MGNREGA: A tale of rural revival

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MGNREGA: A tale of rural revival

Photo: Ramesh Pathania/Mint
If some recent news articles are to be believed, the
Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), a
scheme that costs less than 0.35% of India’s gross domestic product
(GDP), has crashed the country’s economy. The latest to join this
bandwagon of criticism is an editorial in Mint. (“MGNREGA: A tale of wasted efforts”,
7 February). The editorial makes a sweeping assertion that “the scheme
represents Rs2.3 trillion spent on wasteful rural consumption”. While a
healthy debate on the subject is welcome, indeed, desirable, the piece
seems to be an assortment of unsubstantiated claims. No evidence has
been used to support the claims, which is disappointing, given the
plethora of independent evaluations of MGNREGA done by researchers from
across the world over the last few years.

It has been asserted that “such populist schemes helped raise wages
without raising productivity”. The piece also argues that the increase
in rural wages “has had little to do with interventions like MGNREGA”.
To begin with, if indeed MGNREGA has been able to increase rural wages,
it has been worth every paisa spent. Several studies, over many decades,
have shown that there is a strong correlation between rural
agricultural wage rates and rural consumption/rural poverty. In fact,
rural wages remained stagnant between 2000-01 and 2005-06 and it was
after implementation of MGNREGA (from 2005-06 to 2010-11) that the
growth rate of agricultural wages increased to 2.7% per annum for men
and 3.7% for women.

Raising agricultural productivity is one of the
fundamental objectives of MGNREGA. Works such as land levelling, making
of embankments, drought-proofing, etc., have been undertaken on lands of
lakhs of small and marginal farmers. Another recent study across six
states showed that 85% of small and marginal farmers saw an improvement
in land quality as a result of MGNREGA. Other independent studies also
confirm that MGNREGA have led to an improvement in soil fertility and
agricultural production and productivity.
It has also been claimed that MGNREGA has “contributed
more to inflation than to rural wealth.” There is no direct evidence
linking MGNREGA to inflation. In fact, the scheme gives the poorest
households the ability to withstand economic shocks and deal with
inflation—something they don’t otherwise have. Almost Rs1.55 trillion
(65% of the total expenditure on MGNREGA since its inception) has been
credited directly into the accounts of the MGNREGA workers through banks
and post offices. A study by Crisil in 2012 shows that the increase in
rural consumption seen in the last few years is partially due to
MGNREGA. A recent study conducted by the Consultative Group to Assist
the Poor (C-GAP)—World Bank (2013) in Andhra Pradesh shows that MGNREGA
became a major source of income for poor households (40% of their
income) in the lean agricultural season (May-June), saving them from
falling back into poverty.
The third claim is that MGNREGA has “undermined rural
prosperity by cornering resources that may have been better utilized in
projects such as rural roads, water systems,…” (or by creating)
“…durable assets that could spur rural growth on a sustainable basis”.
All the works under MGNREGA are for building rural infrastructure. Rural
roads account for 15%, land development 25% and most visibly, water
conservation structures for 50% of MGNREGA. The works may be of varying
quality in different states, but they are there for everyone to see.
The editorial also argues that the money spent on MGNREGA
could have been “used to build roughly 45,000km of rural roads”. This
is a facile argument for the simple reason that the other major
programme of the ministry of rural development—the Pradhan Mantri Gram
Sadak Yojana—has, over the last 10 years, led to the construction of
267,000km of all-weather roads in rural India. To consider a rural
employment programme and a rural roads programme as alternatives instead
of being complements shows a limited understanding of the dynamics of
rural India today.
It is nobody’s case that MGNREGA does not have issues
such as delays in wage payments, asset quality, leakages and other
weaknesses. But this calls for identifying the problems through
concurrent evaluations and feedback from the field and constructively
addressing them, not closing down the scheme itself.
It is because of the endeavour to constantly
improve—check leakages, streamline money flows, institute more
transparency, etc.—that detailed management information systems have
been put in place that can track every worker and every work undertaken
under MGNREGA.
MGNREGA has been a strong pillar on which the foundation
of rural prosperity of the last decade has been based. One in four rural
households have benefited from it, with at least 50% beneficiaries
being women, scheduled castes and scheduled tribes. Of course, rural
India needs more than just MGNREGA. But the contribution of this
programme to the “India story”, and to rural revival in the last decade
cannot be dismissed cavalierly and without recourse to evidence.
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