Towards true unnati, and ending MGNREGA

By: |
Published: October 28, 2019 12:26:08 AM

The government’s proposed Unnati scheme, if it works as planned, offers MGNREGA beneficiaries a ticket out of the programme, and, in the long run, out of poverty.

While MGNREGA outlays rose from Rs 44,000 crore in FY16 to Rs 70,000 crore in FY19, it is not clear how much it helps reduce poverty levels. (Representational image)While MGNREGA outlays rose from Rs 44,000 crore in FY16 to Rs 70,000 crore in FY19, it is not clear how much it helps reduce poverty levels. (Representational image)

It has been clear for a long time that MGNREGA is barely the poverty reduction tool it is often made out to be; at Rs 204 per day per person, the average wage rate across the country is too low to sustain a household of five even if the card-holding member got 100 days of employment as promised under the programme. As it happens, just around a tenth of all households got this—in FY19, just 50.3 lakh households of the 5.5 crore that were alloted work reached the limit of 100 days of employment—and just around 43% of the households that have job-cards received employment under the programme. While MGNREGA outlays rose from Rs 44,000 crore in FY16 to Rs 70,000 crore in FY19, it is not clear how much it helps reduce poverty levels. For one, the wages are not enough to lift the really poor out of poverty, just around 50 days of employment are provided in a year and if this employment is not provided at a time when the individual has no other job, it is not an addition to the household income since some other paying job has to be sacrificed to get MGNREGA wages. The biggest problem, of course, is that MGNREGA has no in-built plan to reduce poverty since it doesn’t really build any skills that can help workers get higher-paying jobs later; indeed, till some time back, MGNREGA works were not even linked to any meaningful asset creation.

The government’s proposed Unnati scheme, if it works as planned, offers MGNREGA beneficiaries a ticket out of the programme, and, in the long run, out of poverty. Under Unnati, the government will provide 100 days of training to one member from each MGNREGA household that completed 100 days of work under MGNREGA in FY19 in skills such as masonry or carpentry, with the trainee being given a stipend of upto Rs 21,000 for the period; this translates into 100 days of training at the FY19 daily MGNREGA wage rate. Since a major reason for workers not opting for skilling was the opportunity cost in terms of lost wages, this takes care of that aspect. It is not clear if another member of the household can continue to avail of MGNREGA and get a job.

If the government is able to ensure the skilling effort is genuine and is able to impart valuable training to workers—the Aadhaar linkage will ensure only genuine beneficiaries get the benefits—this will go a long way in raising their productivity, and hence, incomes. Right now, based on a news report in The Indian Express, Unnati is planned as just a pilot with a Rs 300 crore budget over three years; based on current wage levels, that means less than 50,000 people are to get skilled per year. That is less than a tenth of the 50.3 lakh who are eligible since they have completed 100 days of work. It makes sense to see how the scheme works and, if it does, to migrate as many MGNREGA workers as possible towards Unnati. An anti-poverty scheme that seeks to dissolve itself over time is the only scheme which is going to really work.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1Is NSA Ajit Doval up or down in Modi-2 regime? Read this to know
2South African team is going through a difficult transition, but their decline is alarming
3Integrating nutirition mission with public distribution system