Stagnating wages since 2014-15: Economists explain Modi legacy for informal workers

By Rajiv Shah 

Real wages have barely risen in India since 2014-15, despite rapid GDP growth. The country’s social security system has also stagnated in this period. The lives of informal workers remain extremely precarious, especially in states like Jharkhand where casual employment is the main source of livelihood for millions. These are some of the findings presented by economists Jean Drèze and Reetika Khera at a press conference convened by the Loktantra Bachao 2024 campaign. 

Evidence of a virtual stagnation in real wages since 2014-15 is available from five different sources, three of them official: Labour Bureau data, the Periodic Labour Force Surveys, the Ministry of Agriculture, the Centre for Monitoring the Indian Economy, and the Centre for Labour Research and Action, they said. 

The economists told media, as the Modi government took charge in 2014, five flagship programmes had started providing solid foundations for social security in the informal sector: the public distribution system (PDS), the National Rural Employment Guarantee Act (NREGA), maternity benefits, social security pensions, and child nutrition schemes under ICDS and the midday-meal programme. 

According to them, all five have been undermined in one way or another by the NDA. For instance, the central budget for ICDS and midday  meals declined by 40% in real terms in the last 10 years; maternity benefits have been illegally restricted to one child per family; the central contribution to social security pensions under NSAP has stagnated at a measly Rs 200 per month; NREGA wages have stagnated in real terms and are rarely paid on time; and more than 100 million persons have been excluded from the PDS due to the continued use of 2011 population figures. 

In Jharkhand alone, 44 lakh people are excluded because of this.

Stating that to some extent, the NDA government has compensated for this decline by expanding schemes of its own liking, such as toilets, LPG connections and housing, they asserted, the achievements of these schemes are much smaller than the Modi government claims. For instance, the NDA government declared India “open defecation free” in 2019, but NFHS-5 data for 2019-21 reveal that about 20% of all households had no toilet facility.

As a percentage of GDP, the Central government expenditure on old and new welfare schemes combined has stagnated under Modi, except for a brief spike during the Covid-19 crisis, the economists pointed out. 

Before that, the Modi government was mainly substituting its own schemes for earlier schemes, along with renaming earlier schemes after the Prime Minister, they claimed. This pattern contrasts with the major expansion of social security that occurred under the UPA government, especially UPA-1. The NDA government has managed to build a reputation for generous welfare spending, but this claim does not bear scrutiny.