Only 69% of people who were “offered” a job under the rural employment guarantee scheme (MGNREGS) presented themselves until June 1 of the current fiscal year, compared with around 85% in the previous year. over the past two years, reflecting rapid spread 19 in rural areas and possibly reluctance on the part of people to be exposed to the virus.
Unlike April 2020, which saw a full nationwide lockdown and declining demand for MGNREGS labor, demand for work under the scheme that provides for living wages, remained high in May 2021, which also saw a almost Pan-Indian locking.
While 4.41 crore people asked for work in May compared to 3.59 crore in March, only 22.9 crore person-days were created in May compared to 25.6 crore in March. Oddly enough, even though the demand for labor is high, people are unable to grab the available labor. Or there could be a “communication gap” between block / gram panchayat level agents and workers, so that “job offers” are much lower than officially reported.
The government has been fairly liberal with the release of MG-NREGS funds in the weeks following last year’s lockdown – person-days soared to 57 crore and 64 crore, respectively, in May and June of the last year, compared to an average of 22.1 crore / month in 2019. -20. Although the rate has since declined, a higher level of MGNREGS work has been maintained throughout 2020-21, resulting in increased budget spending for the program to Rs 1.11 lakh crore from the initially estimated Rs 61,500 crore. However, this time around, the government appears to be more frugal with program spending – at least there is no evidence of a loosening of the purse strings yet.
The budgetary expenditure for the program in 2021-2022 is Rs 73,000 crore.
In a recent report, Nomura noted that nominal rural wages have been pushed much higher during the pandemic – in 2020-21, the accumulation of rural wages in the agricultural sector increased by 7.2 pp after increasing by 3 , 8pp in FY20, while rural non-farm wages increased 5.4pp compared to an accumulation of 3.9pp in FY20. Attributing the faster rise in rural wages largely to supply-side factors, the agency added that while higher rural wages are generally positive for rural demand, it was unlikely to be the case in the reported case. “Higher rural farm wages, along with rising costs of other inputs like fodder, diesel and fertilizers, could lead to higher costs of agricultural production, thus leading to inflationary pressures that push costs”, a- he noted.