Techniques in Innovative Policy Making: Example of National Rural Employment Guarantee Act in India

Abstract

The problem of social ills such as unemployment, poverty, and accelerating pace of rural-urban migration is not only enormous in magnitude, but also complex by nature in developing countries. This article introduces an innovative regulatory approach that addresses the complexity and scale of such problems. An analytical and decision-making model is presented. This model prescribes reflecting on two or more problems simultaneously. Such an approach is expected to create a fresh opportunity for policy makers and scholars in solving problem scenarios, bringing their vantage point to bear on pressing social matters. The model presented in this article is applied to analyze the NREGA or National Rural Employment Guarantee Act, 2005 in India. This Act represents a novel approach to policy-making and demonstrates the positive role governments can play in labor markets. The design, implementation, and promising initial results clearly challenge existing wisdom on how to make effective policy decisions. The framework presented in the article best explains various facets of this remarkable policy and shows how governments can intervene in the labor markets and correct for imperfections. Pioneering future applications to other social and economic challenges are suggested. Also, implications for research and policy are provided.