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Labour

High Demand for MGNREGA Is a Ringing Fire Alarm 

Rising demand for low paying labour work under MGNREGA points to a failure of economic policy as the Indian economy has failed to provide suitable jobs.

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The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), passed in 2005, has agitated policymakers, economists and political commentators over the last 16 years. Some economists have criticised it as an “inefficient instrument of shifting income to the poor” while politicians like Prime Minister Narendra Modi have also called it a “living monument to Congress failure”. Such criticism aside, MGNREGA’s centrality to the Union government’s welfare programmes can be seen from the fact that it makes up for 51% and 56% of all budgetary estimates for various schemes under the Ministry of Rural Development in 2020-21 and 2021-22 respectively.

At its heart, MGNREGA is a safety net for rural India that guarantees 100 days of employment to every registered household (HH) in a year. It is a workfare programme that pays a worker a minimum wage for unskilled manual work. Thus, it remains a self-targeting demand-driven program that provides poor people low-paying work. Under the scheme, households are issued job cards and every adult member of the household can seek work. Thus, at the most basic level, changes in the cumulative number of job cards signify change in demand for work under the scheme.

Also read: Punjab: What the Rift Between Farmers and Workers Over Wages Tells Us About Agrarian Distress

Official MGNREGA data tells us that there was a net decline of 2.4 million job cards in 2016-17 but the next year ― right after the economic shock of demonetisation ― saw a net increase of 1.8 million job cards in 2017-18. We are aware that demonetisation had the worst impact on micro, small and medium enterprises (MSMEs). The rise in MGNREGA job cards in the following year can be seen as a symptom of economic distress. In the year of the coronavirus pandemic, 2020-21, we saw a record 17.51 million new job cards being added for a net increase of 14.97 million. Therefore, a cumulative total of 132 million households had MGNREGA job cards in the year 2020-1. Thus, more and more households had to seek work under the rural employment guarantee programme when faced with economic distress.

MGNREGA data also reveals another disturbing trend in recent years ― more younger people aged 18-30 seeking employment under the programme. While there has been a steady increase in this bracket between 2015-16 and 2018-19, it really took off in 2020-21. Only 20% of all in that age group who registered found MGNREGA work in 2019-20. This increased to 37% in 2020-21. This signifies that even young workers had to depend on MGNREGA work at low wages as the economy crashed in 2020-21. This is in line with previous CEDA analysis of EPFO data, which showed that the pandemic hurt the younger workforce disproportionately.

While MGNREGA’s importance in India’s welfare architecture and as a barometer of economic distress is firmly established, its failure to provide adequate succour to the rural poor needs to be highlighted even more.

While MGNREGA promises 100 days of employment to each household, the reality is vastly different. In 2020-21, average employment per registered household was just 22 days while the average employment per registered person was only 12 days. Only 4.1% of all registered families actually received 100 days of work in 2020-21. What is worse is that these are the highest numbers between 2015-16 and 2020-21. The pandemic saw migrant workers return to their home states in large numbers and the rise in MGNREGA job cards reflects this change, but average employment numbers show us that the programme failed to help. In UP, which saw reverse migration in 2020-21, the average employment per registered households and person under MGNREGA in the year was just 18 days and 13 days respectively, at an average daily wage of Rs 201. In Bihar, this number was 11 days per registered households and eight days per registered person at a daily wage of Rs 194.

Also read: How Can Employment Be Put at the Centre of the Indian Policymaker’s Agenda?

It is clear that while MGNREGA remains a popular fallback safety net for rural India’s poor workers, it has failed to provide them the help they need. It also tells us about the need for similar workfare programmes for urban India. Rising demand for low paying labour work under MGNREGA points to a failure of economic policy as the Indian economy has failed to provide suitable jobs. Rural India’s safety net is in higher demand and policymakers ought to worry.

Ankur Bhardwaj is Editor, CEDA, Ashoka University and Ashwini Deshpande is Founding Director, CEDA, Ashoka University.