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Assessing the Impact of Employment Generation Programs in

Challenging Rural Poverty: A Comparative Study on Bangladesh
and India

Article in Journal of Poverty · July 2011

DOI: 10.1080/10875549.2011.588303

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Assessing the Impact of Employment

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Rural Poverty: A Comparative Study on
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a
Hasanuzzaman Zaman
a
Centre for Policy Dialogue, Dhaka, Bangladesh

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DOI: 10.1080/10875549.2011.588303

Assessing the Impact of Employment

Generation Programs in Challenging Rural
Poverty: A Comparative Study on Bangladesh
and India

HASANUZZAMAN ZAMAN
Centre for Policy Dialogue, Dhaka, Bangladesh
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In low-income countries where unemployment is a regular

phenomenon, policies ought to be geared toward raising the
income of the working poor who generally reside in rural areas.
This article focuses on two national employment programs (NEPs)
aimed toward employing the rural poor who are excluded from the
mainstream activities (e.g., agriculture) in India and Bangladesh.
It provides an assessment of the NEPs performance in challenging
rural poverty through offering employment generation activities.
In view of India’s long and rich experience in directing social
provisions to the rural poor, the article argues that government
interventions cannot suffice to alleviate rural poverty unless they
are complemented by other forms of legal and civil support.

KEYWORDS poverty, employment, state intervention, social

protection, fiscal legitimacy

INTRODUCTION

Majority of the poor in South Asia reside in villages where agriculture-related

activities constitute their primary source of livelihood. What is of relevance is
the awareness that the rural economy, however buoyant it may be, does not
generate sufficient income-earning opportunities for the poorest households.
This requires the state to intervene in ways to provide a source of guaran-
teed income to the low-income households (Sobhan, 2010). Government
interventions in the form of state-sponsored social protection programs tend

Address correspondence to Hasanuzzaman Zaman, House 40/C, Road 11, Dhanmondi,

Dhaka, Bangladesh 1209. E-mail: zaman.h1984@gmail.com

259
 260 H. Zaman

to focus on widening the avenues for the poor to avail of employment

opportunities and social services (such as health care and education) which
have been traditionally more readily available to the better-off segment of
the society. It is encouraging to note that all South Asian governments, to
varying degrees, have taken some form of initiatives (mainly through social
safety net programs) to tackle rural poverty.
This article assesses and compares the performance of two national
employment programs (NEPs)—the Mahathma Gandhi National Rural
Employment Guarantee Scheme (NREGS) in India and the Employment
Generation Hardcore Poor (EGHP) in Bangladesh—in challenging rural
poverty. The article’s point of departure rests on the premise that gov-
ernment intervention, though not desirable from the market economy
perspective, is necessary when the market is not able to deliver socially
desired outcomes. Lack of employment opportunities in the urban and rural
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areas is a reflection of market failure, which originates on part of the South

Asia’s institutions to respond to the effective demand for employment by
the poor. In view of India’s rich and long experience in implementing social
protection programs, the article argues and tries to put forward the case that
state interventions cannot suffice to alleviate poverty, unless they are backed
by legal and other forms of civil support.

Objectives and Methodology

The overarching objective is to contribute toward knowledge and under-
standing of academicians, researchers, and policy makers in the context of
national employment schemes’ performance in challenging rural poverty. As
far as knowledge dictates, this is the first article to assess and compare two
state-sponsored policies in terms of their political economy performance in
Bangladesh and India. It hopes to increase the awareness of the interna-
tional development community with regard to the significance of NEPs from
the poverty-alleviation perspective. In assessing the socioeconomic impact
of the NEPs, the coverage in accordance to poverty incidence has been
considered to be an important factor in determining whether resources are
being effectively disbursed in meeting the programs’ goals. The article also
reports on the implementation-related problems and structural barriers of
the two NEPs.
The article blends in a mix of primary and secondary data. It is based
on information collected from field level investigations carried out inde-
pendently by the Centre for Policy Dialogue (CPD) on the EGHP during
April 2010 at a period when the implementation of the second phase of the
EGHP was underway (Khatun, Khan, & Nabi, 2011). Of the 64 districts in
Bangladesh, four sample districts were selected for collecting information
that possessed similar socioeconomic characteristics (Nilphamari, Jamalpur,
and Kurigram are examples of poor, monga-prone (monga is seasonal
employment) and river-erosive areas of Bangladesh). Chittagong, the port
 Employment Generation Programs 261

city of Bangladesh, is industrialized, but because it remains prone to natural

disaster, it was considered for the study to compare the scheme’s perfor-
mance in alleviating poverty in a developed region. In total, 25 focus group
discussions were held with the participation of 385 EGHP beneficiaries (38%
women).
Similarly, in deciphering the Indian case with regard to its NEP, two sur-
veys conducted by the G.B. Pant Social Science Institute (GBPSSI, 2008) and
the Institute of Applied Manpower Research (IAMR, 2008) were considered.
It is to be noted here that when the scheme was enacted and extended
to 200 districts, the IAMR, with support from the Planning Commission,
Government of India, carried out a survey of 20 districts capturing the impact
of the scheme on quality of life of the households who were benefiting
through wage employment in 2007. In every Gram Panchayat (GP), 50 ben-
eficiaries were selected on random selection basis from the list of job card
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holders/beneficiaries available with the GP office. Later, the GBPSSI initiated

