1. MGNREGS creating jobs, but bigger roads programme better

MGNREGS creating jobs, but bigger roads programme better

Scheme creating jobs, but bigger roads programme better

By: | New Delhi | Published: May 11, 2017 5:21 AM
MGNREGS is not as effective as it appears—12 million is a small fraction of the 240 million employed in agriculture and an even smaller fraction of the country’s total working population. (PTI)

While the performance of MGNREGS appears reasonably good on some parameters—nearly 77 million got work in FY17, even if for just a few days—the fact is the scheme isn’t generating the kind of opportunities it is meant to. For instance, data for FY17 shows that those who found work did so for just 32 days in the year; just 10% of all households that worked were able to do so for the entire 100 days. In a country where unskilled jobs are scarce, giving 77 million people a chance to earn might seem like a good-enough objective to run a scheme funded by tax revenues—after all, it is meant to be a safety net, especially in times of a drought. However, given this translates into just 12 million proper jobs, assuming an average worker works for 200 days a year, MGNREGS is not as effective as it appears—12 million is a small fraction of the 240 million employed in agriculture and an even smaller fraction of the country’s total working population.

That then raises the question of whether the budgeted spends, which have been rising in nominal terms, but not real terms, could be better spent—especially since the leakages are said to be very high according to some surveys and studies. While wages paid out under MGNREGS have been rising over the years—they averaged Rs 164 in 2016-17—the good news is they have stayed well below the all-India average daily wages in agricultural occupations of Rs 248 in 2014-15. In fact, wages were stagnant is several states like Bihar between FY6 and FY17. But there has been a significant upward revision for many states for the current year—in Tamil Nadu, wages will be Rs 205 compared with Rs 140.46 in FY17 while in Andhra Pradesh it will be Rs 197, up from Rs 144.90 last year. In the absence of large productivity hikes, a narrow difference between MGNREGS and other wages will be detrimental to the economy at large.

Given how experts point out the track record on completion of projects hasn’t been very good either, it might be worth allocating the MGNREGS spends to ministries such as roads and irrigation, where it might be put to use more efficiently. Not only would jobs be created, the assets that are built too are likely to be of better quality. Also, as a study by Ashok Gulati, Shenggen Fan and Sukhadeo Thorat found, while every million rupees spent on fertiliser subsidies reduced the number of poor by 24, the reduction was 335 for investments in building roads and 323 for agricultural R&D. Between now and the next budget, that’s something the government needs to think about.

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