MGNREGS demand rises in September

Demand for work under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) rose 5.3% month-on-month in September, the sharpest growth for this time of the year in a decade, government data shows.

A rise in rural work demand even before the monsoon season officially ended could indicate a slowdown in farm activity, forcing workers to rely on the jobs guarantee scheme to find work.

A total of 20.2 million people sought work under the scheme in September, up from 19.2 million in August.

Uneven distribution of the southwest monsoon rainfall this year impeded the crop sowing patterns. This may have led to this quick shift in job demand. Monthly employment demand fell by 4.7% and 0.9% in September 2020 and 2021. It grew only two times in the month of September in the past 10 years—in 2013 and 2015.

Rural work demand under MGNREGS typically picks up as the kharif sowing season ends, but this time, the increase was premature. Employment under the scheme had fallen 41.7% month-on-month in July and 23.9% in August as the monsoon season progressed. But this did not carry into September.

The data is subject to revision.

“The reduction in work demand in July and August may be cyclical,” said Nikhil Gupta, chief economist at Motilal Oswal Financial Services Ltd. After lagging behind in June-July, kharif sowing had recovered in August, though crops remained undersown by 2.3% relative to a year ago.

In 2021, job demand had declined an average of 18.6% in July-August, followed by another decline of 4.7% in September. In 2020, both figures also declined 29.4% and 0.9%, respectively.

Job demand under MGNREGS has been a useful indicator of job market stress in the economy in the past. One major fallout of the first wave of the pandemic was the mass exodus of casual urban workers back to their homeland, and this led to increased job demand under the scheme, a report by MOFSL observed. Monthly MGNREGS employment grew 41.9% in 2020-21, followed by a 34.6% growth in 2021-22 compared to 2019-20 levels.

The surge in September 2022 came against the backdrop of the average pay of ₹227 per day, compared to the average daily wage of ₹215 and ₹ 205 respectively, in the same month of the previous two years.