Skip to main content

Urban MNREGA likely to propel migration from rural areas, 'overburden' city services

By Dr Radhika Pandey*
One of the biggest challenges facing India, since even before the pandemic, is the state of unemployment in the country. While the unemployment rate in the country has been gradually increasing since 2017, it came to the attention of the media and the public eye amidst the pandemic when countless migrants lost their jobs and were forced to walk back to their villages.
A McKinsey Report on Economic Agenda to Spur Growth and Jobs in 2020 stated that India needs to create at least 90 million non-farm jobs to absorb the new entrants and adapt to the structural transformations in the economy, that is, people moving from unproductive farm sectors to the productive non-farm sectors. A boost of 8.5% to the GDP of India will be required to achieve this goal, especially, in manufacturing, construction and labour intensive sectors.
The unemployment rate surged to 23.52% in April 2020 and 21.72% in May 2020. Since then, it has come down to 6.98% in October 2020. As the lockdown eased, the unemployment numbers also declined. It is interesting to note that the rural unemployment rate was lower than the urban unemployment rate in each of these months. This was primarily because the schemes introduced by the government were targeted to boost employment in the rural areas specifically.
According to the Consumer Pyramid Household Survey (CPHS), around 8.4 crore jobs were lost during the April-June 2020 quarter, out of which 72% were small traders and wage labourers, 19% were salaried employees and 18% businesses. During the following quarter, the small traders and wage labourers recovered more than they lost and businesses recovered by almost 97%. However, the salaried employees were the hardest hit as their recovery was a mere 12.3%.
Even an increase in entrepreneurs has not led to an increase in salaried jobs, thus implying that these new ventures are either small businesses or restricted to self-employment. Thus, it has not resulted in generating job opportunities and economic growth. Since this problem persisted even before the pandemic, it is necessary to analyze the reasons behind it and address this through policy impetus and formalization of jobs.
Moreover, a disappointing trend seen in the labour market is that not only is there a decline in the employment rate, but also in the labour force participation market. This is a cause for concern and if this continues to persist, it will have to be closely analyzed and the National Economic Policy will need to address it.

Government initiatives

The Government of India introduced new schemes to address unemployment in the country, keeping in mind the influx of migrant workers from rural to urban areas. The government enhanced the budgetary allocation to the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) by Rs 40,000 crore to address this critical problem. 
Additionally, the PM Garib Kalyan Rozgar Yojana was announced an employment-cum-rural public works program. The scheme was introduced in 116 districts of 6 states in June 2020 with an initial allocation Rs. 50,000 crore for building durable rural infrastructure.
As part of the Atmanirbhar package, the government announced incentives to facilitate formalisation of jobs. Every registered establishment under the Employees Provident Fund Organisation (EPFO) that brings in new employees into its fold or employees who have lost jobs between March 1, 2020 and September 30, 2020 to re-join work, will be eligible to subsidy of 24% or 12% each of the employees' and employers contribution for each new candidate enrolled.
The new candidates who enrol between October 1, 2020 and till June 30, 2021 will get the benefits under the scheme for a period of two years. For organisations with up to 1,000 employees who earn up to Rs 15,000 per month and are registered under EPFO, the 12% contribution of the employees and 12% from the employer -- amounting to a total 24% will be borne entirely by the central government. For establishments employing more than 1,000 employees, employees EPF contribution of 12% will be provided by the government. 
Almost 15 lakh subscribers were added to the EPFO subscriber base in September 2020. Of the new 15,000 subscribers added to the EPFO subscriber base, 42.8% fell in the 18-25 years age group. This is a critical indicator of the labour market of India.
In addition to the above mentioned schemes, the government had also been considering the possibility of introducing a replica of MNREGA for the urban sector. However, the government has rightly decided to shelve the idea for now. There are many arguments against this. The urban local bodies (ULBs) will be primarily responsible for implementing MNREGA in urban areas.
Most ULBs are understaffed and lack skilled staff to meet infrastructure and service delivery needs of citizens. They are also financially constrained: their own revenue is an abysmally low 1 per cent of the GDP.
A disappointing trend is that not only is there a decline in employment rate, but also in  labour force participation market
MNREGA was envisaged to address the problem of rural unemployment and underemployment. It is primarily meant for labourers who are rendered unemployed due to the seasonal nature of agriculture. The nature of work is unskilled manual labour. The scheme is conceived as wage-intensive and less money is allocated towards material and administration.
The scope for manual unskilled work is limited in urban areas. The capital content of urban infrastructure tends to be high. For employing the same number of workers, the total expenditure would need to be much higher in, say, construction activities. The wage intensive nature of the scheme thus makes it largely unsuitable for building urban infrastructure.
An urban MNREGA could propel migration of workers from rural to urban areas. This could create challenges for the already crumbling infrastructure and services in urban areas. It would be a more sensible strategy to use EPFO to incentivize job creation, instead of replicating MNREGA for the urban sector.