a survey of the National Rural Employment Guarantee Act (NREGA) in six
states (Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Rajasthan, and Uttar
Pradesh) from May to June 2008. In Rajasthan, the survey teams covered
10 worksites each in Dungarpur and Sirohi districts and interviewed 200
workers employed at these worksites.
Relevant secondary literature dealing with growth, employment, and
poverty was reviewed from the developing countries perspective to under-
line the importance of state-sponsored programs when economic growth is
not able to percolate its benefits to all. Also, it is to be pointed out here that
the article uses latest data (2009–2010) to compare the effectiveness of both
schemes in challenging rural poverty.

Organization of the Article

The article is divided into four sections. The second section profiles the state
of poverty in Bangladesh and India (alongside other South Asian countries).
The third section has been prepared in a manner to set the tone of the article
that is to argue that state intervention by itself cannot suffice to challenge
rural poverty. This section assesses the performance of public work pro-
grams in operation in Bangladesh and India that helps to distinguish the two
NEPs from other social protection programs. The fourth section compares
the performance of both NEPs and tries to point out their similarities and
differences, achievements and setbacks. Then the conclusion is presented.

SOUTH ASIA POVERTY PROFILE

Growth Performance and Poverty Status
By global standards, South Asia as a region registered robust economic
growth in the last decade that has also partly contributed to reduction in
 262 H. Zaman

poverty rates. However, global events in recent times such as the sudden
surge in the prices of essential commodities in 2007, global financial cri-
sis in 2008, and the consequent global recession indicate that reduction
in poverty levels remain ephemeral. The global financial crisis contributed
to a marked deceleration in real gross domestic product (GDP) growth in
South Asia, from 8.7% in 2007 to 6.0% in 2009, which was largely driven
by a pronounced decline in investment growth and, to a lesser extent, pri-
vate consumption (World Bank, 2010). As external demand collapsed in the
developed world in 2009, exports decreased sharply with steeper decline in
imports, and net trade actually turned out to support growth on the regional
level. Although fiscal policy space in most economies was limited, sub-
stantial fiscal stimulus measures were introduced in India, Bangladesh, and
Sri Lanka (in the form of incentives and safety-net expenditures). Inflows
of remittance, nevertheless, have remained relatively robust particularly in
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Bangladesh, Nepal, and Sri Lanka where they continue to account for a
significant share of GDP (8%–10%).
The international development community is aware of the structural
dimensions of poverty, and the contemporary approach to poverty has been
manifested in the millennium development goals (MDGs), setting explicit
targets for eradicating poverty. In maintaining the article’s focus which is to
compare the performance of the two NEPs in Bangladesh and India, of the
eight MDGs, the present analysis can be linked to MDG-1 that is eradicating
extreme poverty and hunger. Table 1 presents a set of indicators reflecting
the performance of four South Asian countries in attaining the three targets
constituting MDG-1.
The World Bank, in 2006, estimated that if South Asia could achieve
growth rates of 10%, poverty (target 1.A) would decline by two thirds by
2015 (Devarajan & Nabi, 2006). However, in the backdrop of the prevailing
dynamics of the global economy it could be safely assumed that growth rates
need to be much higher than 10% to achieve the MDGs, and more impor-
tantly, to be inclusive to percolate its benefits to the poor. It may be recalled
here that people living below the extreme poverty line are those who earn
less than $1.25 (revised upward from $1.00) a day. State-sponsored employ-
ment generation schemes could be conceived as a top-up service enabling
an intertemporal mechanism for distribution of resources (cash assistance in
this case) to the poor. Such distributions help the poor to shield themselves
from the adverse spillover effects emanating from the global market, and
more pertinently, in case of Bangladesh, from climate change.
With regard to target 1.B, Table 1 bears out one alarming fact—none
of the countries in South Asia is on track. Proportion of population living
the below the extreme poverty line is very high in Bangladesh, India, and
Nepal. In Bangladesh, for example, it is estimated that inflation in food
grain prices in 2007 and 2008 may have pushed 4 million people, whose
diet is heavily dependent on food grains, below the poverty line (World
 Employment Generation Programs 263

TABLE 1 Poverty Profile of South Asia: Key Indicators

Countries

Indicators Period Bangladesh India Nepal Sri Lanka

Growth (%) 1995–05 5.3 6.4 4.1 4.5

2009 5.9 6.0 4.7 3.6
MDG-1, Target 1.A. Halve poverty rate between 1990 and 2015
Population below $1.25 Earliest 66.8 (1992) 49.4 (1994) 68.4 (1996) 15.0 (1991)
a day (%) Year
Latest 49.6 (2005) 41.6 (2005) 55.1 (2004) 14.0 (2002)
Year
MDG-1, Target 1.B. Full and productive employment
Growth rate of GDP per 1992 5.2 2.4 −0.6 1.7
person employed (%) 2008 2.3 5.4 1.7 4.3
Employment to 1991 74.5 59.0 61.2 52.0
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population ratio (%) 2007 68.1 55.4 51.8 55.1

