MNREGA coverage expanded during lockdown, but safety net inadequate for districts that need it the most

Ever since its inception in 2006, the MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act) has served as a credible, if flawed safety net, serving as a lifeline for millions of vulnerable rural people. In the wake of the COVID-19 lockdown, it was apparent that the MNREGA would need to play a crucial role. The lockdown had triggered widespread job losses in cities, prompting a large-scale return of migrant workers to rural areas. Many migrant workers were overwhelmingly from districts that were already poor to start with, where finding work would be a challenge. Many therefore called for a “million worksites”, for a rapid expansion of the MNREGA.

After a sharp dip in April 2020 on account of lockdown restrictions, the MNREGA expanded substantially between May and July 2020 relative to the eve of the lockdown, before it returned to pre-lockdown levels by August 2020 (Figure 1). For a period spanning the COVID-19 lockdown and after — 1 April, 2020 to 15 September, 2020 — 58.5 million households and 83.5 million workers had been employed under the MGNREGA; the programme had generated a total of 2.02 billion person days, compared with 1.88 billion for the entire fiscal year of 2019-20.

Notes and Source: Based on MIS data. March of each year is set as base=100. The vertical redline denotes the month of the lockdown.

Pro-out-migrant and pro-poor?

Despite the expansion in the months following the lockdown, little is known about whether the programme has expanded sufficiently to meet the surge in demand, especially in districts that account for large shares of out-migrants and the poor. India's employment guarantee was designed to be demand-driven and self-targeting and we examine whether it has fulfilled its promise in the areas that need it most. This is especially important in a context where historically poorer states have utilised less funds than relatively richer states. (Saxena, 2016, for example).

Combining monthly administrative data with district-level data on migration and multidimensional poverty, we assess whether the additional person days in public works employment generated are distributed across districts in ways that are commensurate with their population shares of out-migration and poverty.We present our findings below.

Demand and unmet demand

Between 1 April and 31 August, 2020, 8.5 million fresh job cards had been issued countrywide, representing a 22 percent increase in the number of new job cards compared with the previous year. About 55 percent of the job cards issued and applied for during 2020-21 have been in the “High” out-migrant districts (i.e. top tercile by share of all out-migrants in the country). This is a clear sign of demand for work by new households, likely on account of migrant-returnees. Yet, the job cards issued in the “High” out-migration districts remain less than proportionate relative to their share of out-migrants and/or the poor. The same is true of the top tercile of districts based on poverty share and poverty rate.

We also find that there is substantial unmet demand (the proportion of households which sought work but did not get any) in the programme in these districts. In a demand-driven programme where access to work under the MGNREGA is an entitlement, in principle, any household that seeks work ought to obtain work. However, given limited resources, districts might be unable to provide everyone work.

We examined whether such rationing varies systematically across district types. The country-wide administrative rationing rate for the period from May to August 2020 was 22.7 percent in 2020, relative to 15.1 percent in 2019. We find, however, that administrative rationing is substantially higher in regions that have higher shares of out-migrants and amongst these districts, rationing is higher in poorer districts (Figure 2).

Notes and sources: Administrative rationing rate is computed as 1- proportion of households that demand work who actually worked, expressed as percentage. The figures are local polynomial regression with confidence intervals. High outmigration share districts refer to those districts that are in the top tercile in terms of the district’s share in all outmigrants. Data presented here is of monthly rationing rates for May through August 2020.

Programme expansion

Most districts have been able to generate employment significantly relative to previous levels. At the same time, the districts in the top tercile of out-migrant shares have expanded only 1.48 times relative to the same period last year, as compared with the bottom tercile which has generated 1.73 times the person days. Although the former districts account for 72.2 percent of all out-migrants, they account for only 54.8 percent of the person days generated during May-August, 2020.

We decompose the total person days generated under the MGNREGA during the months of the nationwide lockdown (focusing on May 2020) into two parts:

-The person days accounted for by the inclusion of more households under the programme (hence, expansion on the extensive margin) and,

-Those accounted for by the expansion of the number of days each household works (the intensity of participation, hence, expansion on the intensive margin).

