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Monday, 12 December 2011 00:00
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MGNREGA not the main reason for rising farm wages

Agriculture minister Sharad Pawar is known to have a good head for business, witness what he’s done with the BCCI and the IPL. So it does come as a bit of a surprise that he should be adding his weight to the ranks of those who argue MGNREGA is the reason behind rising farm wages—in a letter to the Prime Minister, he has asked that during peak agriculture season (around three months a year), MGNREGA operations be put off so as to ensure there is enough farm labour, presumably at the wage he thinks is an appropriate one. There is a larger point about whether, at current levels of development, India can afford large and ill-targeted public welfare programmes—and the Food Subsidy Bill Sonia Gandhi has put her weight behind will add to this enormously—but the agriculture minister is not making that point.

India has 1.2bn people, of which the workforce is around 450mn, and around 60% of this works in the agriculture sector. Contrast this with the 96 crore person days of employment the MGNREGA website says have been created so far this year. This is lower than the average of around 250 crore person days over the last few years, so let’s work with that. Assuming an employed person works 200 days in a year, that’s 12.5mn jobs created, or around 2.8% of the total workforce—even if you take just the agriculture workforce, it’s still around 5% of the workforce. How 5% of the workforce can affect wages for all of the workforce is anybody’s guess.

What’s affected farm wages is a combination of factors, and MGNREGA is just one of them. Higher GDP, and inflation, is the primary factor. Though the evidence is only anecdotal, the fall in migration from Bihar as a result of better prospects in the state under Nitish Kumar would also play a role in the labour shortage and higher rates. Also, between 2004-05 and 2009-10, according to NSS data, the proportion of the labour force (based on the ‘current daily status’) fell from 38.1% of the population to 36.5%, largely due to women either studying longer or staying at home due to higher household incomes—as a result, the total workforce declined by 19.2mn. It declined by 37mn if you used the ‘usual principal and subsidiary status’ of workforce. So, MGNREGA is just one of the many factors.

The larger question Mr Pawar never asked, that of constructing a European-style welfare state at India’s per capita income remains, as does the extremely poor-targeting—the latter is something the combination of the Congress’s infighting and the BJP’s stubbornness has almost finished off, now that the Standing Committee has rejected the UIDAI Bill.


Last Updated ( Friday, 16 December 2011 03:56 )

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