New Delhi: The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) has shown a significant increase in demand for work, surpassing pre-pandemic levels. This indicates ongoing rural distress, an issue that has also been echoed by major FMCG firms.
In addition, rural wage rates over the last decade have been consistently lower as compared to the previous decade. Despite food inflation being recorded at around 10% in December and remaining over 5-6% over the last few years, rural wage rates have not increased to match the rising prices. This possibly reflects in tepid consumer goods demand in rural areas.
Increase in demand for MGNREGS work
According to the Times of India, the MGNREGS scheme recorded 305.2 crore persondays in 2023-24, up from 293.7 crore in 2022-23, indicating ongoing rural distress and a lack of job opportunities in the cities.
Despite expectations of a decrease because 2022-23 was the first year after India came out of the pandemic, the rise in demand by roughly 12 crore persondays more is being seen in 2023-24.
The persondays generated in 2022-23 were 28.4 crore more than 2019-20, and it has shot even higher by almost 40 crore in 2023-24 till date, the daily reported.
The work generation zoomed to an all-time record of 389.9 crore persondays in the pandemic hit year of 2020-21, and then barely slipped to 363.2 crore in 2021-22, it added.
“That the work demand and generation under the job scheme should stay elevated, and higher than the pre-pandemic years, is viewed unanimously by experts as signs of high unemployment and rural distress,” it said.
High demand for MGNREGA work may indicate a lack of alternative employment opportunities in rural and urban areas.
Separately, the finance ministry released an additional Rs 3,400 crore in urgent assistance for the MGNREGS, over and above the revised estimate of Rs 86,000 crore for 2023-24, as work demand beat initial projections, a senior official told the Economic Times.
“This pushed up the actual MGNREGS allocation for the financial year to Rs 89,400 crore, against Rs 90,806 crore a year before but almost 50% higher than the budget estimate of Rs 60,000 crore,” the business daily reported.
The extra funds were released to the rural development ministry a few days ago (in March), and would be enough to cater for the improved demand, the official told the newspaper.
This was the second time in 2023-24 that the government released urgent assistance for MGNREGS. In the third quarter of the fiscal, Rs 10,000 was transferred over and above the budgetary allocation of Rs 60,000 crore.
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Rural wages
As earlier mentioned, rural wage rates don’t match the rising food prices.
While the average rural wage rate for men, according to Centre for Monitoring Indian Economy data, was in double digits from 2008-09 to 2013-14, it has significantly decreased in the years following. In 2013-14, it stood at 27.98%, but declined to 4.46% in 2021-22 and 5.86% in 2022-23.
The wage rates are for agricultural and non-agricultural activities.
For women, the situation is the same, according to the CMIE data. In 2013-14, the wage rate for women stood at 25.25%. It declined to 5.4% and 6.24% in 2021-22 and 2022-23, respectively.
