MGNREGS demand not a real indicator of rural distress: Economic Survey
The Hindu
Chief Economic Adviser analyzes MGNREGS effectiveness, highlighting disparities in fund usage and employment generation across Indian states.
Laying the groundwork for revisiting the Mahatma Gandhi Rural Employment Guarantee Scheme (MGNREGS) as a poverty alleviation tool, Chief Economic Adviser V. Anantha Nageswaran on July 22 noted in the Economic Survey that demand under the scheme was not a “real indicator” of rural distress.
While there is a marked variation in the performance of the scheme across States, Mr. Nageswaran said that none of the studies conducted so far had come up with a satisfactory explanation on the unevenness in outcomes.
According to the survey, while Tamil Nadu has less than 1% of the poor population in the country, it accounted for nearly 15% of all the MGNREGS funds released in the financial year 2023-24.
Similarly, Kerala, with only 0.1% of the poor population, used almost 4% of the total funds allocated for the MGNREGS. Together, these States generated 51 crore person-days of employment.
In contrast, Bihar and Uttar Pradesh, with about 45% (20% and 25%, respectively) of the poor population, accounted for only 17% (6% and 11% respectively) of the MGNREGS funds and generated 53 crore person-days of employment.
The correlation coefficient, as per the survey, between State-wise multidimensional poverty index and person-days generated was only 0.3, indicating that the MGNREGS fund usage and employment generation were not proportional to poverty levels. (A coefficient of 1 would indicate that the poorer a State, greater the number of person-days it would generate, while a coefficient of 0 would indicate no relationship between poverty and person-days.)
In this context, the survey concludes that “demand under MGNREGS is not a real indicator of rural distress but is rather predominantly linked with the State’s institutional capacity and to some extent also different minimum wages and other considerations”.