biggest governmental rural programme in the world in recent times but has not made any impact on farmer suicides," Kishor Tiwari, president of the Vidarba Jan Andolan Samiti, told Asia Times Online.
Tiwari's organization, based in Maharashtra's winter capital Nagpur, is an activist group working for the distressed farmers in Vidarba. "There is 90% corruption in the NREG program benefiting mostly contractors with fake muster rolls," alleges Tiwari, who also believes that the basic programme structure is flawed. "Farmers are not used to constructing roads and buildings and it is no use offering them such work."
Tiwari says Manmohan's visit to the suicide-stricken Vidarba region in July 2006 has made little beneficial impact. Manmohan, at present in China on an official visit, had declared a $954 million relief package on July 1, 2006, but debt-tortured farmers saw little of it. Nearly 2,000 farmers have killed themselves since the prime minister's visit, says Tiwari.
Even as the NREG report made headlines, six farmers killed themselves in the Vidarbha region on January 10 and 12. In Bothbodan village, 18 farmers have committed suicide in the past 18 months. All 400 families in the village are in debt, according to a news report in south Indian daily The Hindu on January 13, and each family is threatened with a suicide.
The Indian government's lackadaisical approach to agricultural problems is best exemplified in Agriculture Minister Pawar finding time to be president of the Board of Control of Cricket in India. A minister handling one of the three most important portfolios in the union cabinet moonlighting as a busy sports administrator and frequently traveling abroad to see cricket matches might have been cause for scandal in some other countries, but not yet in India. Worse, Pawar's home state is Maharashtra, the epicenter of farmer suicides in India.
Besides discrepancies in governmental data and the findings of country's most senior governmental auditors, disturbing independent reports allege looting of public money made available through NREG.
The Center for Environment and Food Security, for instance, has said it carried out a five-month survey in 100 villages of Orissa, in the east of the country, and found that out of $186.5 million spent under NREG during 2006-7, $127.2 million has been looted by government officials of executing agencies.
In a 2,000-word letter to the prime minister dated September 3, 2006, Ray says major corruption involving NREG funds resulted in tragic starvation deaths of adivasis (tribals) in Orissa state, particularly in Kalahandi district, one of the most backward regions in the country. Ray accused the Orissa government of falsely passing the starvation deaths as being caused by cholera.
Ray, who sent copies of the letter to the leader of the opposition in the Lok Sabha (Lower House) , Lal Krishna Advani, Congress Party president Sonia Gandhi and Communist Party of India (Marxist) general secretary Prakash Karat, said that "abject poverty and chronic hunger manufactured by corrupt bureaucracy are the main reasons behind these tragic deaths of Adivasis". Ray told Asia Times Online he has not yet received any direct response from the government to his letter.
Ray says the majority of tribals in Orissa barely subsist on mango kernel gruel and wild leaves, and their weakened immune system becomes susceptible to diseases. "This tragedy repeats every year," says Ray. "The historic anti-poverty NREG scheme was launched to stop precisely this kind of tragedy."
The Indian government has sought inputs of chief ministers of states on the CAG findings, and some are far from bashful in publicly expressing what they think of it. On January 9, the chief minister of the backward eastern state of Bihar, Nitish Kumar, scathingly told a media conference: "Name one state where the program is running properly. The scheme was launched in haste and has much scope for leakages."
The CAG audit points to key reasons for the mismanagement: inefficient monitoring of funds, badly planned work projects, improper accounting and funds diverted for unauthorized purposes.
Some rare voices sound hopeful. The New Delhi-based Right to Food Campaign, a network of organizations and individuals working for India's food security, is optimistic about NREG, while admitting it is badly affected by corruption. "Given political will, the program can succeed," Gurminder Singh of the group's secretariat told Asia Times Online. "The NREG is making some positive impact."
Indian farmers need more than stray optimism and hope. January 15 is Pongal, India's important harvest festival, and while rich urbanites will be celebrating the festival with new silk clothes, 32-dish vegetarian feasts and juicy bites of sugar cane, India's poor farmers in Bothbodan village, Maharashtra state, risk a fatal feast of a bottle of pesticide.