A mod­i­fied NREGA can al­le­vi­ate the farm cri­sis

In­stead of cap­i­tal sub­sidy tools such as loan waivers, a wage sub­sidy can pro­mote labour sup­ply to farm­ers

Hindustan Times (Gurugram) - - Comment - SHREOSHEE MUKHER­JEE

In­dian agri­cul­ture is wit­ness­ing a pe­riod of com­plex so­cio-eco­nomic distress, ev­i­denced at mul­ti­ple farmer ag­i­ta­tions across ru­ral In­dia, all de­mand­ing a higher re­mu­ner­a­tive price for their crops. Ac­cord­ing to the lat­est re­port of the Com­mis­sion for Agri­cul­tural Costs and Prices (CACP), paddy farm­ers man­aged on a mar­ginal re­turn of 4.4% on their in­vest­ments whereas cot­ton farm­ers made a loss of 8.1%. Labour, as one of the largest in­put costs in farm­ing could im­pact cost of cul­ti­va­tion and thereby, the prof­itabil­ity. A ran­domised eval­u­a­tion in Andhra Pradesh found that the in­crease in wages for un­skilled labour was driven by higher wages from the Na­tional Ru­ral Em­ploy­ment Guar­an­tee Scheme (NREGS). An ef­fort needs to be made to eval­u­ate whether mod­i­fy­ing the NREGS to pro­vide farm­ers with labour wage sub­si­dies in­stead of the guar­an­teed 100 days of min­i­mum wages to the labour­ers, may help re­duce the agrar­ian distress that’s sweep­ing ru­ral In­dia.

The ex­pan­sion of the multi-crore NREGS and a grow­ing con­struc­tion sec­tor — both pri­vate and pub­lic — has given labour­ers an al­ter­na­tive to farm labour jobs and has driven higher wage rates. A study by an Ab­dul Jameel Poverty Ac­tion Lab (J-PAL)-af­fil­i­ate, con­ducted over ran­domly se­lected 250 sub-dis­tricts of Andhra Pradesh, found that an in­crease in pub­lic-wages also led to a con­se­quent rise in pri­vate-wages by up to 24%.

In an on­go­ing JPAL study by Breza et al., study­ing the Odisha labour mar­ket, a rea­son for short­age of farm labour has been re­ported as avail­abil­ity of al­ter­na­tive job op­por­tu­ni­ties with higher wages. Job op­por­tu­ni­ties in­cluded not just work un­der the NREGS but a host of other gov­ern­ment schemes such as the Prad­han Mantri Awaas Yo­jana (PMAY), a hous­ing scheme which pro­vides an­other ninety days of un­skilled em­ploy­ment to ben­e­fi­cia­ries, above and beyond the 100 days of­fered un­der NREGS. Labour­ers work­ing un­der PMAY re­ported earn­ing dou­ble the daily wage of­fered for farm. Ac­cord­ing to a study by Na­tional Coun­cil of Ap­plied Eco­nomic Re­search, 1.71 crore labour­ers from the un­or­gan­ised sec­tor have been em­ployed so far un­der this scheme, ad­ding to the higher wage op­tions for ru­ral man­ual labour­ers.

A mod­i­fi­ca­tion in the NREGS could re­duce stress on farm­ing by in­clud­ing agri­cul­tural tasks on pri­vate land as a sub­set of works al­lowed un­der the scheme, and sub­si­dis­ing wages that farm­ers of­fer to labour­ers. Such a wage sub­sidy would pro­mote labour sup­ply to farm­ers, and should with­draw the stress of labour sup­ply short­ages. Se­cond, shar­ing of the wage cost be­tween farm­ers and the gov­ern­ment will mean sav­ings on the NREGS bud­get. Such a mod­i­fi­ca­tion of the pol­icy could pro­vide a way to re­duce bud­getary ex­pen­di­ture, ex­pand the cov­er­age of the scheme to a larger pop­u­la­tion.

At present, the NREGS op­er­a­tional guide­lines (2005) ex­clude all day-to-day agri­cul­tural op­er­a­tions such as plough­ing, sow­ing, weed­ing, har­vest­ing etc from its per­mis­si­ble work list. A leg­isla­tive amend­ment to in­clude farm work on pri­vate lands into the list of per­mis­si­ble work for agri­cul­tural ac­tiv­i­ties would be a huge boost for the pro­duc­tiv­ity of the ru­ral agrar­ian com­mu­nity. The Ma­ha­rash­tra Em­ploy­ment Guar­an­tee Scheme, one of the first em­ploy­ment guar­an­tee schemes in the coun­try, had in­cluded that as­pect in its le­gal tenets by stan­dar­d­is­ing labour pay­ments to farm­ers work­ing on their own lands, based on mea­sur­able farm out­put. The pro­posal is not to ad­dress how in­volved a gov­ern­ment should be in sup­port­ing the agrar­ian econ­omy, but in­stead to ques­tion what is a bet­ter way to ap­ply the large amounts of gov­ern­ment funds en­ter­ing the ru­ral econ­omy.

Since the 1990s, the Cen­tre and state gov­ern­ments have been us­ing cap­i­tal sub­sidy tools like loan waivers to bring re­lief to dis­tressed farm­ers with­out ac­com­plish­ing much, ex­cept elec­toral and po­lit­i­cal gains. The cu­mu­la­tive debt re­lief an­nounced by UP, Pun­jab and Ma­ha­rash­tra is 60% higher than the bud­get of NREGS in 2017-18. The de­sign of large injections of pub­lic funds for In­dia’s agri­cul­ture econ­omy needs to be in­formed with eval­u­a­tions on what is ef­fec­tive for higher farm pro­duc­tiv­ity. A wage sub­sidy for farm labour is one mod­i­fi­ca­tion that needs an eval­u­a­tion, to gen­er­ate ev­i­dence to in­form how the MGNREGA pol­icy gen­er­ates em­ploy­ment when there is need, but with­out stress to farm pro­duc­tion.


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