India’s rural job guarantee overhaul needs a trial run

The recent budget marks a shift in India’s approach to short-term state-backed employment support.

- VIDYA MAHAMBARE & VIVEK JADHAV

It has reduced funds for the scheme under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), which is expected to be phased out, to ₹30,000 crore from last year’s spending of ₹88,000 crore and allocated over ₹95,000 crore to the new Viksit Bharat Guarantee for Rozgar and Ajeevika Mission-Gramin (VB-G RAM G) scheme that will replace it. What explains this shift and what is its context?In 2004, India made a distinctive choice: an unconditional public employment guarantee for rural citizens. Most countries, up to that point, had relied on conditional income support or unemployment assistance during periods of distress. The backdrop was the NDA government's defeat in the 2004-election. Despite strong economic growth, rural India had not fared well. So the new UPA government chose a universal, demand-driven employment guarantee that entitled rural residents to 100 days of work with no preconditions. If work was not provided within 15 days of a demand, an unemployment allowance was payable, though this was rarely enforced.

In short, MGNREGA was based on the fact that meaningful jobs in rural India were scarce. Any reform of this scheme should start with an assessment of that premise. What is the current evidence on MGNREGA and rural employment in general?