Home >Opinion >Views >Opinion | India needs an urban replica of MGNREGA
CMIE data shows after easing of lockdown and gradual resumption of economic activities in states albeit in a phased manner starting June 1, rural unemployment scenario has fared better than its urban counterpart.
CMIE data shows after easing of lockdown and gradual resumption of economic activities in states albeit in a phased manner starting June 1, rural unemployment scenario has fared better than its urban counterpart.

Opinion | India needs an urban replica of MGNREGA

  • As a part of the relief measures, while the PDS system could reach a vast majority of people both in rural and urban areas, the system has failed to identify the affected informally employed labour force in largely urban areas. This makes a case for introducing an urban replica of MGNREGA

With laudable measures like the increased allocation in Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and the Pradhan Mantri Garib Kalyan Yojana in several districts, rural economy has congruently depicted a sharp revival in employment numbers. Centre for Monitoring Indian Economy (CMIE) data shows that after easing of lockdown and gradual resumption of economic activities in states albeit in a phased manner starting 1 June, rural unemployment scenario has fared better than its urban counterpart.

Quite evidently, this has been a result of government’s immediate response to address the mounting rural distress as it began to emerge as a humanitarian crisis when lakhs of interstate migrant workers were forced to go back to their homes in the rural pockets of several states. In the middle of all this, what went unattended was a slowly paralyzing urban India as the majority of people working in urban areas had been informally employed. Just like those several thousand migrant workers, these non-migrant urban resident workers also fell through the cracks when their incomes began to dry up and none had a social safety net to fall back on. This was not just the phenomenon in informal nets, but the formally employed suffered a similar plight too as they faced salary cuts and layoffs. This was an expected outcome as the cash flows of job providers spread across several sectors and throughout the value chain were affected, not to forget the growth backbone Micro, Small and Medium Enterprises (MSMEs) too. More so because they were already trying their best to stay afloat amid the slowdown before the covid outbreak. With unlocking, however, several sectors like manufacturing and services have started opening up and their revival now is clearly dependent on what new forms demand will take post covid times. For example, FMCG sales picking up indicate an increased demand for essentials, discretionary spending remains muted as people turn cautious, and hospitality and travel would take a long time to revive, among others.

The grim urban unemployment scenario, as explained above, coupled with increasing petrol prices and struggles with Chinese imports could further brew trouble for urban India. Additionally, inflationary pressures could mount due to the Centre’s fresh call for an Atmanirbhar Bharat, embodying the idea of import substitution, as industries will face higher input costs domestically. There is fear that we may enter stagflation if supply side disruptions continue and a vaccine isn’t launched in time. As a result, most of these unemployed people are now forced to take rather odd jobs which shall further magnify the problem of informality and reverse the growth outcomes achieved so far. As a part of the relief measures, while the Public Distribution System (PDS) system could reach a vast majority of people both in rural and iurban areas, the system has failed to identify the affected informally employed labour force in largely urban areas. This makes a case for introducing an urban replica of MGNREGA as an urban employment guarantee scheme.

Under the scheme, states should be empowered to take more capital focused expenditure that has a large multiplier effect with encouragement on creation of more public goods like roads, bridges, schools and hospitals. Surprisingly so, government seems to be moving in this direction. As the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) completed its five years since the inception, the government has agreed for the next phase of it with an impressive vision focused on digitization, entrepreneurship and skill mapping based database creation. This Artificial Intelligence (AI) based Atmanirbhar Skilled Employee Employer Mapping (ASEEM) portal can be a game changer in rapid development and could also serve useful for an urban employment guarantee scheme during distress. For the formally employed, government can think of some sort of wage subsidy as a short run strategy like several developed countries have, so that people possess purchasing power to keep consumption demand afloat.

Now, several other policies in pipeline like the urban health scheme with focus on Resident Welfare Associations (RWAs) empowerment, Affordable Rental Housing Complexes (ARHCs) scheme to make urban housing available at affordable rent close to places of work, are all steps in the right direction. What would be needed is a greater emphasis on the credibility of states and a rethinking of local government in the implementation of these policies. They are the most crucial components in developing a quick recovery response in times of crises presently being the health one. A focus on urban development integrated with infrastructure development is vital for a demographically young India, as urban areas spur productivity to the rest of the country thereby encouraging upward social mobility and better human development outcomes.

(The author is an assistant professor, Department of Economics, Sri Guru Gobind Singh College of Commerce, University of Delhi. The views expressed are her own.)

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