We plot the intensive and extensive margin of the MGNREGA expansion each on a district-level map based on the year-on-year change of the months May 2019 and May 2020 (Figure 3). For May 2020, we find that about 55 percent of the expansion in person days, relative to May 2019, has come from the extensive margin. In our analyses, we find that poorer districts appear to have extended the programme to include more households (rather than giving more work to already working households), but the same does not seem to be the case for districts with a high proportion of all out-migrants in the country.

Notes and Source: Authors' calculations based on MIS data for May 2019 and May 2020 and Census 2011. Excludes districts that do not have a consistent series, district boundaries of 2011. Urban districts in the map are coded as NA. Bardhaman, Balrampur, Puducherry are set to 0 due to incomplete data.

The decomposition exercise is instructive in understanding the nature of expansion of the MGNREGA, but is not in itself informative on whether the overall expansion is adequate to needs. Here we use the average person days generated per rural household (from Census 2011) to judge the scale of expansion (following an analysis in 2011 by Dreze and Oldiges titled 'Employment Guarantee: The Official Picture'). In Figure 4, we show the overall coverage across districts in terms of average person days per rural household in May 2020.

Notes and Source: Authors' calculations based on MIS data for May 2020 and Census 2011. Excludes districts that do not have a consistent series, district boundaries of 2011. Urban districts in the map are coded as NA. Bardhaman, Balrampur, Puducherry are set to 0 due to incomplete data.

Districts in states such as Andhra Pradesh, Telangana, Chhattisgarh and Rajasthan, that have traditionally been implementing the programme well, continue to generate a larger number of days per rural household. For example, as the top performing state in this regard, Telangana (across all its districts) provided 11.4 days on average per rural household in May 2020, and Chhattisgarh 10.65. In contrast, for states that also saw a high expansion on the extensive margin at the district level (Figure 3b) — Uttar Pradesh, Bihar and West Bengal — these figures stand at 2.75, 1.98, and 3.10, respectively. We therefore notice, that despite expanding significantly, many states that, incidentally, also account for a large proportion of out-migrants continue to generate just a few days per rural household.Between May and August 2020, the employment guarantee provided 31 days per working household, yet this is equivalent to just 13.5 days per rural household. Our analyses show that districts that account for a higher out-migration share are not differentially ramping up the programme; instead, implementation patterns are consistent with past records of person-days generated or rationing rate.

MNREGA’s relevance going forward

Our findings suggest that notwithstanding the impressive expansion of the MNREGA, it needs continued funding and attention to fulfill its promise as a credible safety net, especially in districts that need it most. Although the Government of India announced additional allocations, which, in nominal terms, are the largest ever since MNREGA's inception, a substantial portion of these have gone into servicing pending wage and material payments. The allocations also fall well short of what is required for a crisis of this magnitude, with many districts already running out of funds.

Several commentators have pointed out a number of other problems that prevent MNREGA from being an effective palliative. Even as there is significant unmet demand, many MNREGA households that do get work are quickly reaching their 100-day minimum entitlement – an estimated 13.1 percent of enrolled households by 31 August, 2020. It is clear that 100 days of work does not offer adequate protection to vulnerable households, especially considering that MNREGA wages continue to be very low. Some states have already requested an expansion of the minimum guarantee to 200 days per household under the programme. Delays in wage payments and rejected payments continue to remain serious problems. Further, barriers to accessing jobs, owing to the lack of a job card and so on, need to be reduced to enable greater coverage of households, especially those with return migrants, who tend not to be enrolled.

Given that the economy will take time to recover and the continuing spread of the pandemic in rural areas, the MNREGA will continue to be a lifeline for many wage workers, especially in districts where migrants have returned in large numbers. It is important for the government to continue its support of the programme, that serves as a “diffused economic stimulus” and to enhance the capacity of districts that need it most to expand and maintain the programme.

Sudha Narayanan is Associate Professor, Indira Gandhi Institute of Development Research, Mumbai; Christian Oldiges is at the University of Oxford; and Shree Saha is a doctoral student at Cornell University, Ithaca. This article is based on a working paper.

This article first appeared at Ideas for India.

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