Rise in MGNREGA Workers - Reversing the Job Trend

What is the issue?

• The Indian economy is in the midst of a severe slowdown and the data suggests that a sharp recovery in the near term is unlikely.
• In this backdrop, the changes in the job scenario call for immediate intervention to utilise the demographic potential.

What is the recent shift in the job scenario?

• There is an increase in the number of young workers waiting for work under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
• The number of workers employed in the 18-30 years age group under this reached 7.07 million in 2018-19 compared to 5.8 million in 2017-18.
• There is clearly a higher enrolment of people in the 18-30 age bracket in the subsistence-level job guarantee programme.

Why is this shift?

• The above indicates a severe lack of employment opportunities.
• The GDP data for the 2019 April-June quarter showed that growth in the construction sector declined to 5.7%.
• Expansion in the manufacturing sector collapsed to 0.6%.
• Subdued activity in these sectors and their inability to absorb labour could have pushed workers to seek employment under the MGNREGA.
• It is also likely that distress in agriculture could have affected the demand for labour in rural areas.
• A 2017 discussion paper by the NITI Aayog showed that about two-thirds of income in rural India is now generated through non-agricultural activities.
• About half the construction and manufacturing sector output comes from rural areas.
• It also contributes significantly to the services sector output.
• The manufacturing units in rural areas are possibly losing out because of size and greater formalisation of the economy after GST implementation.

Why is job creation crucial now?

• At a broader level, the inability of the Indian economy to create enough jobs can have longer-term consequences.
• India is witnessing a demographic transition with a significant increase in the proportion of the working-age population.
• The working-age population in absolute terms is likely to grow by about 9.7 million per year between 2021 and 2031.
• This growth will slow in the subsequent years.
• Certainly, India cannot afford to lose this opportunity.
• It will not be able to take advantage of a rising workforce without creating enough employment opportunities.
• But, as the evidence suggests, this is not happening at the moment.

What is to be done?

• The situation forcing young workers to enroll for the MGNREGA work needs to be reversed.
• Revering this trend will require more investment, which will help generate jobs.
• In this context, the government has done well to reduce the corporate tax rate.
• Over the last few years, India has moved up significantly in the World Bank’s Ease of Doing Business ranking.
• However, India needs to do a lot more, particularly in areas such as land registration and contract enforcement, to attract investment.
• Therefore, the pace of reforms must be accelerated.
• Only higher investment and rapid growth can create sufficient employment opportunities.

Source: Business Standard