New Delhi has made its share of economic mistakes in recent years, but its marquee employment program is in a league by itself. The scheme, which began in 2005 to offer social security to millions of rural poor, is instead shunting those people into expensive underemployment while real employers struggle to find workers. It's such a disaster that one branch of the government this month asked another temporarily to stop enforcing the law.

The Mahatma Gandhi National Rural Employment Guarantee Act, as the jobs scheme is now...