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LATEST NEWS UPDATES | Strengthening MGNREGA for reviving the economy -Surajit Das

Strengthening MGNREGA for reviving the economy -Surajit Das

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published Published on Oct 30, 2019   modified Modified on Oct 30, 2019
-Newsclick.in

Even if the wage rates under MGNREGA are doubled and if jobs are provided for at least 100 days in a year as per the law, the extra expenditure would not exceed 1% of GDP.

The growth rate is slowing down in India neither because of lower productivity of the labourers or that of the land, nor because of shortage of labour or productive capacity, but because of the lack of demand at the aggregate level. It means that the aggregate actual level of activity is way below the potential national income, given the size of the labour force, labour productivity, land size and productivity, and the productive capacities in the industries and services. The actual growth rate is much lower than the full employment or full capacity growth rate. There are unemployed labourers ready to work at the ongoing wage rates, given their skill levels, and there is unutilised productive capacity at the aggregate level. Also, the ongoing wage rate is lower than the marginal productivity of labour i.e. if the capitalists employ one more unit of labour, the extra cost (wage rate) would be less than the value of output that the extra unit of labour produces. Therefore, it would be profitable to employ more labourers and unemployed labourers would also get jobs at the ongoing wage rates.

However, this profit would be realised only if the producers can sell their products in the market at the ongoing prices. If there is not enough demand in the market, either they have to reduce prices of their products or they would not be able sell their extra output at the existing prices to realise profit. In that case, inventories would be piled up.

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Newsclick.in, 28 October, 2019, https://www.newsclick.in/Strengthening-MGNREGA-Reviving-Economy?fbclid=IwAR2mxgG3nDmCIR55EsdK4cR0py4p9Aq8I8jBo2ICO_j5iQQwRBLYEjMnZ1U


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