MDG-1, Target 1.C. Halve, between 1990 and 2015, the proportion of hunger
Population below 1990–92 36 24 21 27
minimum level of 2003–05 27 21 15 21
dietary energy
consumption (%)
Source. Compiled from World Bank (2010) and Asian Development Bank (2009).
MDG = Millenium Development Goals; GDP = gross domestic product.

Bank, 2008). These trends indicate that reduction in poverty levels remain
transient and inform us little about how far such numbers are able capture
any qualitative changes in the condition of life and the circumstances of the
income poor (Sobhan, 2010).
In spite of the negative repercussions of recent events, one may spec-
ulate whether the earlier achieved high growth rates were able to trickle
down benefits so as to lift the poor above the poverty line. It is to be high-
lighted here that barring Sri Lanka, economic growth held little value for the
poor living in South Asia. For instance, Bangladesh’s growth rate of output
per unit of labor declined from 5.2% to 2.3% in 2008, indicating a sharp fall
in labor productivity. Similarly, the proportion of working age also experi-
enced a decline from 74.5% in 1991 to 68.1% in 2007. On the other hand,
India was able to more than double its GDP growth rate in terms of per
person employed from 2.4% in 1992 to 5.4% though, similar to Bangladesh,
its employment-to-population ratio experienced a decrease.
Can the market be blamed for failing to provide 1.02 billion people with
food, which is more than the populations of the United States, Canada, and
the European Union? The number of undernourished people in the world
increased by 75 million in 2007 and 40 million in 2008, largely due to higher
food prices (Food and Agriculture Organization [FAO], 2009). According to
the State of Food Insecurity in the World report, 65% of the world’s hungry
 264 H. Zaman

live in only seven countries—India, China, the Democratic Republic of

Congo, Bangladesh, Indonesia, Pakistan, and Ethiopia—where South Asia
accounts for the lion’s share. For proponents of the market economy, they
can put forward a simple argument to dismiss the claim that markets have
not failed—after all, not all things have remained the same in contempo-
rary times. Global food prices registered an unprecedented 40% rise during
2007 and price of rice (the main staple crop) and wheat in Bangladesh
increased by 42.6% and 55.4%, respectively, in the same year. Bangladesh,
nevertheless, has made the strongest progress in reducing the proportion
of hungry people (thanks to its extensive Food for Work program [FFW]).
On the other hand, India’s position remained the same in 2003 to 2005
as in 1995 to 1997. Meanwhile, Nepal and Sri Lanka have been successful
in reducing the proportion of population below minimum level of dietary
energy consumption.
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THE CASE FOR GOVERNMENT INTERVENTION

Growth–Employment–Poverty Nexus
It is now widely recognized that providing employment opportunities could
be one of the most sustainable routes out of poverty, and the experience of
countries that have succeeded in reducing poverty support the importance of
attaining high rates of economic growth (e.g., Brazil, India, and China). High
growth, however, is not a sufficient condition for poverty reduction because
it is not necessarily linked to employment creation; the pattern and com-
position of growth, as well as how benefits are able to trickle down to the
bottom of the pyramid, are equally important from the sustainable develop-
ment and inclusive growth perspectives. Hence, state interventions through
NEPs that help to widen opportunities for the poor to release themselves
from the vicious poverty cycle, need not be overstated.
Exploring the nexus of economic growth, employment, and poverty
offers an idea on how growth can be pro-poor, thereby creating a virtuous
cycle of poverty reduction through employment generation. Indeed, a high
growth rate, complemented with efforts such as social protection programs
(health, education, and employment), has the potential to lift millions out
of poverty. Although economic growth may increase the quality of income,
whether it is able to percolate its benefits to the poor remain open to debate.
Therefore, the challenge is to build a more participatory structure that would
change the composition of growth and thereby trickle down its benefit to
the bottom of the pyramid.
Islam (2004) illustrated how high rates of economic growth led to
substantial increase in employment opportunities with rising productivity,
resulting in the absorption of the poor, comprising the unemployed and
underemployed, into formal economic activities. In this process, the poor
 Employment Generation Programs 265

may be able to augment their social capital as a result of achieving higher

productivity, which in turn would increase their incomes, moving them up
the market tier. As a result of increasing incomes, the scope of the poor to
afford better education and avail of health care services would be enhanced.
According to Osmani (2003), however, one of the main reasons why
economic growth did not lead to significant reduction in poverty rates in
South Asia is because growth failed to promote labor intensity in the com-
position of output. In other words, growth process was not able to respond
to the kind of employment that would be more beneficial for the poor.
Economic growth can widen the scope for the poor to improve their stan-
dard of living if such employment opportunities complement their existing
skills. It is, thus, imperative that there be a combination of high growth
supported by state-sponsored social protection programs to ensure that the
poor are not excluded.
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The nature of labor markets has received substantially less attention

