After 3 months of surge, employment under MGNREGS slows; 60% less jobs in August versus July

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September 1, 2020 8:00 AM

The government allocated Rs 61,500 crore for this scheme in the budget for 2020-21, and it later increased the allocation by Rs 40,000 crore amid the pandemic to support the rural economy.

The average monthly income of a person who took up the work offered under the scheme nearly doubled to a perfect Rs 1,000 in the April-July this fiscal.

After the surge witnessed for 3 straight months (May-June-July), person days of work generated under the Mahatma Gandhi National Ru-ral Employment Guarantee Sc-heme (MG-NREGS) slowed in August, as per the official dashboard. In August last year, 15.3 crore person days were created. In comparison, only 14.97 crore of such days was reported in August this year.

As the Centre and states relied heavily on the scheme to avert a rural distress during the pandemic period, the person days had jumped to 57 crore in May and peaked at 64 crore in June. In July, 39 crore person days were generated.
At 189.19 crore, the person days under the popular scheme in April-August in the current fiscal was still a sharp 44% higher than in the year-ago period.

The deceleration witnessed in August is attributed to heavy monsoon rains in certain areas and a return of tens of thousands of migrant workers back to the urban centres. Also, given that the perked-up demand for the scheme has potentially increased the budget funds required even to levels much higher than provided after the recent hikes in outlays, the authorities seem to have become a bit cautious on spending.

The average monthly income of a person who took up the work offered under the scheme nearly doubled to a perfect Rs 1,000 in the April-July this fiscal, from Rs 509 in the year-ago period, CRISIL Research has recently estimated. This feat was enabled by a 46% growth on-year in person-days of work, coupled with an increase of 12% in average wage under the scheme, it added.

Curiously, even after such jump in the person days, there appeared considerable unmet demand in existence for work under the scheme. The demand for work under MG-NREGA saw a sharp spike since early May and peaked in June but has since shown moderation. Net generation of person days in May this year at 56.87 crore was higher by 54% on year; in June and July, the days were more than double the levels in the respective year-ago months.

XLRI Professor KR Shyam Sundar said the demand for work under MG-NREGS might increase in September after falling again in the harvesting season starting with October, but the rising trend could continue for the remaining period of the current fiscal.

The government allocated Rs 61,500 crore for this scheme in the budget for 2020-21, and it later increased the allocation by Rs 40,000 crore amid the pandemic to support the rural economy. Of the Rs 101,500 crore, Rs 11,500 crore has to be spent on clearing pending dues of 2019-20, thus leaving Rs 90,000 crore for the current fiscal. Clearly, the pace of the scheme will likely demand an even higher outlay for the fiscal year.

“Given the trend and the unusual popularity of the scheme, the Finance Minister would have to infuse more funds into it. Alternatively, like Odisha and Jharkhand other state governments would have to devise urban employment assurance scheme. Either way, the state has to step in during this extraordinary time, either in rural or urban labour markets,” Sundar opined.

Responding to the crisis precipitatd by Covid-19, the Centre has already released Rs 57,853 crore under the scheme in the current fiscal, as against Rs 71,026 crore spent during the whole of 2019-20. The government also increased the 2020-21 budget outlay for MG-NREGS to Rs 1,01,500 crore from initial outlay of Rs 61,500 crore. The person days target for the current fiscal has been revised from 280.76 crore to 300 crore.

Between the September-March period of the last fiscal, 134.12 crore person days were generated. Considering that the same number of person days is added in the remaining period of the current fiscal, the total number of person days to be generated will be 323.31 crore.

An ideal scenario would be of average days of employment per household in a year touching 100. In the past years, the days hovered around half that level.

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