Impact, challenges, way forward

With the salaried jobs witnessing negligible growth, it is becoming more critical than ever before to address the rapid informality in employment. In comparison to 2019-2020, informal employment increased while salaried jobs have faced a sharp decline. In spite of India’s fast growth, the proportion of salaried jobs crawled up at a very slow pace from 21.2 per cent in 2016-17 to 21.6 per cent in 2017-18 and to 21.9 per cent in 2018-19.
According to the Periodic Labour Force Survey, 2017-18 77.1% of employment in India is in non-regular jobs i.e. they are now either self-employed or casual labour. Among the salaried employees in the non-agriculture sector there is rampant informality. 71.1% of salaried employees had no written job contract, 54.2% were ineligible for paid leave and 49.6% were ineligible for any social security. Informality is here to stay during the pandemic.
Workers who lost their jobs will try to create or find more jobs, mostly in the non-formal sector. Even formal enterprises prefer to hire informal workforce since it leads to a reduction in labour costs. It is of critical importance to periodically analyze and identify measures to address the problem of unemployment which has been aggravated by the pandemic.
There is an imperative need for an updated labour force database of the economy to fully comprehend the actual scale of the problem. This will substantially increase the possibility of accurately identifying the pandemic’s effect on the informal sector of the economy -- enterprises and workers both. The Ministry of Labour and Employment is reportedly creating a database of the informal workforce in the country to provide them social security. However, the status of this project is currently unknown.
The National Employment Policy needs to have a more holistic approach to address the challenge of unemployment. It is necessary to look at the composition of employment to ensure more gainful employment in the formal sector. The policy needs to focus on tackling informal employment and low and declining female participation rate.
There is a need to identify policies that might promote dwarfism amongst enterprises in India. There is a need to resurrect the ‘missing middle’ to augment productivity. Finally the laws and regulations that impose undue compliance burden and prevent enterprises from growing in scale need to be identified and rationalised. This will go a long in promoting the ease of doing business in India.
---
*Fellow, National Institute of Public Finance amd Policy, New Delhi. The article is based on Dr Pandey's web policy talk organised by Impact and Policy Research Institute (IMPRI), New Delhi. Acknowledgements: Sajili Oberoi, Research intern, IMPRI, New Delhi, and Marketing and Communications Lead at BrainGain Global, New Delhi 

Comments

TRENDING

Tracing roots of Hindutva Zionism: cannon fodder for 'warped' nationalist pretensions

By Shamsul Islam*  Those who believe in a world free of hegemonic ethno-nationalism, racism, religious bigotry and hatred have rightly taken note of Zionism and its ally Christian Zionism, major perpetrators of ethnic cleansing of ‘Others’. However, the civilized world with its core belief in multi-culturalism and peaceful co-existence is oblivious to a no less dangerous threat to the present human civilization: the Hindutva Zionism. As the term reads it is part of the Hindutva world-view which stands for an exclusive Hindu India minus Muslims and Christians. The other religions like Sikhism, Buddhism, and Jainism will have no independent status but treated as part of Hinduism. The Rashtriya Swayamsevak Sangh (RSS; National Volunteer Organization) is the most prominent flag-bearer of the Hindutva politics whose cadres presently rule India, the largest democracy in the world. RSS was founded by Keshav Baliram Hedgewar (1889-1940) in 1925 who was disillusioned with the Indian freedom st