despite the obvious fact that the poor derive most of their income from work
that is not part of the mainstream economic activities. Among scholars and
policy makers, there has been a growing concern with jobless growth that
appears intuitive because the poor draw most of their income from work as
employees, as the self-employed, or in subsistence activities (Onaran, 2008).
Evidence suggests that NEPs can be successful if they involve a compre-
hensive package of services, tightly targeted at a particular group seeking
work (United Nations Economics and Social Commission for the Asia-Pacific
[UNESCAP], 2006). The Solidarity for the Urban Poor Federation (SUPF) in
Cambodia, Environment and Development Action (ENDA) in Vietnam, and
the Savings and Credit Systems (SIPSACRES) in Lao People’s Democratic
Republic support that providing employment enables the poor to participate
in the economic growth process that also helps to defuse the vicious cycle
of poverty.

Justifying Government Intervention

In terms of protecting and promoting social welfare, there is need for
government intervention for two main purposes: ensuring equity (social
protection) and enhancing allocative efficiency (redistribution). Allocative
efficiency has an intertemporal aspect: individuals’ well-being is increased
if they have a mechanism for redistributing income to themselves across
the life cycle (consumption smoothing), through NEPs or other welfare-
protecting programs (Barr, 2005). Social welfare theories dictate that society
stands to benefit more if a poor person receives an extra unit of income
than a rich person does. There are, nevertheless, “thresholds” implying
that households, given their nature of poverty whether chronic or tran-
sient, have to reach a certain minimum standard of living where they
would feel confident to invest in other productive assets. Gertler, Martinez,
 266 H. Zaman

and Rubio-Codino (2006) reported that cash assistance scheme in Mexico

allowed its beneficiaries to invest 12% of their transfers, which also raised
their consumption by about one third after fewer than 6 years in the
program.
In case of the equity aspect, the objective is to promote social protection
by ensuring that nobody falls below a certain minimum standard of living.
Its other objectives pertain to reducing inequality, strengthening social inclu-
sion, and ensuring social cohesion. Public work programs, therefore, should
cover all the various groups in need of assistance: especially the chronic and
transient poor. It should provide the same benefits to individuals or house-
hold equal in all respect (horizontal equity) and may provide more generous
benefits to the poorest beneficiaries (vertical equity). To ensure this, the
management aspect of state-sponsored programs should be able to evolve
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and transform as problems are solved and new standards set (the fourth
section examines the structural barriers inhibiting successful implementation
of the NEPs).
Government interventions in the form of public work programs can
help to achieve the longer run welfare of households through a different
investment channel: the construction or maintenance of infrastructure that
yields services to households. A simple road that enables access to markets,
or widens the scope for migration opportunities, availability of health, edu-
cation, or other public services, could correct some of the structural injustices
and include the poor to capture the benefits generated by high economic
growth rates and public decisions. In Bangladesh, Khandker, Bakht, and
Koolwal (2006) estimated that certain road improvement projects led to a
27% increase in agricultural wages and an 11% increase in per capita con-
sumption. Similarly, it also led to an increase in school enrolment rates for
boys and girls.
Even though a large number of developing countries are cur-
rently engaged in formulating poverty-reduction strategies, policies offering
employment opportunities as a source of guaranteed income to the low-
income households often suffer from political legitimacy, that is, the
selection of beneficiaries and the manner in which the programs are imple-
mented open up avenues for nepotism and rent-seeking behavior by the
agents. Similarly, MDGs relating to poverty reduction do not explicitly
mention employment programs as a means for achieving the set targets.

Fiscal Overview of Public Work Programs in Bangladesh and India

Most of the public work programs are aimed at specific target groups
such as low-income and less skilled workers, and we can distinguish
between two types of employment creation programs that are in operation
in many developing countries: (1) self-employment creation schemes and
 Employment Generation Programs 267

TABLE 2 Performance of Public Works Programs in Bangladesh and India

Share in total Poverty Per

Public expenditure public coverage beneficiary
(US$ million) expenditure (%) (%) cost (US$)

FY FY FY FY FY
Countries Programs 2008–09 2009–10 2008–09 2009–10 2009–10 2009–10

Bangladesh EGHP 132.2 153.2 1.0 1.0 8.8a 34.0

FFW 147.5 132.0 1.1 0.8 7.0 36.7
CLP 29.0 13.3 0.2 >0.1 0.5 53.2
EUPNR 1.3 1.1 >0.1 >0.1 >0.1 56.5
REOPA 9.0 12.3 >0.1 >0.1 >0.1 408.3
RERMP 27.4 26.3 0.2 0.2 >0.1 438.8
Total 346.4 338.2 2.5 2.1 16.3 40.0
India NREGS 6456.0 7814.4 7.9 8.7 20.4 126.9
PMGSY 1674.0 2513.0 2.0 2.7 0.4 1933.1
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IAY 1894.0 1675.0 2.3 1.8 1.4 394.1

