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Relevant for: Indian Economy | Topic: Issues Related to Poverty, Inclusion, Employment & Sustainable Development

The finding that 8.4 lakh poor households have completed at least 80 days of the 100-day limit for work under the MGNREGS and 1.4 lakh among those have completed the full quota, should come as no surprise. While these numbers are a fraction of the 4.6 crore households which have benefited from MGNREGS this year, the fact that many poor households have nearly completed their full quota of employment under the scheme in just the last two months (May-June 2020) is a reflection of the distress that has driven them to take recourse to it. With the economy reeling after extended lockdowns following the COVID-19 pandemic and migrant labourers losing jobs in urban areas and returning to their rural homes to avoid destitution, the scheme has come as a huge relief to poor families. The government’s decision to extend it into the monsoon season has also benefited households. Data from this year show that in nearly two-thirds of the States, demand for MGNREGS work has doubled or even tripled in a number of districts compared to the previous year. Only in States where kharif crop was sown, the demand was relatively lower. But with some States resorting to their own shutdowns to curtail the spread of COVID-19, the prospects of a robust economic recovery that would benefit those engaged in casual labour and daily wage-labour remain dim. The fairly good monsoon this season should help with providing for more agricultural jobs beyond the MGNREGS works as well, but the surging rate of demand for work under the scheme suggests that it is time the government thought about extending the limit, at least on a State-by-State basis. The swell in agrarian employment in the monsoon season notwithstanding, the excess supply of labour owing to reverse migration from the cities could depress wages. This makes an extension of the limit of work days under the MGNREGS even more imperative.

Since its implementation over a decade ago, the scheme has acted as insurance for rural dwellers during crop failures and agrarian crises. But the Centre’s outlook towards it continues to limit it only as a “fall-back” option for the poor. Even before the COVID-19-induced crisis, a lack of demand and falling consumption among the poor were constraining the economy. The MGNREGS, if utilised as more than just an insurance scheme and as a vehicle for rural development, could potentially address that problem. The lessons from its successes and failures could be used for a more comprehensive job guarantee plan that covers urban India too. Besides alleviating distress, this could also boost consumption and aid economic recovery. An extension of the 100-day limit and comprehensive implementation of the scheme in rural areas can be the first step.

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