'Blatant violation' of law by Central government in making NREGA payments

By Our Representative  In September third week, NREGA workers across the country were mobilised for two day so raise their issues and submit a memorandum to the Prime Minister. Organised the NREGA Sangharsh Morcha (NSM), a collective of groups that work with NREGA labourers across the country, workers from 13 states -- Andhra Pradesh, Bihar, Chhattisgarh, Gujarat, Haryana, Jharkhand, Karnataka, Madhya Pradesh, Odisha, Rajasthan, Telangana, Uttar Pradesh and West Bengal -- carried out Kaam Do Abhiyaan, staging demonstrations and rallies against what they called blatant violation of law by the Central government in making NREGA payments. While NREGA has had very positive impacts, it has lately become fruitless, exploiting labour, even though workers who have put in honest hard work have to wait for their wages endlessly, it was suggested.  In such a situation, there is a need to firm up NREGA implementation and end systematic corruption to ensure that workers get their basic NREGA entit

Shocking? No Covid vaccine trials conducted on pregnant, lactating women: RTI reply

By Rosamma Thomas*  A Right to Information applicant who sought details of safety trials conducted in India on pregnant and lactating women for three Covid vaccines in use in India – Covishield, Covaxin and ZyCov-D -- was shocked to learn from the Central Drugs Standard Control Organization (CDSCO) that Serum Institute, manufacturer of Covishield, and Cadila Healthcare, manufacturer of the ZyCov-D vaccine, had not sought permission for such trials.  Bharat Biotech, manufacturer of Covaxin, had sought permission for trial on pregnant women and later withdrawn its application. This response , provided after the applicant was initially unsatisfied with the response and went in appeal, is from the joint drugs controller, CDSCO. It was dated September 13, 2022. One researcher closely following the vaccine rollout, however, is of the opinion that the lack of a trial on pregnant and lactating women is a blessing; potential trial participants and their unborn babies thus escaped harm. Aruna Ro

Fascism on prowl? Religious meet 'deeply pained' at silence of Church, bishops, priests

Counterview Desk  The ‘Forum of Religious for Justice and Peace’which held its 17th National Convention at the Montfort Social Institute, Hyderabad, Telangana from 22 to 24 September 2022 on the theme “Deepening our Identity as Religious: Responding to the Signs of the Times”, has expressed concern “at the deteriorating situation of our nation on every front”, especially stating, “Fascism seems to have come to stay” in India. At the same time, the convention, which took place with the participation of 60 persons from 16 states representing 20 religious congregations, in its unanimously-adopted statement added, “We have reached abysmal depths on every parameter: be it social, economic and political”, underlining, “The poor in India become poorer every day; the rich and powerful continue to profiteer at their expense and amass scandalous amounts of wealth.” Text: We, members (63 women and men Religious, from 16 states representing 20 Congregations) of the Forum of Religious for Justice

Rajasthan cops 'halt' Gujarat Dalit women's rally: homage to untouchability victim boy

By Our Representative  In a surprise move, the Rajasthan police stopped a Dalit women's rally from Gujarat on the borders after it crossed Gujarat alleging that it would "disturb peace" in village Surana, Jalore district, where the gruesome incident of death of a Dalit boy took place on August 13 after he was brutally beaten up by his teacher on touching the drinking water pot. Sources said, while the Gujarat government had "no objection" in allowing the rally, which originated from the Dalit Shakti Kendra (DSK), an empowerment-cut-technical institute for teens founded by human rights leader Martin Macwan, on September 24 morning, the Rajasthan police stopped it for two and a half hours before allowing it to proceed to Surana. The decision to take out a women's rally was taken at a DSK meeting on September 5 following a condolence meeting of the NGO Navsarjan Trust, also founded by Macwan, activists committed to work against caste-based discrimination, orga

