MGNREGS fails to deliver on even its own targets
Given how less than a tenth of households applying for jobs under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) have ended up getting the guaranteed 100 days of workin FY14—the figure was 14.5% in FY09—it is obvious the scheme is failing under even its own stated goals. At a time when both economic growth and jobs creation is falling, it is a measure of MGNREGS’ inability to deliver that the number of persons who availed employment fell from 8.2 crore in FY12 to 7.97 crore in FY13 and 7.31 crore in FY14—in terms of the number of households, the figure fell from 5.5 crore in FY11 to 4.7 crore in FY14, a period during which economic growth almost halved.
Though a Commission for Agricultural Costs and Prices (CACP) study dismisses the view that MGNREGS has been the main driving force behind high rural wages—it was largely construction, according to the CACP—it also points to higher rural wages in states such as Rajasthan and Andhra Pradesh which have a high share of MGNREGS employment. The larger issue is that despite having spent over R2.5 lakh crore since the scheme’s inception, only 1,612 crore person days of employment have been generated—that’s 8 crore jobs based on an employment of 200 days a year for a person considered to be fully employed, or roughly 1 crore jobs each year.
Had this low employment been accompanied by an increase in farm productivity—say, due to greater irrigation facilities getting created—it would be understandable. There is, however, as yet, no formal study of whether MGNREGS has resulted in such a productivity hike. Contrast the R40,000 crore annual spend on MGNREGS over the last few years with the small fraction being spent on irrigation (R12,300 crore in FY15’s budget estimates), and it tells you how misplaced the government’s priorities are. A study by ex-CACP chief Ashok Gulati along with Shenggen Fan and Sukhdeo Thorat for the 1990s found that every rupee spent on rural roads gave a return of R3.17 versus R1.41 in irrigation and 53-58 paise on fertiliser and power subsidies. Even if the next government is not willing to scrap the MGNREGS immediately, it has to be made flexible enough so that it reduces the farmers’ cost of hiring workers by allowing it to be used for irrigation, canal repair and the like. In the meanwhile, analysis needs to be done to see whether the money is better spent in simply creating more irrigation or building rural roads.