SGSY 506.0 492.0 0.6 0.5 0.9 175.7
Total 10530.0 12494.4 12.8 13.7 23.1 178.6
Sources. Mannan (2010) and Ministry of Rural Development (2010).
EGHP = Employment Generation Hardcore Poor; FFW = Food for Work; CLP = Char Livelihood
Programme; EUPNR = Employment for Ultra-poor in the Northern Region; REOPA = Rural Employment
Opportunity for Public Asset; RERMP = Rural Employment and Road Maintenance Program;
NREGS = National Rural Employment Guarantee Scheme; PMGSY = Pradhan Mantri Gram Sadak Yojana;
IAY = Indira Awaaz Yojana; SGSY = Swarnjayanti Gram Swarozgar Yojana.
This is the estimate till March 2010. Official estimates indicate that 4.5 million poor people were covered
by the EGHP 2009–2010.
a
The total number of population living below the national poverty line in Bangladesh and India is
estimated to be 51.12 million and 301.70 million, respectively.

(2) direct wage employment schemes. Our focus is on the latter providing
employment opportunities largely on building and developing rural infras-
tructure. In India and Bangladesh, public work programs targeting the rural
and urban poor have been relatively successful in their poverty-alleviation
endeavor. Table 2 provides an overview of the performance of differ-
ent state-sponsored public work programs in operation in Bangladesh and
India.
There are four main programs in India that account for 12% to 13%
of total public expenditure. The NREGS is the flagship, poverty-eradication
program of the government of India and provided 62 million individuals
employment opportunities in 2009 to 2010. The scheme tends to receive a
substantial share in budgetary allocation, and it can be safe to state that it will
surpass the 10% threshold by 2011. In FY 2009–2010, an enlargement in the
finances for most of the programs can be observed with NREGS experiencing
17% increase. Overall, a positive political development is discernible in India
by the virtue of the success attained by the programs, particularly the NREGS,
in terms of consolidating fiscal legitimacy.
 268 H. Zaman

Unlike the Indian scenario where public expenditure substantially

increased in FY 2009–2010, the allocated funds for social protection pro-
grams reflect a declining trend in case of Bangladesh. The FFW program,
which is one of the major social safety nets providing food to the vulner-
able groups, is by far one of the most important employment-generating
mechanisms. Yet the budget decreased by 0.27% in FY 2009–2010 compared
to the previous year, and not surprisingly, the coverage also witnessed a fall
of 0.8 million in FY 2009–2010. Allocation for overall social programs was
reduced by 0.4% to 14.8% of the total outlay compared to 15.2% of total
outlay in 2009–2010 (Mannan, 2010).
In determining the cost-effectiveness of the two NEPs, we have carried
out a quantitative analysis for both countries. In FY 2009–2010, the EGHP
charged around $34.03 per beneficiary whereas the NREGS recorded a more
than threefold amount of $127 per poor employed. In view of the fact that
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the NREGS is implemented in India on a very large-scale basis and that the
number of beneficiaries and the volume of poor are incomparable to its
neighboring country, it could be safely asserted the NREGS is cost-efficient
to a large extent. Of the $1.08 billion received by the state governments in
FY 2009–2010, which are entrusted with the responsibility of administering
the NREGA’s implementation, about 24% of the allocation was consumed by
administrative expenses alone (66% on wages of the beneficiaries). Such a
high administrative cost (including salaries for the personnel) could explain
the high spending per beneficiary. For Bangladesh, Khatun et al. (2011)
reported that the fiscal administrative allocation for the EGHP was marginal,
accounting for less than a percentage share of $153.15 million.
A project-wise assessment of the public work programs in operation
in Bangladesh and India helps to provide an overview of government
efforts geared toward eradicating poverty. Although, in a lot of ways it is
not fair on Bangladesh to compare its smaller-scale programs with India’s
extensive ones that have been in existence far longer, comparing the aggre-
gate fiscal expenditures by both countries offers us a clear picture on the
prevailing wide gap in the share of public expenditure. The Swarnjayanti
Gram Swarozgar Yojana (SGSY) is a scheme for promoting self-employment
through organization of rural poor into self-help groups. In terms of its
functions, it can be contrasted with the Char Livelihood Programme (CLP) in
Bangladesh. The SGSY has a larger budget benefiting 2.8 million people with
an overhead cost of $175. The CLP benefited 0.25 million people costing $53
per head with an annual budget of $29 million in FY 2009–2010. The Rural
Employment and Road Maintenance Programme (RERMP) in Bangladesh
and Pradhan Mantri Gram Sadak Yojana (PMGSY) in India are very simi-
lar projects concentrating on building rural communications through roads
and other transport links. With a budget almost 95 times larger than that of
Bangladesh’s, PMGSY is expected to benefit 1.3 million people residing in
rural areas.
 Employment Generation Programs 269

From the above discussion it bears out that India spends about six
times more on each poverty head ($41.4) than Bangladesh ($6.62). It is
quite paradoxical that India, with nearly six times more poverty heads than
Bangladesh, is able to cover twice more than what is covered by the lat-
ter’s state-sponsored public work programs. One of the reasons that could
explain this factor is the ongoing salient paradigm shift in India from mere
fiscal policy interventions to more demand-drive social protection programs
(right to food, work, and education more recently).

