Arshad Shaikh studies the reduced allocation for MGNREGA in the Budget and the recently released PLFS numbers. Contrary to the government’s position that the status of our economy has reached the stage of “recovery complete”, it appears that we are still experiencing significant rural distress. A major challenge for our policymakers is to generate enough jobs for our youth and control inflation. However, those who govern us seem to be fixated only on growth numbers and bloating the size of the economy. The data on unemployment is not pleasant, and the lack of a “jobs policy” makes those numbers gloomier.

The Union Budget (2023-24) saw a sharp reduction in the allocation for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). The provision for India’s flagship programme that pledges a minimum of 100 days of work is down to a five-year low of `60,000 crore. As a percentage of the GDP at 0.19%, this is the lowest recorded amount set aside for MGNREGS. Members of civil society who are resisting this sharp downturn point out that this will effectively offer only 17 days of work per active household. Their calculations suggest that an allocation of `1.24 lakh crore is required to give 40 days of work to those who are entitled to avail of the rural job scheme.

The National Sample Survey Office (NSSO) released the latest Periodic Labour Force Survey (PLFS) report covering the period from July 2021 to June 2022. The PLFS data says that the unemployment rate in 2021-22 was 4.1% – the lowest since 2017-18. However, experts point out that this could be a red herring. Things at the employment front are not that hunky-dory for which one needs to dig deeper into the data. Our policymakers must focus on jobs and inflation. Unfortunately, the pressing need for “headline management” makes those who govern us to obsess only about the size and growth of our economy.


The justification of the government for cutting the MGNREGA funding is that it is a demand-driven scheme and the government releases funds in the supplementary budget as and when the demand goes up. A look at the actual spending versus the budgeted amount for MGNREGA can be seen in the following table (amount in crores): (* = revised estimate)


An intuitive analysis would reveal that if people demanding work under MGNREGA increase, it means fewer folks in rural areas have jobs and income to pay for their bare necessities. Moreover, the wages offered under the scheme are two-thirds of the market rate. Thus, there exists a direct correlation between rural distress and the number of jobs demanded under MGNREGA. Activists point out that a major portion of the allocation would go toward the pending dues. Thus, very little would reach the economically vulnerable. This slash is likely to sound the death kneel for the rural employment scheme and is bound to slow down our economic recovery.


There are several problems associated with the Periodic Labour Force Survey. First, the report does not directly give the number of jobs created or jobs lost. The data from the last four years (2017-18 until 2020-21) shows that unemployment is decreasing and the ratio of workers to population and labour force participation is on the rise. However, there is no explanation for this phenomenon. This does not correlate to the steep fall in our economic growth (from 8.3% in 2017 to 3.7% in 2020 and then minus 6.6% in 2021) due to the twin shocks of demonetisation and GST followed by the unprecedented lockdown imposed in the country.

The PLFS data for 2020-21 shows that the share of agriculture in giving employment is on the rise. Although the PLFS report for 2021-22 points out that this trend is reversing, the numbers for those getting jobs in the agro-sector continue to be above the pre-pandemic levels. This means that the number of migrant workers who went back to their villages during the lockdown has still not returned to the cities. This means the job scenario is still not encouraging.

According to reports, the unemployment rate for those who have completed graduation from a university stood at 29.1% in 2021-22. The Labour Force Participation Rate (LFPR) for this age bracket is 53% compared to 62% in older people. It appears as if the higher the education one has lesser are the chances to secure a job.


With the mantra of privatisation and disinvestment, there has been a steady erosion in the number of government jobs available in the market. However, this does not mean that we had too many government employees. Our number of government staff is just 6.8% of the total workforce. This number is much less compared to the OECD average of 17.4% in 2021. In terms of public servants per one lakh population, India’s figure of 139 is significantly less than that of the United States, which stands at 668 (as stated in Seventh Pay Commission 2015).

According to figures quoted by Prasanna Mohanty, for Fortune India – “The Railways abolished 72,000 Group C and D posts in six years during FY16-FY21. Hiring temporary and casual workers has been on the rise. A study by the Indian Staffing Federation (ISF) revealed in 2014 that (i) 43% of government jobs (Central, state, PSUs and local bodies) were temporary. (ii) 2/3rd of the incremental formal workforce was temporary, with 80% in casual jobs. (iii) high incidence of professionals and high-skilled workers, including architects, engineers and teachers, professors were on short-term contracts. (iv) 56% of those working in government schemes like ICDS, NRHM, NRLM (Anganwadi and ASHA workers) were honorary workers, getting honorarium, instead of wages/salaries.”


The direction of our economic policy is aimed at the growth and creation of wealth. Those in the highest echelons of power appear to be fixated on making India the largest and fastest-growing economy. Little attention is paid to wealth distribution. The policies mainly benefit capitalists and a limited segment of the urban elite.

The concentration of wealth increases and income inequality increases. The interests of the capitalists and elite foreign businesspersons gain precedence over the interests of the poor. As a result, despite being one of the world’s leading countries in terms of economic growth and the number of super-rich, we have not been able to erase the stigma of being the country with the largest number of poorest people.

The role of the government in managing the economy is not merely that of a coordinator or a regulator. It is the foremost duty of the government to ensure the welfare of the people and cater to the basic needs of the poor.

Similarly, it is the responsibility of the government to formulate policies for the equitable distribution of wealth. The government must ensure that the benefits of development reach the backward, the poor and those from rural areas. Government jobs and schemes for the poor should not be looked at as a drag on the economy. As South African author, Ilana Mercer said: “Government jobs are not an addition to the country’s payroll; they are an increase in the nation’s payload.”

Similar Posts