Home >News >India >Why Bihar and UP could struggle to scale up MGNREGS work
Migrant workers sit at a bus terminal as they wait to catch state provided transportation to their home villages, in Greater Noida, Uttar Pradesh, India, on Friday, May 29, 2020. Migrant�workers, who form part of India's vast informal sector, were the worst hit by the shutdown. Millions of them lost jobs and incomes, and they continue to return to villages from cities across India. Photographer: Anindito Mukherjee/Bloomberg (Bloomberg)
Migrant workers sit at a bus terminal as they wait to catch state provided transportation to their home villages, in Greater Noida, Uttar Pradesh, India, on Friday, May 29, 2020. Migrant�workers, who form part of India's vast informal sector, were the worst hit by the shutdown. Millions of them lost jobs and incomes, and they continue to return to villages from cities across India. Photographer: Anindito Mukherjee/Bloomberg (Bloomberg)

Why Bihar and UP could struggle to scale up MGNREGS work

As migrant workers return home, the rural jobs scheme is key—but the two states that will matter the most have a poor record in implementing it

As covid-19 cases keep rising, the ensuing economic crisis continues to take its toll. One of the worst-hit groups is rural migrants, who have been compelled to go to their villages because of a standstill in the cities. At home, these migrants face the spectre of poverty due to the lack of suitable livelihood opportunities.

As such, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), which promises a minimum 100 days of wage employment to every rural household, takes on added importance. It is the best poised scheme in terms of coverage and systems to channel the Centre’s funds to supplement lost incomes. Moreover, the Centre has revised its 2020-21 allocation for the scheme from the 60,000 crore that had earlier been earmarked to 1 trillion.

Not all states are set to benefit equally. An assessment of performance indicators from 2016-17 to 2019-20 shows that states differ widely on usage, implementation, and effectiveness of MGNREGS. Certain trends become evident, though no state is clearly ahead on all parameters. Kerala, Tamil Nadu, Chhattisgarh, and Andhra Pradesh have a good track record. As do Rajasthan and West Bengal to some extent. However, Uttar Pradesh (UP) and Bihar, which will account for the maximum number of returning migrants, have mostly underperformed and will need to step up administrative infrastructure in case demand for wage employment spurts.

MGNREGS is a highly devolved scheme, with gram panchayats (GPs) empowered to assess demand for wage employment in the villages. The labour budget prepared by GPs is authorized by programme officers and consolidated across blocks, districts, and the respective state governments. The states then provide labour budgets to an empowered committee of the Union ministry of rural development. The ministry also considers past implementation levels to set state-wise budgets. If work demand increases universally, and states compete for the incremental 40,000 crore, those more active in the past will be better placed.

A key metric that captures effective demand for MGNREGS is the percentage of active job cards, which is the number of registered households seeking work. Around 132 million rural households were registered for MGNREGS in 2019-20. That is 79% of the 168 million rural households enumerated in Census 2011.

However, not all registered households seek work. Of the 132 million households, just about 59 million, or 45%, sought work in 2019-20. There are state-level variances. In the last four years, average active job cards range from 29% in Bihar to nearly 100% in Mizoram. This is 50% to 75% for most large states but is lower in Maharashtra, Gujarat, UP, and Bihar.

This demand could jump across states with migrants coming home. Rural unemployment ranged between 6.3% and 8.4% between May 2019 and March 2020, according to the Centre for Monitoring Indian Economy (CMIE).

This had risen to 22.5% by the end of May and could increase further as migrants in significant numbers are still retreating from urban areas, where unemployment levels are equally grim.

On the supply side, the number of person-days represents the total quantum of work generated. In the past four years, on average, West Bengal, Tamil Nadu, and Rajasthan generated the most person-days of work. UP and Bihar, which lead in total rural households and migrant workers, do much less.

UP has twice as many rural households as West Bengal, but recorded 31% fewer MGNREGS person-days during the period. Bihar’s MGNREGS profile is more like UP than West Bengal. Bihar is also among the three states that used less than 80% of its approved labour budget, suggesting capacity issues. If demand spikes, these factors will come into play to determine incremental state outlays.

MGNREGS promises 100 days of employment in a year to all work-seeking households, but this has never been realized in the last four years. Barring Meghalaya and Mizoram, no state exceeded 60 days. Among major states, West Bengal leads with 57 days, followed by Andhra Pradesh (53). By comparison, both UP and Bihar registered 39 days. If the rural unemployed flock to MGNREGS, states will come under pressure to offer more days.

States will also be under pressure to offer higher wages. In the last four years, average daily wages have varied from 136 in Rajasthan to 276 in Haryana. Yet, in most states, MGNREGS wages are significantly below rural wages, even minimum wages. Large pending dues compound this.

When the lockdown began in March, MGNREGS wages of 11,499 crore were pending with the Centre. In the weeks and months ahead, how states and the Centre navigate this matrix of demand and supply, and cash flows, will determine how MGNREGS fares as a distress alleviation programme.

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