NATIONAL EMPLOYMENT PROGRAMS (NEPS): A POLITICAL

ECONOMY ASSESSMENT
An Institutional Perspective
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It is to be noted at the outset that the 100-Day Employment Generation

Programme (100-DEGP), introduced in 2008, was replaced by the EGHP in
the budget FY 2009–2010 following the assumption of office by the newly
elected government in 2009. Both share common features in terms of insti-
tutional setup, coverage, implementation period, and so on. On the other
hand, in case of India, the NREGS has its roots in the late 1970s when the
Maharashtra Employment Guarantee Scheme Act (MEGSA) was enacted to
ensure employment for unskilled manual labor living in rural Maharashtra.
In 2005, the Indian Parliament enacted the NREGS extending its coverage
to all over India. When comparing the institutional frameworks of the two
NEPs in Bangladesh and India, it reveals striking differences.
The first and foremost difference lies in the letter G. The significance of
NREGS in India is that as an Act of Parliament (NREGA), it confers statutory
rights whereas in case of Bangladesh the EGHP is merely a fiscal interven-
tion lacking the political strength and legal support. In India, the case is
drastically different. The government of India is legally obligated to pro-
vide employment to the rural poor within 15 days of the application by
the prospective beneficiary. However, when the Act was enacted, one of
the main criticisms raised was that the implementation will lead to rampant
corruption and leakage of funds. Suffice to point out here that the right to
information (RTI) Act in India has played a decisive role in exercising con-
trol over delivery mechanisms. Furthermore, the operational guidelines of
NREGA clearly mandate that the RTI Act should be adhered to in letter and
in spirit in all matters relating to NREGA.
Not surprisingly many have raised doubts as to whether the EGHP in
Bangladesh is any different from other similar social safety net programs. In
case of India, the NREGS has helped to empower many landless, marginal-
ized, and vulnerable segments of the rural population by assuring them
a basic income through employment. The enactment of rural employment
guarantee also symbolizes the triumph of civil society and people’s struggle
 270 H. Zaman

for the right to work. The EGHP in Bangladesh remains contingent on the
government’s priorities as well as its resource position and more on the
political will to pay heed to the voices of the poor.
The EGHP and NRGES share similar features in terms of their objectives.
However, although the Bangladeshi version offers coverage to only one
member per household and during specific periods (two lean periods and
natural disasters), in India it covers every household adult member and
is implemented throughout the year, providing 100 days of work to each
household. Moreover, India follows a bottom-up approach in the selection
processes (projects and beneficiaries) and the opposite holds true in case
of Bangladesh. Also, the NREGS has a gender quota to ensure that women
are not excluded from such programs though this element is missing in the
EGHP in Bangladesh.
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Poverty Coverage by EGHP and NREGS

A comparison of the NREGS of India and EGHP of Bangladesh helps to
acquire an understanding of the overall performance of the two programs
in challenging rural poverty. The crucial difference lies in the design and
political will to finance such rights-based programs whereby Bangladesh
aims to only generate employment, and India guarantees rights to the poor.
Suffice to mention that the NREGS, thus, offer a more sustainable and politi-
cally powerful instrument in the reduction of poverty. It may be highlighted
here that in 2009–2010, the NREGS covered about one fourth of India’s poor
whereas the EGHP managed to provide employment to only 2% to 3% of
Bangladesh’s poor.
The eastern states of India host more than one half of India’s poor
(Table 3). The states of Orissa, Bihar, and Jharkhand reflect the highest rates
of poverty with 46.4%, 41.4%, and 40.3%, respectively, out of which the latest
data of NREGS shows coverage of only 14%, 0.9%, and 19.7%, respectively.
Considering that Bihar has an estimated population of 36.9 million below the
poverty line, only 0.3 million people received employment through NREGS.
The survey by GBPSSI (2008) and the IAMR (2008) pointed out that though
the principle of “work on demand” is yet to be fully operationalized, work-
ers’ awareness in terms of their NREGA entitlements appear to be rising over
time. With a decentralized mechanism such as the GP the poor in India are
poised in a relatively better-off position than their Bangladeshi counterparts,
and recent estimates show that approximately 28% of the beneficiaries were
accounted by schedule tribes in 2009–2010.
The NREGS coverage has been highest in Tripura (165%), Mizoram
(88.9%), and Nagaland (80.1%). It is to be pointed here that education
and literacy levels are much higher in Mizoram and Nagaland than the
national level; and thus, the poor there are likely to be more employ-
able. Nevertheless, instances of discrimination with regard to caste, gender,
 Employment Generation Programs 271

