Employment provided by India’s flagship rural jobs guarantee programme fell to a five-year low in April as the nationwide lockdown stalled work.
The 40-day lockdown, in response to the Covid-19 crisis, began on March 24 and is scheduled to end on May 3. In the first 21-day leg of restrictions, there was lack of clarity on whether works under the Mahatama Gandhi National Rural Employment Guarantee Act would continue. While the government later clarified that it can continue with proper physical distancing measures in place, many states saw limited construction activity in April.
According to data available on the official MGNREGA website, work in terms of ‘persondays’ generated dropped to 3.08 crore, 88.8 percent lower than April last year. The work provided was also substantially lower than 26.2 crore persondays in work projected by the government for April. These projections are used for allocation of resources.
A break-up of the data shows that Andhra Pradesh, Chhattisgarh, Bihar, Karnataka, Odisha and West Bengal were among the states generating the highest number of persondays of work for April.
In other states, such as Telangana, work was at a complete halt with no persondays generated. Madhya Pradesh, Gujarat, Kerala and Maharashtra also saw very low work generated under the scheme.
The disruption to India’s only form of social security could not have come at a worse time. The nationwide lockdown meant that daily-wage earners saw incomes stall. Any recourse to earnings by working under MGNREGA scheme was also not available due to disruptions to projects.
Besides, April is typically a month which sees high seasonal demand for work.
There is a clear seasonal pattern in NREGA employment, with these months being the peak months of work, said Reetika Khera, professor at IIM-Ahmedabad. “Due to the lockdown through most of April, work that was usually available to rural workers was lost this year,” Khera said.
With some clarity on work being permitted under MGNREGA even under a lockdown, availability of employment may improve in May. Whether this happens or not will depend on work restarting and if workers will feel safe to go to these sites, Khera said.
Economists believe that under the current circumstances, demand for work under MNREGA will rise. Unemployment is estimated at 29.4 percent in rural areas and at 25 percent in urban areas for the week ended April 26, according to data from the Centre For Monitoring The Indian Economy.
In the only fiscal relief package announced so far, Finance Minister Nirmala Sitharaman said wages for MNREGA would be increased from Rs 182 to Rs 202 per day. However, the drop in persondays indicates that few workers would have benefited even from the moderate rise in wages.
Even before the onset of the coronavirus pandemic in India, the country was in the midst of a slowdown. Total individuals working under the scheme rose to 7.87 crore in FY20, with the number of households rising to 5.47 crore. This was the highest since at least FY17, indicating a lack of job opportunities in the broader economy.
“For April, where we can see clearly that labourers lost employment opportunities, the government should compensate MGNREGA workers,” said Khera. There are roughly 13.6 crore job card holding families. With average wage at about Rs 200 per day, that would work out to about Rs 2,000 per family and Rs 28,000 crore in all, she said.
Given the dominance of informal sector in the economy, along with poor social security, the sudden stop in economic activity along with a prolonged period of social distancing will require fiscal and monetary policy support, said an April 3 report by Kotak Institutional Research. Apart from additional transfers to MGNREGA beneficiaries, the report suggested further transfers to Jan Dhan accounts, additional PM-KISAN spends and build-out of health care infrastructure.
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