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What next for MGNREGA?

Source : BUSINESS_STANDARD
Last Updated: Sun, Feb 03, 2013 20:15 hrs
BJP against Cong, not corruption: Sonia

Seven years on, the United Progressive Alliance's flagship rural welfare programme, operated under the Mahatma Gandhi National Rural Employment Guarantee Act, or MGNREGA, continues to have effects that are simultaneously little understood and divisive. 


As reported on Sunday, the past three years, since 2010-11, have seen the average number of workdays per worker it has provided fall, along with a decline in the actual expenditure incurred on the scheme. Yet there is no clear way to interpret these facts, or even to decide whether they're good news or bad. 

 After all, the point of MGNREGA and similar sustenance-level schemes is to serve as a safety net for the very poorest and most desperate, who are forced into back-breaking labour to stay alive. If the numbers of such people are declining because fewer want to participate, then it could be good news; if the numbers of those taking advantage of the scheme are lower because of supply constraints in the scheme or poor administration, then it is bad news. 

The unfortunate part is that it remains unclear which of those two effects is at work — or even if, say, the scheme is unable to provide employment at the level it did earlier because it is revamping itself to allow direct cash transfers. The giant scope of the scheme, operating in every major state of the country, both helps and hinders analysis. 

After all, each state has different service delivery problems — and each state will have a different effect on rural wages, causing a lack of demand for the scheme to also build up over time. 

 It is important to note that, according to the government's labour bureau, rural wages have shot up in the years since 2004. When decomposed by profession, the three occupations that have seen the largest cumulative increase since 2004 have been directly farm-related: winnowing, picking and unskilled labour. They have seen an increase in wages from 150 to 170 per cent — beating the cumulative increase in per capita income over the same period. It is difficult to see how this will have no effect on the choice to take up the MGNREGA work. 

It is necessary, therefore, for the government's policy analysts to take a step back and see if they can properly understand how the scheme is working, if it is working, and what the various pressures on job choices are. 

The pressure is already on to enhance the scheme's scope, though it is widely acknowledged that a programme of this nature upsets the wage market and has already resulted in several states reporting labour shortages at harvesting and sowing time because of a rise in the MGNREGA wage rates. 

 Over the weekend, at the MGNREGA anniversary celebrations, Congress President Sonia Gandhi said the scheme could help unleash a second green revolution. It is not entirely clear how this would happen. If MGNREGA workers are put to work on farms, then it would hardly create a productivity jump. If, on the other hand, a focus on the creation of productive assets through the scheme is rediscovered, then a jump in farm productivity is possible — but at the cost of its simplicity and accessibility to the poorest. 

 Either way, decisions will have to be made with better and more granular information than is currently available.

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