TABLE 3 Performance of EGHP and NREGS in 2009–2010

India (NREGS) Bangladesh (EGHP)

Population Population
below Employment below Employment
poverty provided poverty provided
line person Coverage line person Coverage
States (million) (million) (%) Divisions (million) (million) (%)

Total 301.7 71.28 23.63 Total 51.12 1.25a 2.44

(including
New
Delhi)
Andhra Pradesh 12.6 2.39 0.79 Barisal 4.32 0.13 3.04
Arunachal Pradesh 0.2 0.02 0.01 Chittagong 7.75 0.17 2.16
Assam 5.6 1.61 0.53 Dhaka 13.73 0.34 2.50
Bihar 36.9 0.48 0.16 Khulna 6.49 0.17 2.60
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Chhattisgarh 9.1 4.44 1.47 Rajshahi 16.22 0.39 2.37

Goa 0.2 0.0 0.00 Sylhet 2.60 0.05 2.05
Gujarat 9.1 3.47 1.15
Haryana 3.2 0.24 0.08
Him. Pradesh 0.6 0.59 0.20
Jammu & Kashmir 0.6 0.11 0.04
Jharkhand 11.6 2.67 0.88
Karnataka 13.9 9.57 3.17
Kerala 5.0 1.09 0.36
Madhya Pradesh 25.0 6.58 2.18
Maharashtra 31.7 0.80 0.27
Manipur 0.4 0.05 0.02
Meghalaya 0.5 0.19 0.06
Mizoram 0.1 0.13 0.04
Nagaland 0.4 0.33 0.11
Orissa 17.8 2.57 0.85
Punjab 2.2 0.28 0.09
Rajasthan 13.5 9.30 3.08
Sikkim 0.1 0.04 0.01
Tamil Nadu 14.6 7.70 2.55
Tripura 0.6 1.10 0.36
Uttar Pradesh 59.0 8.54 2.83
Uttarakhand 3.6 0.16 0.05
West Bengal 20.8 6.83 2.26
Andaman & 0.1 0.0 (702) 0.00
Nikobar Islands
Chandigarh 0.1 0.00 0.00
Dadra & Nagar 0.1 0.00 0.00
Haveli
Dama & Diu 0.0 0.00 0.00
Lakshadweep 0.0 0.0 (225) 0.00
Pondicherry 0.2 0.0 (358) 0.00

Source. Planning Commission of India (2010, 2004–2005 data); NREGA (2010); Ministry of Food and
Disaster Management, (2010, data 2005).
EGHP = Employment Generation Hardcore Poor; NREGS = National Rural Employment Guarantee
Scheme.
a
This is the estimate till March 2010. Official estimates indicate that 4.5 million poor people were covered
by the EGHP in 2009–2010.
 272 H. Zaman

and age play a dominant role hampering the effectiveness and usage of
the rural employment scheme. Lack of awareness and illiteracy in these
poverty-stricken regions adds further to the struggle against poverty allevia-
tion. Rajasthan in the north and Karnataka in the south are ideal examples
where NREGS has been a success recording 64.1% and 66.7%, respectively,
of coverage.
As in India, poverty is not concentrated in one particular region in
Bangladesh; it is spread throughout the northern and the eastern territories.
Nilphamari and Kurigram in the northern region (Rajshahi Division) reflect
some of the highest rates of poverty of 70.15% and 68.17%, respectively,
followed closely by Rangpur (61.82%). These areas are prone to monga suf-
fering from riverbank erosion, seasonal employment, and so on. A huge
number of the poor migrate to other parts of Bangladesh during the unem-
ployment season, but surveys reflect that the hard-core poor suffer from
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lack of motivation and tend to accept their fate by staying back. Hence, at
least in theory, the EGHP should have been a success in providing employ-
ment to the more hardcore poor within the monga-prone region. Evidence,
however, shows that EGHP coverage has been 4.07%, 3.92%, and 3.80% for
Nilphamari, Kurigram, and Rangpur, respectively, in the north. In aggregate
terms, in the top six most poverty-concentrated districts, the EGHP provided
employment to only 0.21 million people of 6.5 million living below the
poverty line.
Although the northern region of Bangladesh suffers from seasonal
unemployment, the south faces a constant cycle of natural disasters in the
form of cyclones, floods, and so on. Hence, Patuakhali, Satkhira, and Barisal
have to live with high rates of poverty. With a population of 3.44 million
living under the poverty line, employment was provided to 0.12 million by
the EGHP that would mean the overall coverage of the program reached
only 2.5% of the target population in the three districts.

