Andy Mukherjee argues that the Indian government is squabbling liberalization opportunities by managing the welfare state poorly:

The architects of India’s rural job-guarantee program forgot to ask themselves a crucial question: Instead of paying one group of villagers to dig holes, and another to fill them, wouldn’t it be cheaper to just give people the money and have them stay home? …

The nature of the actual work to be done is so incidental to the program that it found a mention only in the appendix of India’s National Rural Employment Guarantee Act published last month. Why not dump the charade of job guarantees and just give people the cash? …

An elaborate job guarantee program that requires synchronized efforts by five levels of government across five different ministries and a plethora of coordinators is like a machine with too many moving parts: It’s bound to fail…

By contrast, a cash grant, which covers both rural and urban India, could have been used as a bargaining chip for the Indian government to mobilize political support for doing away with subsidies on food, fertilizer and fuel, which together cost $10 billion last year. [IHT]