MNREGS can be a stimulus for the rural economy in the event of a pandemic

The disruption of demand induced by the pandemic and the resulting loss of jobs in manufacturing and services has resulted in a migration of workers from cities to villages. State governments are only now beginning to realize this pressure on rural households. Farm households have so far survived because one or more members are usually a city wage worker; without this support, farm household incomes are even more depressed. It is therefore important to reorganize and relaunch the functioning of rural employment systems. Synergies and efficiency gains must be created and improved to increase rural incomes so that demand can return to pre-pandemic levels.

Developing a new diagram takes time. Therefore, Finance Minister Nirmala Sitharaman, in his recovery plan, increased Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) allocation by 18.69% to Rs 73,000 crore for the 2021-2022 fiscal year. In a question to parliament on August 6, 2021, the government said it had already released Rs 46,705 crore to states and UT and would allocate more funds as requested. The MNREGS has been in the spotlight of left and right ideologies but has always found political favor. Now that the program has been expanded, it is time to examine its ability to boost investment and consumption spending in rural areas and also help individual farmers.

The efficiency of use of the system must be increased in the field. The efforts of the central government using the NREGA software made it very effective. The link with Aadhaar and the transfer of funds directly to beneficiary accounts ensure minimal leakage. Hence, it is time to take advantage of MNREGS to improve not only employment but also better utilization of Rs 73,000 crore.

Unintended consequences

The MNREGS was designed to guarantee 100 days of employment for rural workers. Over the years, it has become a benchmark for the rural minimum wage. It has increased rural wages and there are hardly any areas left where agricultural labor can be paid less than MNREGS wages. This benefited the landless agricultural labor force, but also increased the cost of production for the farmers. Like any other state intervention in market forces, this has had unintended consequences.

Besides the MNREGS, there are other programs at the rural level that provide income to the rural poor. All of these social protection schemes have contributed to wage inflation for agricultural labor required for sowing, harvesting or other agricultural activities. States like Haryana, Punjab, Himachal Pradesh, Uttarakhand and even the Western UP depend on the migrant population for the harvest. Over the past 18 months, migrant labor has been unwilling to move; as a result, harvesting in these states has suffered and increasingly depends on mechanization.

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Mechanized harvesting creates its own challenges by leaving residues on the farm, especially rice and wheat, which due to lack of manpower cannot be cleaned up and are burnt. This massive burning across the fields causes pollution in the cities of the North and is suffered by the townspeople of the region. An unintended consequence of higher rural wages and higher mechanization is pollution. Mechanized harvesting is also not possible for very small farms; large combines cannot turn or move on small farms. In the case of sugar cane, the harvester cuts the green stems at the same time as the cane, which results in an increase in weight for the mill but a lower yield of sugar per kg, distorting the price dynamics. Again, the sugar cane harvester cannot work on very small farms.

There is a way to solve this problem by involving individual farmers to use MNREGS labor for harvest or post-harvest activities. Small farmers could pay, say 25 percent, labor wages and the remaining 75 percent could come from MNREGS. This would ensure a productive use of the MNREGS labor force and reduce costs for the farmer, thus increasing his income. This would go a long way to help the government meet its stated goal of doubling farmers’ incomes.

Capacity for projects

My organization, the Center for Innovation in Public Policy (CIPP), has been working since its inception in the Nuh district of Haryana with the long-term objective of setting up a rural laboratory with the local population to study and report on the implementation of policies on the ground . We have studied several MNREGS in the field and documented their evolution. Nuh is an ambitious district and, as a backward district, it is expected to get a higher allocation from the MNREGS fund among the other 22 districts in Haryana. But the challenge of a backward district is exacerbated by the lack of capacity and capacity on the ground.

We have observed that it is almost impossible for Junior Engineers (JOs) in the Panchayat Department to conceptualize large projects like affordable housing. The JE plays an important role in each MNREGS project because he / she must establish the costing of the project. A sarpanch in a village also lacks the skills to conceptualize an affordable housing project. A housing project is a construction project requiring skilled labor and materials; the simple format of the NREGS software must be adapted for this. The software assigns job codes to each part of the project if it is too large. Payment for labor and material is made through this software. Worksheets are uploaded for labor, and material invoices are processed and transferred directly by central government.

In a construction project, the panchayat will need to hire an architect to design the project on the ground by studying the configuration of the land. But MNREGS software does not have the flexibility to pay a highly qualified person as an architect. Even a clever one mistri (mason) or a supervisor cannot be hired. The quick answer to this problem would be to use resources under PMAY-Gramin for material and design and MNREGS for labor. This has been considered but it does not happen because the Sarpanch or the JE, or even the ABPO (Additional Block Program Officer), do not have the capacity, skills or authority to combine different devices. Collaboration between two different government departments is rarely seen at the top due to structural issues and is almost impossible on the ground.

There is no incentive for village or bloc agents to collaborate and due to territorial issues, joint project proposals are considered “interference”. It is only if DC has the vision that such projects will be conceptualized and executed. This is too much to ask of a District Commissioner (DC) as the number of departments is the same as under a Chief Minister but without the corresponding support staff.

The solution to conceptualize the projects also lies in the NREGS software, which can have modules of adaptation of models for the construction of projects. From affordable housing in rural areas to control dams and water harvesting projects under the Jal Shakti mission. It would help increase the capacity of engineering staff and panchayats to create better and bigger projects.

Technology must be used to bridge this gap, maybe it is time to create an open source digital stack as a public digital infrastructure for the design of field projects. A lego-like design tool that helps estimate material and labor requirements and assigns their payment to various programs. This pays for the labor component of the MNREGS and the material component of the PMAY-Gramin scheme. This is an innovation that would greatly contribute to better use of public spending on the ground.

K. Yatish Rajawat is Policy Analyst at the Center for Innovation in Public Policy. He tweets @yatishrajawat. The opinions expressed in this article are those of the author and do not represent the position of this publication.

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