MGNREGA causing labour crisis: RBI

Rural households in six states said they prefer working under MGNREGA rather than traditional labour, leading to an agricultural labour crisis

By Jitendra
Published: Friday 31 August 2018
The shift to MGNREGS from traditional employment was the highest in Odisha. Credit: Sutapa Ghosh/CSE

The Reserve Bank of India’s annual report  says that Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is causing a labour crisis in agriculture.

The report (2017-18) says that since rural households across six states surveyed preferred working under MGNREGS than traditional labour, it is leading to an agricultural labour crisis.

The observation is based on a primary survey carried out with 1,798 MGNREGA workers during August-September 2016 in Gujarat, Kerala, Odisha, Punjab, Uttar Pradesh and West Bengal.

In poorer states, more people preferred MGNREGS over traditional labour and casual labours in agriculture were more likely to choose MGNREGA over other traditional work than casual labour in non-agriculture related work, said the report.

The shift to MGNREGS from traditional employment was higher in casual labour households and the highest in Odisha with 75 per cent households shifting to MGNREGS followed by Uttar Pradesh (66 per cent) and West Bengal (42.5 per cent).

In Punjab, 29 per cent households shifted to MGNREGA from traditional employment, 24 per cent in Kerala and 8 per cent in Gujarat.

The main reason of choosing MGNREGA was payment parity among gender and difference in wage of schemes over traditional employment.

The report points out how a judicious design could help deal with labour crisis. For instance, in West Bengal, work schedule was adjusted to the seasonality of traditional employment to some extent.

The report also says that Minimum Support Price has a clear impact on inflation. Read more here.

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