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A hard look at MGNREGS

-Live Mint

After years of denial about problems in its flagship social welfare programme, the MGNREGS, the government has awoken to the need for an honest debate on the subject

After years of denial about problems in its flagship social welfare programme, the Mahatma Gandhi National Rural Employment Scheme (MGNREGS), the government has awoken to the need for an honest debate on the subject. On Saturday, Prime Minister Manmohan Singh made some comments on the subject that, obliquely, hinted at problems in MGNREGS. Earlier in the month, the National Advisory Council (NAC)—the intellectual and political begetter of the scheme —called for measuring its impact. These are welcome changes in what has otherwise been an environment of denial.

While releasing NREGA Sameeksha—an anthology of studies on the scheme—Singh said: “The combined effect of expanded agricultural production, demand for labour from the construction sector and the effect of Mahatma Gandhi NREGA has led to a tightening of the market for agricultural labour and a steady rise in real wages… But rising demand for labour is the only way to help the landless improve their standard of living. The income support provided under Mahatma Gandhi NREGA has increased the bargaining power of agricultural labour to some extent and it has helped to put a floor under rural poverty as well.”
The Prime Minister’s remarks, implicitly, provide a critique of the programme.

It is no one’s case that rural labour should be exploited. The issue is different. The question is if MGNREGS is the “only” way to help the rural poor. As the Prime Minister said, the programme has provided a wage floor for rural workers. The problem lies in the sustainability of that floor. On the one hand, as the Prime Minister has asserted, raising demand for rural labour is the only way to help the landless improve their standard of living. On the other hand, MGNREGS has a strong localizing effect that keeps rural labour away from high productivity regions where labour shortage is acute.

In a country where economic growth is slowing, a wage-cum-work guarantee programme that is de-linked from the wider economy is bound to become unsustainable sooner than later. By 2010-11, MGNREGS provided over 250 crore workdays of employment to nearly 5.5 crore families or nearly one in four rural households. These are very large numbers and sustaining them only on the basis of government’s budgetary allocations was a tall order even in the years of high growth. Today, sustainability is a far more serious challenge.

The deeper issue, one that has not been debated is this: would spending on rural infrastructure—roads, schools, better market yards, transportation networks in areas where there are no roads—have helped the poor on a more sustainable basis instead of MGNREGS?