The so-called Design Problem with NREGS

Has Rural Labor really stopped migrating because of NREGS?

On July 21st, 2011, an insightful article came up in Indian Express (Wages of a Quick Fix) highlighting the design problems with NREGS. An educated and instructive piece of writing, the article skillfully characterized the two major sources of unemployment in India – first, structural, arising from a mismatch between the demand for labour and existing skill levels and the location of the workers and second, seasonal, a result of the irregular nature of labor demand in the rural economy, which is primarily dependent on farming. The article also claimed that NREGS was bound to intensify the problem of structural unemployment in India by taking away the incentive from people to migrate and develop skills – “With the launch of NREGA, work was made available at above market prices to many individuals who should have been engaged in improving skills and/or migrating. By paying for digging earth, NREGA took away the incentive for taking the risk of looking for work in the nearest city or in faraway states. It took away the incentive for gaining knowledge about work and the human networks required to find jobs.”

While much of the diagnosis by the author was fairly nuanced, the assertion that NREGS is taking away the incentive for people to migrate and can thus lead to labor shortage in urban areas , in our humble opinion, is ill-founded and too big a leap from reality. The author argues that “The lack of migration will have consequences for urban India as well. Labour shortages in low-skilled urban jobs are likely to push employers into more capital-intensive production technologies.” Our contention is that such a scenario will arise only if people stopped migrating. Is that the case?

We work with a small NGO, headquartered in Udaipur, Rajasthan. Our work is specifically with the migrant community where we provide them with a range of services so that migration becomes a more rewarding opportunity. We would like to refer to certain evidence from the field and throw some more light on this debate from our context. Last year we undertook a small study covering 300 migrant HHs registered with our organisation to understand the impact NREGS is having on them and their families which are left behind. The study was carried out in a small block of Udaipur, called Gogunda and found that in the year FY09-10, a person got 56 days of employment at NREGS site on an average (the government figure was 57). The average daily earning was Rs. 73 which added to an annual figure of Rs. 4036 as income from NREGS. With the average MPCE of Rs. 772 for rural HHs as per NSS 2007-08, adding to Rs. 3860 for a family of five, this income was hardly sufficient to pay for a month of consumption expenses. It was evident that the celebrated scheme had not been able to discourage youth from migrating. Instead, what it had turned into was an opportunity for women left behind to earn extra dough, lessen their dependence on remittance income and more importantly on the money-lenders.

It is worth mentioning that from Udaipur, it is mostly the single men who migrate. In the absence of men, erratic cash flows, and sudden financial shocks such as children’s illnesses women lead a precarious existence. NREGS has given them an opportunity to buffer their income and tide through financial shocks and related vulnerabilities. We found that more than 60 per cent of the laborers working on NREGS site were women. Among the men, several were returnees and/or elderly, instances of primary breadwinners of the family choosing NREGS over migration were virtually non-existent.

While Rajasthan is a relatively new labor exporting economy, a look at some of the older masters of the trade such as Bihar shows that migration (and not NREGS) is the key determinant of rural labor market scenario. Gerry Rodgers in his study of rural labor markets in Purnia, Bihar points out that the labor shortage in the two select villages and drastic rise in wages (50 percent between 1999 to 2009 in real terms) is due to migration and not because of NREGA (as there was limited NREGA work happening in close vicinity of the surveyed villages). From NREGS being a possible answer to perils of distress migration to aggravating the structural unemployment issues of India by arresting migration, in our view, the scholarship is making too giant a leap.

If anything, migration has only grown in the last four-five years, a period that also overlaps with the life-time of NREGS. Though there are no national level estimates which would help us establish this, speaking of Gogunda again (which was included in the first phase of NREGS), one only finds the number of buses leaving to Surat growing. Further, if anecdotal evidence was to be believed, similar trends are reported by our partner organisations working with migrant communities in UP, Odisha and Bihar.

On the issue of lack of emphasis on skill building, the author is quite on target. It is indeed a serious constraint and needs addressing proactively. Unfortunately, the current drive of skill development initiatives launched by the government fails to address the needs of the migrant poor. However, this is an issue worthy of a separate discussion and reflects more of an intellectual ennui in the skill development mission itself. We wonder how much of the blame can be put on NREGS.

– Amrita Sharma, Rajendra Sharma (Aajeevika Bureau)

To read the Ila Patnaik’s piece click on the following link –

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