The rural jobs scheme will be cost-effective only if assets created are of sufficient value to the poor, says bank
New Delhi: Unless India’s rural job guarantee scheme can be turned around to create valuable assets, transferring cash directly to intended beneficiaries could reduce poverty faster, the World Bank said on Tuesday, joining an ongoing debate on the effectiveness of the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).
In its bi-annual India Development Update, the World Bank said that though the rural job guarantee scheme has an inbuilt self-targeting mechanism unlike the cash transfer scheme and has multiplier effects on economic activity, it entails high costs and participants have to forgo alternative income.
“Even though MGNREGS is better targeted than a cash transfer scheme would be, wage earnings alone are not sufficient to make it more cost-effective at reducing poverty. But, it could, if the assets created under it are of sufficient value to the poor,” it added.
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