Rural job scheme did little to raise farm wages: CACP

Even as the United Progressive Alliance government is touting the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) as its biggest step for the uplift of the rural poor, a discussion paper floated by the Commission for Agricultural Costs and Prices (CACP) suggests compared to this scheme, growth in overall gross domestic product, agriculture or construction raises real farm wages four to six times more.

The analysis, based on wages between 1990-91 and 2011-12, showed growth in real farm wages decelerated to 2.1 per cent in 2000s, against 3.7 per cent in the 1990s. The paper said this meant if the trend seen in the 1990s had continued in the 2000s as well, farm wages would have been much higher than what they are today. “The results (of the analysis) points to the fact that a ‘pull strategy’ is more desirable than a ‘push strategy’, meaning growth-oriented investments are likely to be a better bet for raising rural wages and lowering poverty than the welfare-oriented MGNREGS,” the paper said.

A state-specific analysis shows growth is the main driver of farm wages, not MGNREGS. To augment its point, the paper showed real farm wages had fallen between 2001-02 and 2006-07, when agriculture growth decelerated. The paper questioned the government’s decision to spend about Rs 2,00,000 crore on MGNREGS since its inception in 2006 to increase investments with a view to raise farm wages. A better bet would have been spending the money on increasing investments in rural-urban construction, overall growth or agriculture growth. “These investments would have raised the growth rates in these sectors, and ‘pulled’ the real farm wages through a natural process of development, whereby wages increase broadly in line with rising labour productivity,” the paper said.

It also questioned the MGNREGS, saying the nature of the scheme wasn’t clear---was it an investment policy or a welfare scheme?

“Since its inception in 2006, MGNREGS claims almost 51 per cent of its expenditure has been on works related to water conservation and irrigation and over 19 per cent on works related to rural connectivity,” it said.

In its present form, the Mahatma Gandhi National Rural Employment Guarantee Act allows works such as irrigation and horticulture, development on private land of small and marginal farmers, which implies a coverage of 80 per cent of land holdings. However, the impact of such expenditure on agriculture growth was still unclear, the paper said.

It said the best way to overcome this anomaly would be to fuse MGNREGS and farm operations. To formalise this, CACP suggested farmers register their demand for MGNREGS labour with panchayats. The MGNREGS in-charge could have groups of such labours that specialised in particular agri-operations and shift these them from one farm to another, it said. “These workers can be given wage rates from the MGNREGS, which can be topped by a farmer in any ratio of his choice,” the report said, adding this would ensure more money than current MGNREGS wages and solve the problem of labour shortage in agriculture.

THE OTHER SIDE

• Overall GDP growth, farm growth has more impact on increasing real farm wages than MGNREGS
• States with high farm growth have high real farm wages
• Investing in agriculture, construction etc more beneficial than MGNREGS
• MGNREGS is not helping agriculture despite best efforts
• MGNREGS should be clearly dovetailed with farming with growers paying a part of the wages