Coronavirus – Economic Issues

Tackling rural economic distress


From UPSC perspective, the following things are important :

Prelims level: MGNREGS

Mains level: Paper 2- Need to strengthen the PDS and MGNREGS

The disruption caused by the second Covid wave has added to the hardship faced by the migrant workers and the rural poor. Dealing with it requires strengthening of  PDS and MGNREGS.

Distress due to second Covid wave

  • Several States have imposed lockdown amid second Covid wave which will have severe implications for the livelihoods of those in the informal sector.
  • Migrant workers and the rural poor have been facing great distress over the past one year and the crisis for food and work is only going to intensify further.
  • The migrants have again become vulnerable due to the lockdown in different cities.
  • In this context, there is an urgent need to strengthen the public distribution system (PDS) and the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).

Steps need to be taken

  • The government announced 5 kg free foodgrains for individuals enlisted under the National Food Security Act (NFSA), for May and June 2021.

1) Changes in PDS

  • Expand coverage: The government should expand PDS coverage immediately and include all eligible households under the schemes.
  • According to an independent study, about 100 million people are excluded from the ration distribution system owing to a dated database based on the 2011 Census.
  • Extend period: The Centre should also extend the free foodgrains programme to a year instead of limiting it to two months.

2) Expand MGNREGS

  • The Centre had allocated ₹73,000 crore for 2021-22 for MGNREGS and notified an annual increment of about 4% in wages. 
  • Both these provisions are inadequate to match the requirements on the ground.
  • The central allocation for MGNREGS is about ₹38,500 crore less than last year’s revised estimate.
  • The budget for 75-80 days of employment in the year for 6.5 crore families given the current scale of economic distress.
  • By this rationale, at the current rate of ₹268/day/person, at least ₹1.3 lakh crore will have to be budgeted.
  • The government should also re-consider its decision of a mere 4% increase in MGNREGS wages and hike it by at least 10%.


A large population is facing hunger and a cash crunch. The situation is only becoming more dire as the pandemic continues to rage on. Therefore, the Union government should prioritise food and work for all and start making policy reforms right away.

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