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Modi wanted to end MGNREGS. Now it’s his only tool to ride through slowdown

Under the Modi government, the MGNREGS has suddenly become both an indicator of rural stagnation as well as the proposed solution to it.

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Agriculture Minister Narendra Singh Tomar had told the Lok Sabha in July this year that the Narendra Modi government was “not in favour of continuing with” the Mahatma Gandhi National Rural Employment Guarantee Scheme for long.  While MGNREGS’ target group is the rural poor, the Modi government’s larger goal is to eliminate poverty altogether, Tomar said.

But now, the rural development and agriculture ministry is preparing to ask for an additional Rs 20,000 crore for this scheme in the winter session of Parliament. This would be besides the Rs 60,000 crore already earmarked for the scheme in the 2019-20 Union Budget.

If this report is to be believed, Rs 50,000 crore from the original allocation has already been used, including the Rs 15,000 crore outstanding payment from last year. Rising labour demand for work under this flagship rural employment scheme is another reason why the government is seeking supplementary grants.

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Dependence on MGNREGS

Judging from a flurry of announcements relating to MGNREGS in the past few weeks, it would seem that the Modi government’s dependence on this scheme is rapidly growing. It believes this to be a stopgap solution for widespread rural distress and depressed rural employment.

MGNREGS has suddenly become both an indicator of rural stagnation as well as the proposed solution to it. Reports suggest that there is a “rising trend of” entry-level workers seeking employment guarantee under this scheme instead of regular jobs. This implies that the latter is just not available to this section of the population.

Meanwhile, another recent report says the Modi government plans to  execute its other sanctioned schemes — the Pradhan Mantri Awas Yojana (PMAY) and improving water supply — using the MGNREGS. But there are inherent limitations in the MGNREGA guidelines: Labourers can be hired only for limited mandays (100 days per rural household) and only for the unskilled labour component of the programme.

Also read: Beyond MSPs & loan waivers, Modi govt must make agricultural market reforms its top priority

More cracks

The main criticism of this scheme has been that it provides low wages for the work done, lower than the minimum wages set by states. The guidelines on payment standards are set by a formula provided for in the MGNREGA. While a committee discussed a revision of the formula earlier this year, no change has been announced yet. Meanwhile, the legislation to implement minimum wages for unorganised labour has been passed via the Code on Wages 2019, which the Modi government has notified.

The average notified MGNREGA daily wage rate in India increased from Rs 207.62 in 2018-19 to Rs 210.86 in 2019-20 (a mere 1.56 per cent) while the average minimum agricultural wage rate increased from Rs 244.38 in 2018-19 to Rs 280.04 in 2019-20 (by 14.59 per cent).

At this point, the absolute difference prevailing across states between the minimum agricultural wage rates and the MGNREGS daily wage rate for 2019-20 looks like this. It ranges from a differential of Rs 201 in the Andamans (Rs 451 vs Rs 250) to a differential of Rs 187 in Nicobar, Rs 155 in Goa, Rs 75 in Bihar, Rs 113 in Gujarat, Rs 16 in Kerala, Rs 41 in Maharashtra, and Rs 10 in Uttar Pradesh. Where the difference is minimal, it could either be because both wage rates are high (Kerala) or both are low (Uttar Pradesh). The MGNREGA daily wage rate is highest in Haryana at Rs 284 and the minimum agricultural wage rate is Rs 339.

Wage rates for MGNREGA workers are notified and revised annually based on the Consumer Price Index-Agricultural Labourers (CPI-AL) set by the central government in accordance with the provisions of Section 6(1) of the MGNREG (2005) Act. The revised wage rates come into effect from 1 April of every financial year. There is currently a dissonance within the Modi government on which CPI to link the MGNREGA wage rate with, the CPI-AL or the CPI-Rural.

Also read: Modi govt wants to give jobs first and then develop skills through MGNREGA

Need of the hour

In an effort to dodge this issue,  the Modi government announced in September that it would link MGNREGA wages under the Employment Guarantee Act to an updated inflation index, which will be revised annually. But does indexing these rates to inflation compensate for keeping the wages lower than the minimum wage rates?

Nobel laureate Abhijit Banerjee recently put raising wage rates under the MGNREGS second on his list of prescriptions for the Indian economy.

The government also announced that a casual labourer enrolled in MGNREGS would now get a Rs 250 daily allowance for skill training so that he or she could improve their employment opportunity and earn more as masons or plumbers or people skilled in crop storage.

Wage rates under employment guarantee schemes are also lower because MGNREGS wages are paid based on measurement of work done – wages are paid according to the piece rate pay system. Every state has established its Schedule of Rates (SoRs) on the basis of which the work output is defined and used to calculate the wages for MGNREGS beneficiaries.

Payments for hapless labourers working under this scheme are also routinely delayed by state governments. This PIB release of 7 January explains why: “The delay in payment of wages are due to implementation issues in the States which include inadequate staffing, non-timely recording and reporting of attendance, measurement, data entry, generation of wage list, Fund Transfer Order (FTO), etc”.

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Given the current extent of rural distress, all political parties should approve of an expansion of MGNREGS despite its faults, including delayed payments. But it will remain an investment tool for alleviating poverty, not for India’s economic recovery.

The author is a journalist and researcher, and is the founder editor of Views are personal.

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  1. Is Kssshmir valley the whole of Jmu and Kashmir? Doesn’t the will and voice of people in the rest of the erstwhile estate count for any thing. Every time the libtards like the article’s author want to cry for Kashmir they refer to a handful.of the valley populace. I don’t need to mention who these ‘betrayed’ people owe their allegiance to. They were betrayed the moment Jammu and Kashmir chose to be with India. And nothing has changed for them. These libtards never want to talk about the betrayal of Pandits in Kashmir because that will spoil their rhetoric. As for the so called compliance of media with the Modi government, the fact remains that with social media and round the clock access to news and information people no longer need to depend upon the so called informed and wise scribes to make up their mind for them. The common man can use his common sense to process facts and judge. When will these professional journalists and scribes learn that for all their formal learning most of them are unable to overcome their prejudice and fail to see theground reality. How for all the erudition and elan Pronoy Roy spent more time asking people leading questions about the failure of the Modi government then to find out what were their thoughts. That is why most of them proved do horribly wrong. But perhaps failure has no cost in professional journalism. At the end of each election in which the BJP government has not done well they come up with a new theory about Modi or his policies having been seen through by the people only to be trashed by the results of the next election. They have yet failed to trounce their bete noir because he rebounds after every reversal with greater force. It is about time these scribes began to put facts before opinions rather than to tailor facts to suit their propaganda.

  2. The only politician who has the guts to remove mnrega, Jayaprakash Narayan of lok satta party will never come to power. Every other politician is either a communist Raja or brinda karat with different faces with PhD in leftism right from womb itself.

  3. Maharashtra formulated its Employment Guarantee Scheme after the terrible drought of 1972. In a sense, it is unfortunate that a scheme like Nrega is still required to give poor rural families a safety net against starvation.

    • And soon this scheme will be extended to ex employees of airline companies, telecom companies etc. as they start shutting down. In fact most PSUs and PSBs with their bloated workforice are nothing more then MNREGA schemes. Come to think of it, much of the government itself is a MNREGA scheme.

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