WAGING CHANGE

Guaranteed employment is an effective poverty alleviation tool. But it works only when governments know how to use it

- A AMARENDER REDDY

LAST YEAR, when the Union government announced that it will pump an additional ₹40,000 crore into the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) for the financial year 2020-21 as part of its covid-19 relief package, it was hailed as a well-thought-out move. After all, the anti-poverty scheme helps create durable assets like check dams and farm ponds; and improve agricultural productivity capacity of the poorest households. The additional amount the government announced was more than half of the ₹61,500 crore budget allocated for the scheme that year, and it did play a role in reducing the economic shock induced by the pandemic and the nationwide lockdown. As many as 110 million people benefitted from works under MGNREGA that year. By comparison, 78.8 million people benefitted in 2019-20 and 77.7 million in 2018-19.

Yet, recent surveys show that MGNREGA has failed to make much of a dent in the deteriorating poverty and unemployment levels in rural India during the pandemic. A study by the Centre for Monitoring Indian Economy (CMIE), an economic think-tank and business information company, estimates that during the first six months of the pandemic—March to August 2020—the average household earned 17 per cent less than what it earned during the corresponding period the previous year. This is equivalent to losing 36 days of income. Moreover, 10 per cent of the households at the bottom of the income ladder lost three months of income during this period. By the second wave this year, unemployment levels moved into double digits. CMIE’s latest estimate shows that unemployment in rural India crossed 14 per cent as on the week ending May 23, 2021. Also, those seeking employment under MGNREGA did not always get it. The State of Working India 2021, a