MGNREGA data offer scant information on demonetisation impact

Work under MGNREGA rose in Nov compared with previous months

It is difficult to conclude from employment trends in the national rural employment guarantee scheme under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNRGEA) whether after demonetisation, migrant workers moved back to rural areas and took up work under MGNREGA, as jobs in urban centres have dried up. 

Data show the “bump” in November and December is in line with seasonal trends. This seasonality, coupled with the unusual manner in which MGNREGA has been rolled out this year, makes it difficult to draw conclusions about the impact of demonetisation.

Work under MGNREGA rose in November compared with previous months as it happens every year after rabi sowing. In fact, the rise this year was lower than that witnessed in previous comparable years.

Also, the roll-out of the scheme this year was peculiar. This year, the government encouraged unfettered registration of demand and provided work unchecked in the first half of FY17. Consequently, a large percentage of the pre-approved labour Budget and the financial allocation of the ministry had been exhausted by August. Then the rural development ministry found itself limited by a below expectation mid-year supplementary budgetary grant. 

As a consequence of the financial constraints, the work given to people fell sharply in September and October as compared to the original plan. It was against this low base that a cursory reading of month-on-month comparison has been misread to suggest work given rose substantially in subsequent months — what experts refer to as the low base effect.

On a month-on-month basis (in percentage terms), person days generated under the programme had been contracting from July till October, declining from a peak of 375.4 million days in June to a low of 79.7 million in October.

 In November this trend reversed marginally. The person days generated of work given rose by two per cent in November. In absolute terms, the rise was of a mere 1.6 million. Thus part of the month-on-month rise in November is a consequence of the low base effect.

The upswing continued in December this year, with work generated growing by 27.7 per cent over November. But this upswing is not unique. In FY16, work generated had increased by 62.7 per cent in December when compared to November.

But FY16 and FY15 aren’t exactly comparable to FY17. The former was a drought year, while the latter saw MGNREGA suffering a freeze from the Centre. In 2014-15 person days generated fell to 1.66 billion. So the ideal comparison is with 2013-14, a normal monsoon year. In 2013-14, work generated in December was 50 per cent higher than that in November — again substantially higher than this year. 

The peculiarity of MGNREGA’s implementation in 2016-17 can be seen through another set of data.  

 Over the April-August period this year, person days generated were 28 per cent higher than the person days of work the government had initially planned to give (the pre-approved labour budget). The work given as compared to that projected was as high as 57 per cent in June. 

After August, the trend reversed with work generated lower than projections, touching a low of 59.2 per cent in November. This trend is in sharp contrast to last year when work generated was significantly lower than projections in the first few months of the financial year.

In the first two months after demonetisation, work provided under MNREGA was 113.5 million person days less than what the government had initially planned to give. As against a projection of 298.6 million days in November and December, only 185.1 million days or 62 per cent of the projection was given under the employment guarantee scheme.

Even if one was to set aside reservations about artificial chokes on the scheme, data on work demanded by people suggest a similar trend. The work demanded in November and December this year was actually less than what was originally projected as the labour budget for the period. And what was given was even lower than what was demanded.

In November, demand registered was 112.3 million person days against a projected labour budget of 137.2 million person days, while actual work given was 81.3 million person days. The same trend holds for December. Moreover, the work demanded this year in November and December is less than even that demanded in the same period in previous years, including the good monsoon years.