labels: Economy - general
India's rural job schemes are barriers to development: World Bank news
16 March 2009

The central government's National Rural Employment Guarantee (NREGA) scheme and other poverty alleviation schemes act as policy barriers to economic development and perpetual alleviation of poverty, according to the World Bank.

The government's watershed programmes and schemes for development of small and medium towns are acting as "policy barriers to internal mobility", the bank said in its 'World Development Report' 2009.

The 'World Development Report 2009: Reshaping Economic Geography' challenges the assumption that economic activities must be spread geographically to benefit the world's most poor and vulnerable.

''Throughout history, mobility has helped people escape the tyranny of poor geography or poor governance,'' said Indermit S Gill, director of WDR and regional chief economist for the World Bank's Europe and Central Asia region at a media briefing on the report.

The report said the schemes negate the economic benefits of migration and in fact, attempts to counter migration.

Arguing in favour of mobility of labour, the report said, it is necessary as "lifting people out of poverty requires shifting populations from villages to cities." (See: Governments must promote mobility of people: World Bank)

The better alternative, the report said, is to encourage the process of migration, the bank said.

"Negative attitudes held by government and ignorance of the benefits of population mobility have caused migration to be overlooked as a force in economic development," it said.

The World Bank also cited other programmes like watershed development aimed at improving agricultural productivity and development of small and medium towns.

"Because of the perceived negative effects, local governments remain hostile toward migrants, while employers routinely disregard laws to protect their rights and needs," the report said.

In many cases, welfare policies and social services are designed for a sedentary population, the bank said.

"This is best exemplified by location-specific entitlements to social services, housing subsidies, food rations, and other public amenities especially important to working poor people," it said.

The World Bank, meanwhile, said it will soon clear a $2.6 billion special loan for India's infrastructure sector as part of the Bank's stepped up lending plans for India.

Under the enhanced lending plan, the World Bank will lend India Infrastructure Finance Company $1.2 billion, SIDBI $400 million and Power Grid Corporation $1 billion.

The World Bank has targeted $14 billion exposure to India over the next three years, up from about $8.1 billion during the three years ended 31 December 2008.

The Bank is also working on a $3 billion loan for recapitalisation of public sector banks in the country, World Bank's Economic Adviser (India) Giovanna Prennushi said.

The Bank, he said, has approved five projects in India with a total commitment of $1.34 billion till February this year, including a $400 million loan earlier this year to Power Grid Corporation.

World Bank expects funding of such investments to help developing nations tide over the global recession.

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India's rural job schemes are barriers to development: World Bank