Out of sync: Persistent mismatch between MGNREGA wage growth and inflation

The Parliamentary Standing Committee on Rural Development and Panchayati Raj has criticised the Centre for its failure to ensure daily wages under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) keep pace with inflation.

 

An analysis of MGNREGA wage and inflation trends reveals a persistent mismatch between wage growth and inflation. Over the past few years, wage growth has consistently trailed both general and food inflation rates, with the exceptions of FY21 and FY24 (Chart 1). 

 

Another issue highlighted by the committee has been the disparity in wage rates across different states under MGNREGA. The data shows significant variation in wage growth between FY23 and FY24, with Goa recording the highest wage growth and Uttarakhand the lowest (Chart 2). 

 

Additionally, overall demand for work under the scheme has shown a noticeable decline since the pandemic (Chart 3). 

 

The number of registered job cards, meanwhile, has been declining. Since FY23, the removal of job cards has outpaced issuances (Chart 4). 

 

Also, given that scheme is demand-driven, MGNREGA expenditure has consistently exceeded Budget allocations since FY20 (Chart 5). 

 

Between FY20 and FY24, six states accounted for over the funds released by the Centre under MGNREGA (Chart 6).