[op-ed snap] The NREGA signal


From UPSC perspective, the following things are important :

Prelims level : Nothing much

Mains level : Youth on MNREGA shows the distress in economy


As per a paper released recently, the proportion of young workers, those in the age group of 18-30, in the MGNREGA scheme, has begun to rise, especially after 2017-18, when the economy was hit first by demonetisation and later by the implementation of the GST.

What the report says

  • The number of young workers employed under rose to 70.71 lakh in 2018-19 — up from 58.69 lakh in FY18.
  • This aleo seems to be on an upward trajectory this year also, with 57.57 lakh having been employed upto October 21 this year.

Bad news

  • Contraction of factory output by 1.1% in August compared to the past year.
  • The sharp decline in commercial credit in the year till September.
  • Among such gloomy indicators, fresh signs of the deepening slowdown are visible.

What this data reflects

  • MGNREGA is a scheme targeted at the hinterland, aiming to provide 100 days of work to each rural household. 
  • It is clearly a reflection of the little or limited opportunities for young people in rural India to venture out to bigger towns or cities given the slump in construction, real estate and manufacturing and the informal sector besides services, especially the hospitality business.
  • The warning signs were evident earlier when the demand for work under the MGNREGA rose almost 10% compared to the previous year.
  • This shows the mounting rural distress and low farm support prices.

Issue with MNREGA

  • The government pegged the allocation for this scheme for FY20 at Rs 60,000 crore.
  • This is a marginal decline compared to the revised estimates for the last fiscal.
  • A minister said that the government did not want MGNREGA to be a programme in perpetuity.

Way ahead

  • Nobel laureate Abhijit Banerjee had recently pointed to a worrying factor — average consumption expenditure at 2018 prices had fallen from Rs 1,587 per person each month in 2014 to Rs 1,524 in 2017-18 in rural areas, according to NSSO data. 
  • Banerjee has suggested raising wages under MGNREGA and farm support prices.

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