Political Economy of NEPs: Separating the Principals from the Agents

Having discussed the effectiveness of the two NEPs in terms of their cover-
age, it would be useful to highlight their experiences in terms of institutional
challenges toward successful implementation of the programs. It is of little
surprise that corruption is pervasive in Bangladesh and India. The basis
on which executive officers in Bangladesh (at the lowest tire of the gov-
ernment, i.e., union council level) decided on the number of cards for
allocation in each ward varied widely. Although the official criteria com-
prised poverty and unemployment intensity, CPD (2010) reported that at
times decisions were solely based on the number of people in one area and
not the poverty intensity. Although the guideline of the program mentioned
about the involvement of a number of people and consultations with rele-
vant individuals and nongovernmental organizations (NGOs), in reality the
 Employment Generation Programs 273

union/upazilla (subdistrict) council Chairmen or members in several cases

did not consult anyone else in deciding who should be on the list.
In India, it has been reported that in most of the sample GP, mainte-
nance of job cards was very poor, except in Rajasthan, and a very common
irregularity was “hoarding” of job cards by government officials, GP func-
tionaries, or contractors. The problem is more acute in case of Bangladesh
due to the complex governance structure where members of Parliament con-
tinue to interfere with local government affairs to meet their constituency
needs. On the other hand, cards are hoarded at the upazilla (subdistrict)
level by the elected Chairmen and members to fulfill their partisan needs.
Such manipulation in cards distribution increases the scope for leakage from
the NEPs.
Wages are paid on a weekly basis in India whereas it is done on a
daily basis in case of Bangladesh. For the case of NREGS, minimum wage
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is equivalent to the minimum wage of agricultural labors though the offered

wage is not suitable for some areas. The study by IAMR (2008) noted that
in some places (e.g., some worksites in Jharkand), workers seemed to be
receiving more than the minimum wage and that wages are much closer to
the minimum wage. Similarly, in Chittagong, the port city of Bangladesh,
market wage is approximately Taka (Tk.) 250 per day, and as a result it is
difficult find beneficiary at the given wage rate of Tk. 120 per day. Recent
reports of lurking corruption in NREGA have led many observers to advo-
cate the payment of wages through bank accounts, instead of cash payments
(Adhikari & Bhatia, 2010; Drèze & Khera, 2008). This approach reduces the
scope for manipulation of any fudging of the muster rolls on the part of the
implementing agencies. It can be perceived as an example of “the separa-
tion of payment agencies (principal) from implementing agencies (agent)”
and bank payments of NREGA wages have already been introduced in a
number of districts. In Bangladesh, it was found that the number of names
in the muster roll book was often higher than that of the number of workers
actually present at the project site. Monitoring mechanisms, thus, constitute
the heart of such NEPs and also where it is to be borne in mind that if
employment is achieved at the expense of wage reductions, it may have a
negligible impact on poverty.
It is recognized that women in India and Bangladesh continue to be
marginalized in their respective societies as a result of not only the prevailing
unjust nature of institutional and market arrangements, but also household
and familial arrangements that enforce marginality (Pandey, 2007). In view
of these aforesaid structural injustices and keeping in mind that there was
no gender target in the program, it is encouraging to observe that more than
20% of the beneficiaries in the EGHP turned out to be women, implying
that there is a demand by women for participating in such a program. This
also reflects the desperation among women for work because they account
for only 1% of total employment in the formal sector. Indeed, only out of
 274 H. Zaman

desperation would a Bangladeshi rural woman be willing to work with men

at onerous, low-paying manual work labor. The Indian NREGS mandates
that one third of the participants be women, and latest data indicates that
nearly 49% of the NREGS’s beneficiaries were women.
In case of India, the NREGA, given its evolution, has been success-
ful in ensuring transparency safeguards and holding the involved actors
accountable. The online access to key information of the NREGA (and
also other programs) is very resourceful for researchers and policy mak-
ers in understanding the program’s performance in terms of its success
and setbacks. Furthermore, NGOs are involved in the monitoring pro-
cess unlike in Bangladesh. Annual reports are prepared by the Ministry
of Rural Development (MoRD) and submitted to the Parliament for scru-
tinizing the outcomes. Most importantly, the latest development plan (11th
Five Year Plan) envisages setting up of a grievance redressal cell at the
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Programme Officer/District Programme Coordinator (DPC) officers, with a

toll-free helpline.

CONCLUSION

Awareness of the NREGA and previous public work program by the gov-
ernment along with the RTI movement has instilled a culture in Rajasthan
where information is readily available to the public and which has con-
tributed to the NREGS’ success. When a community can be made conscious
of what they are entitled to, it is easier for them to question and demand for
their rights, rather than simply be directed toward working for a day’s wage.
India’s NREGA is yet to be acknowledged as a fully success story, but con-
sidering that it has taken the first steps of giving the poor entitlement, issues
of corruption and administration should be the prerogative now for effec-
tive and successful implementation of India’s rural employment scheme. The
EGHP, though still in its embryonic stage of life, has a long way to travel in
reaching the success achieved by the NREGS in India. There are lessons to
be drawn from the Indian experience, such as the shift from fiscal interven-
tions to demand-driven socioeconomic models (e.g., right to work), which
could be emulated by Bangladesh and other developing countries in moving
their poverty-eradication agendas forward.

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