Introducing non-native cheetahs is 'not equivalent' to restoring pride in the nation

By Bappaditya Mukhopadhyay*  The Cheetahs from the African continent has finally been introduced to India by the Indian Prime Minister on his 72nd birthday. The process had started with the previous Government in 2009. However, the Supreme Court clearance was pending owing to the objection by the National Tiger Conservation Authority (NTCA) plea to reintroduce cheetahs. Finally the clearance was obtained in January 2020 and thereafter Kuno National Park (KNP) was chosen for the reintroduction of first set of Southeast African Cheetahs. In the near future, depending upon the success story of the current reintroduction, more cheetahs from South Africa may also be introduced. This exercise has generated a lot of interest among various stakeholders with opinions on both sides galore. It is important to pose some questions that surround the whole exercise. Let us evaluate some of these arguments. The first set of arguments are quite detached from the issues of conservation as they most

'Military diplomacy': US praises Bangladesh Army for leadership role in UN operations

By Kamal Uddin Mazumder* As the Indo-Pacific region represents the world’s economic and strategic center of gravity, the Indian Ocean today is becoming the centerpiece of all geo-strategic play. Cooperation in the region is crucial to implementing the international community’s global agenda, including achieving the UN’s Sustainable Development Goals. Major powers like the US have enhanced and deepened their strategic engagement and leadership roles with countries in the region. The Indo-Pacific Army Management Seminar, or IPAMS, is a U.S. Army Pacific (USARPAC) initiated conference that is aimed at facilitating and enhancing interactions among the armies of the Indo-Pacific region. This year's 46th Indo-Pacific Armies Management Seminar (IPAMS)-2022, co-hosted by the Bangladesh Army and US Army Pacific (USARPAC), concluded in Dhaka. The objective of IPAMS is to promote peace and stability in the region through mutual understanding, dialogue, and friendship. It is the largest confer

Buddhist shrines were 'massively destroyed' by Brahmanical rulers: Historian DN Jha

Nalanda mahavihara By Our Representative Prominent historian DN Jha, an expert in India's ancient and medieval past, in his new book , "Against the Grain: Notes on Identity, Intolerance and History", in a sharp critique of "Hindutva ideologues", who look at the ancient period of Indian history as "a golden age marked by social harmony, devoid of any religious violence", has said, "Demolition and desecration of rival religious establishments, and the appropriation of their idols, was not uncommon in India before the advent of Islam".

Grave error? Scholar blames ex-Gujarat babu for anti-Christian riots 'citing fake report'

By Rajiv Shah  A few days back, I received a message from one of the finest former Gujarat government bureaucrats, PG Ramrakhiani, a 1964 batch IAS official, who retired in November 2000. I would often interact with him in 1997-99, even later, after I was sent to Gandhinagar as a Times of India man to cover Sachivalaya. Those were turbulent times. Shankarsinh Vaghela was the Gujarat chief minister, under attack from two sides – from the BJP, which he had left to form a separate breakaway party, Rashtriya Janata Party (RJP), one one hand, and the Congress, which was supporting him from outside, on the other. Ramrakhiani, in his message, referred to the book authored by Ghanshyam Shah and Jan Breman, both top-notch scholars who have known Gujarat in and out. Called “Gujarat, Cradle and Harbinger of Identity Politics: India’s Injurious Frame of Communalism”, I reviewed the book in January 2022.  It claims that Muslims in Gujarat have been turned into “new untouchables”, thanks to the Hin

Swami Vivekananda's views on caste and sexuality were 'painfully' regressive

By Bhaskar Sur* Swami Vivekananda now belongs more to the modern Hindu mythology than reality. It makes a daunting job to discover the real human being who knew unemployment, humiliation of losing a teaching job for 'incompetence', longed in vain for the bliss of a happy conjugal life only to suffer the consequent frustration.