Agrarian distress and rural distress are terms used interchangeably, but the rural economy today is very different from what it was many years ago, given the diversification of rural incomes and hence incorrect to think one means the other, says Amarjeet Sinha, secretary, ministry of rural development. In an interview, Sinha also spoke about how the flagship rural employment guarantee scheme has evolved since 2006 to result in improvements in income, acreage, water tables, productivity and fodder availability. Edited excerpts:

The rural economy in India encompasses many things other than agriculture. What comes to your mind when the current phase of agrarian distress—due to a collapse in crop prices—is often equated with rural distress?

The rural economy today is very different from what it was many years ago—as has come out in the NSSO (National Sample Survey Office) data—how about half of manufacturing and one third of services is now part of the rural economy. Second, in a very silent way, the diversification of livelihoods through the women’s self-help groups (SHGs), something which happened in a very significant way in southern Indian states and contributed very significantly to decline in poverty in those states. Women’s SHGs getting into retail, getting into non-farm livelihoods, increasing incomes through basic processing of agri-produce—a whole of that we find in the northern, eastern and north-eastern parts of the country. One of the biggest gains over the last four-five years is that a lot of what happened for poverty reduction through women SHGs and secondary education completion. The diversification of livelihoods is beginning to happen on a very large scale and is reflected in the total loans which women of SHGs have taken in states like Bihar, West Bengal, Jharkhand, Rajasthan, Madhya Pradesh, etc., which are contributing to supplementary incomes in many households.

We have got clearance for 1,850 ‘grameen haats’ (rural markets) to enable producers to command a better price, says rural development secretary Amarjeet Sinha. Photo: HT
We have got clearance for 1,850 ‘grameen haats’ (rural markets) to enable producers to command a better price, says rural development secretary Amarjeet Sinha. Photo: HT

So, you are saying that agrarian distress is distinct from rural distress...

The fact that food inflation has been very low and food prices being low, not only in one commodity but in a range of commodities, it does create a distress, net gains to farmers, marginal, small or big farmers, do tend to come down. But having said that, there are a lot of other activities happening simultaneously. To understand the rural conundrum, there was first an argument that perhaps the wage earners still manage to survive the vagaries of distress on account of the fact that their dependence was on wages rather than the price of the agri-produce. We also see some diversification happening on a fairly large scale—the growth in vegetables and horticulture as also animal resources. So, I think the supplementation of incomes through many of these other interventions—the paradox seen in terms of rising demand for fast-moving consumer goods or automobile and other sectors—clearly what it points out is that while there is the challenge of agrarian distress on account of food inflation being low the fact that other forms of economic activity have also started is the demand for goods and services.

There is criticism that the increase in MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme) wages this year has been quite subdued. In many states this is less than the stipulated wages for agricultural labour. Do you see a problem here?

The demand for work under MGNREGS has remained high. This year, in the first quarter, almost 86 crore-87 crore person days of work has already been done—almost 25 crore person days a month. Secondly, there is a fairly scientific methodology for fixing wages in MGNREGS and which is using the consumer price index for agricultural labour. Now with the expansion of the National Food Security Act (NFSA) across the country, rice at 3 a kg and wheat at 2 a kg—actually when the labour bureau does a survey of households, the basket of goods and services which determines the consumer price index for agricultural labour, 74% weightage is on food items and if the prices of cereals don’t rise to the household in real terms due to the subsidy provided, then the annual increases in wages are lower than what would happen if food inflation was very high or if the cost to the household was very high. Having said that, what is emerging is that with the changing consumer behaviour, changing household needs, is there a case for moving towards consumer price index for rural areas, where the weightage on food items is a little lower. These are issues that are under consideration at a time when increases in real wages have slowed.

We’ve already generated over 86 crore person days of work under MGNREGS against an annual average of 236 crore person days, says rural development secretary Amarjeet Sinha. Photo: Mint
We’ve already generated over 86 crore person days of work under MGNREGS against an annual average of 236 crore person days, says rural development secretary Amarjeet Sinha. Photo: Mint

Are you also using MGNREGS to create rural markets?

Under MGNREGS, we have identified rural markets and we are now insisting on no-objection certificates with regard to APMC (Agricultural Produce Market Committee) regulations. We are trying to leverage resources where producers can sell outside the control of APMCs. We have got clearance for 1,850 “grameen haats" (rural markets) to enable producers to command a better price. Building farm gate-level processing infrastructure and rural markets is what we are planning to create using the MGNREGS and other livelihood funds to improve farm incomes. With PMGSY (Pradhan Mantri Gram Sadak Yojna) road network expanding significantly, it will allow us to improve incomes more effectively.

How much of the MGNREGS budget has been exhausted so far this year?

We have already generated more than 86 crore person days of work under MGNREGS compared to the average of 236 crore person days generated every year. This year, Prime Minister (Narendra Modi) specifically requested every chief minister to focus on water conservation in the April-to-June period. Over the last three years, 14.3 million hectares have been covered with water conservation, more than 1.5 million farm ponds, dug wells, etc., have been constructed. Throughout this phase, our thrust has been to create durable assets and provide wage employment. Each year, we have not only used the budgetary resources but have also asked for additional funds depending on the demand for work.

How much has 12 years of MGNREGS helped to address abject poverty?

In the last four years, we have done significant changes under the programme. From the electronic fund management system, geo-tagging of more than 30 million assets, the thrust on durable assets and water conservation, 60% spending on agriculture and allied activities—evaluations have shown the scheme has led to improvements in income, acreage, water tables, productivity and fodder availability.

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