Govt should make MGNREGA irrelevant

Instead, NDA is fighting with Congress to exert ownership over the scheme

The 10th anniversary of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has seen some unseemly political point-scoring between the Bharatiya Janata Party-led central government and the opposition Congress. The Congress, which had legislated and implemented the scheme a decade ago when in power, has long sought to exert ownership over MGNREGA in order to reap political dividends - even though the evidence suggests that it was implemented better in states that had non-Congress governments. Meanwhile, the National Democratic Alliance government released a statement declaring that MGNREGA was a cause for "national pride" and insisted that the scheme had been transformed over the past 20 months that it has been in power - in spite of data suggesting that a fewer percentage of households are accessing the full 100 days of work promised under the scheme, and consistent complaints from states about delays in the sanctioning of funds. The NDA's attempt to own the scheme, while in keeping with its new-found rural focus, is a significant departure from past statements by its leaders about the scheme's utility.

However, this political point-scoring about the scheme is more than just unseemly - it also misses the point. The fact is that Prime Minister Narendra Modi was on to something when he said in Parliament last year that it was a "monument to failures". The point of MGNREGA is to provide a safety net to the rural destitute. It features a design unusual for Indian welfare programmes in that it contains within it the ability to wither away when it is no longer needed. It offers a pittance for hard work - which means that welfare recipients are self-selected among the destitute. But this also means that, with increasing rural prosperity and access to insurance or methods of improving consumption across time, fewer and fewer households should choose to take it up, preferring other ways of keeping themselves away from absolute poverty. However, that clearly has not happened. The years of high rural wage growth till 2014 held out the promise that MGNREGA would eventually wither away. But, since then, rural wage growth has been stagnant. Meanwhile, two successive poor and erratic monsoons mean that demand for the scheme has spiked.

Agriculture remains the most unreformed sector of the Indian economy. Some progress is being made to fix this, with electronic mandis being established in order to ease agricultural marketing, and with proposals for land-leasing to enable the consolidation of holdings finally on the horizon. But the absence of secure and reasonably compensated jobs in rural areas continues to be a problem. The truth is that, while MGNREGA may perform a vital function in the given situation, it is not a cure for rural distress but only a palliative. A more sustained focus on raising productivity in rural areas is needed, but has been missing in successive governments. Instead of resting on its laurels, the Congress should accept that MGNREGA is indeed an admission of other failures. And the government, instead of loudly claiming to have transformed the scheme, should instead worry about how it is going to transform agriculture, and render MGNREGA irrelevant.