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LATEST NEWS UPDATES | Rural Distress Makes India Inc. Call for Higher MGNREGA Allocation -Rabindra Nath Sinha

Rural Distress Makes India Inc. Call for Higher MGNREGA Allocation -Rabindra Nath Sinha

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published Published on Feb 21, 2022   modified Modified on Feb 22, 2022

-Newsclick.in

By doing so, the corporate sector seems to have cautioned the government against expecting a fast rebound in industrial activity, as there is sizeable idle capacity in the absence of consumption demand.

Kolkata: Rural stress and funds for the rural job guarantee scheme were surprise additions in the organised corporate sector’s listed points for the post-Budget interaction with the Union government held on February 5 under the aegis of the Confederation of Indian Industry.

Surprising additions, because funds and jobs under the Mahatma Gandhi National Rural Employment Guarantee Act 2005, are invariably issues taken up by kisan outfits and social activists. Corporate India, knowing as it does the stance of the Prime Minister Narendra Modi toward MGNREGA (in 2015, he referred to it as a “living monument of failure), says little on this issue.

Be that as it may, the interaction this time round marked a departure from the past and it was Mallika Srinivasan, Chairman and Managing Director of Tractors and Farm Equipment (TAFE), who raised the issue. Srinivasan said despite government support, rural stress was still pronounced. In the fitness of things, therefore, the outlay under the MGNREGA should be kept at the 2021-22 RE (revised estimate) level. The BE or budget estimate for 2022-23 is Rs 73,000 crore, same as the BE for 2021-22. 

Subsequently, circumstances forced the Centre to step up allocation for MGNREGA in the current fiscal by Rs 25,000 crore to Rs 98,000 crore which, therefore, is the RE for this fiscal. Srinivasan thus sought restoration of the outlay for the next fiscal to Rs 98,000 crore. 

Finance minister Nirmala Sitharaman’s reaction was usual – MGNREGA is a demand-driven scheme and “we will be any time ready to add on to that money”. Revenue secretary Tarun Bajaj, in what looked like an attempt to supplement the finance minister’s response, said the government expected demand for MGNREGA jobs to decline next fiscal as industries were likely to hire many hands. 

But, read between the lines, the TAFE CMD’s observation lends itself to several interpretations. It cautioned the government against expecting a fast rebound in industrial activity as there is sizeable idle capacity in the absence of consumption demand. Therefore, industries will wait for demand to pick up, which, when materialising, will facilitate optimum capacity utilisation. Priority for capex (capital expenditure) and job creation will merit consideration thereafter. 

The message, therefore, also is that the government has to wait to see its capex package to “crowd in” private investments. Factory output growth, as measured by the index of industrial production, dropped for the fourth straight month in December 2021 to 0.4%, which was a 10-month low compared with December 2020. 

By suggesting a hike in MGNREGA allocation to Rs 98,000 crore, Srinivasan was, therefore, pleading for priority to de-stress the rural economy and revive rural consumption demand. For example, market research firms have established that the FMCG (fast moving consumer goods) segment depends on rural India for at least 35% of the demand for their products. Apart from MGNREGA jobs, FMCG companies are also counting on direct transfer of Rs 237 lakh crore on account of minimum support price or MSP into farmers’ accounts.      

Asked to comment on the revenue secretary’s expectation that MGNREGA job demand may decrease as industries will engage many people, Dipa Sinha, faculty at Dr B R Ambedkar University, Delhi, told NewsClick : “Either they are deliberately saying this to convey that things are getting better, or they are unable to gauge the magnitude of the distress, particularly in rural areas. Also, there is idle industrial capacity; how can job creation gather so much momentum as to result in less demand for MGNREGA jobs?”

Sinha said industry pleading for larger MGNREGA funds conveyed a lot.

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Newsclick.in, 21 February, 2022, https://www.newsclick.in/rural-distress-turns-tables-MGNREGA-oindia-Inc-calling-higher-allocation?fbclid=IwAR2XGtJ5f0YdJnbBoOCZXL9Hf682MX8ZgoPAwfr9mj7yX_Vqiyf07pdZj18


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