Don’t mess with jobs guarantee scheme

A. SRINIVAS | Updated on July 12, 2012 Published on July 12, 2012

The governance deficit is best addressed by empowering rural women and lower castes.

A recent government report focuses on MGNREGA’s role as an agent of social change.

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has come under attack from a section of the economists and the media, and even from those within the government, on three counts: for creating a “labour shortage” in agriculture; raising farm wages and rendering agriculture unviable; and being a major cause of inflation. How valid are these apprehensions?

A recent publication, MGNREGA Sameeksha, brought out by the Ministry of Rural Development, draws upon a wealth of independent studies to assess MGNREGA’s impact on labour availability, wage rates and expenditure patterns.

The strength of the report, looking into the performance of MGNREGS between 2006 and 2012, lies in its ability to counter the critics by questioning their framework. It puts forward a vision of social transformation against one governed by economics alone. The report makes a case for raising the floor wage of the rural economy, arguing how MGNREGA has improved the nutrition levels of the socially and economically deprived. In the process, it implicitly discards the inflation argument on ethical grounds.


On the issue of limiting the operation of the scheme to the lean season to prevent labour shortages in farms, the report says: “The solution of limiting MGNREGA workdays may not be optimal…in the case of labour (debt bondage, tied labour, etc) that prefers the choice of MGNREGA work over work on private farms.”

In the same refrain, it continues, “the provision of this choice of work is one of the arguments that effectively support the need to implement MGNREGA in areas where contract labour/debt bondage still exist.” The scheme, therefore, is being seen as a catalyst of social change, rather than just a safety net for farm workers.

While the report does assert that diversion of labour from farm operations is not significant, except in a few States, the larger, implicit point is that even if it is, it must be accepted for reasons of equity. What it means is that farmers must be prepared to pay higher wages to secure their workforce.

Ms Uma Shankari, a practising farmer in Chittoor district and an academic, explains: “Farmers are weighed down by a range of input costs, of which the rise in labour costs is not the only factor. MGNREGA is a part of a larger economic drive to put money into the hands of poor farm workers. It should not be seen as central to the problems of the agriculture sector.”

Explaining the social transformation in the wake of MGNREGA, Prof K.P. Thomas, Coffee Board member representing the interests of labour, says: “MGNREGA has triggered a kind of self-respect movement among farm workers. They go in a group, and do not have to put up with rough behaviour in the plantations.”

The coffee sector is facing a “shortage” of labour, with MGNREGA, construction work, petrol pumps and malls emerging as attractive job options.


Besides, the young generation cannot be persuaded to be at the beck and call of estate managers. Therefore, it is a question of growers being willing to pay a higher price for labour, rather than the non-availability of labour in a populous country such as ours — or so the proponents of MGNREGA would perhaps argue.

But this raises the question of the capacity of farmers to pay. Small farmers and plantation owners may indeed be unable to cope with labour costs and opt for mechanisation, and this is already happening. What we are also seeing is a shift to less labour-intensive crops, such as mangoes in Andhra Pradesh.

The report does not, however, look at the long-term economic impact of MGNREGA — its effect on cropping patterns, the energy implications of farm mechanisation and its labour-displacing effects. The report concedes a governance deficit, where the worse-off States, which really need such a scheme, are poorest at implementation.

States with strong panchayati raj institutions, with women and dalits playing an important role in gram panchayats, have shown the way. It seems that MGNREGA is an agent of social change, but at the same time depends on such change to be effective. Prof Abusaleh Shariff, Chief Economist at the National Council for Applied Economic Research, observes in a paper in the Indian Journal of Labour Economics: “A household gets its number of employment days maximised when a woman from the household or even the community is a formal member in panchayat-linked village level institutions.”

Therefore, the governance problem in MGNREGA is best addressed by grassroots social and political processes.


The document could have considered the possibility of providing wages in the form of food, more so amidst prospects of a drought and heightened food inflation this year. Paddy output may be hit, and the poorest regions are rice consumers. The bulging rice stocks with the Food Corporation of India can be put to good use.

It appears that the matter, which came up during the inception of MGNREGA, has been laid to rest by linking MGNREGA wages to the Consumer Price Index for Agricultural Labour. However, given the report’s admission that wages are either delayed or the right amount not paid, payment in kind seems a workable option.

In fact, it is also worth considering whether the Food Security Bill can be merged with MGNREGA. This may eliminate the difficulties involved in identifying the poor, provided, of course, the MGNREGA works effectively as a self-selection scheme.

Prof Shariff has raised doubts in this regard, saying that it tends to select better-off households, a point that tallies with the problem of fake muster rolls.

If this dovetailing becomes possible after a few years with better implementation of MGNREGA, it would lead to better food security outcomes at lower cost. BPL cards could be restricted to specific categories identified by the N C Saxena committee, such as the destitute and homeless.

In sum, MGNREGA Sameeksha makes a candid assessment, but it needs to be followed up by a serious look at its impact on the agrarian economy.

Published on July 12, 2012
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