Date: 24/08/2022

Relevance: GS-2: Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources, Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes; mechanisms, laws

Key Phrases: Rural economy, Periodic Labour Force Survey(PLFS), Covid-19 impact on rural economy, MGNREGA, National Family Health Survey (NFHS).

Context:

• There has been a buzz around the distress in the rural economy since the pandemic began and this public discourse has influenced policy decisions as well as sections of intelligentsia but the multifaceted rural economy needs a recalibration to be realistic and true to facts.

Background:

• The last four annual releases of the Periodic Labour Force Survey (2017-18 to 2020-21, July-June) show that the rural labour market has been witnessing consistently rising labour participation and sliding unemployment rates.
• There is a rise in the share of self-employed and a decline in the share of regular wage/ salaried and casual labour.
• Demand for work under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA), continued to be above pre-pandemic levels in the larger part of 2021 and 2022 which is believed to be a sign of economic distress.
• The above facts are contradicting and thus require a reassessment of whether the rural economy is under stress in the true sense.

The increased work demand under MGNREGA and its impact:

• MGNREGA has become more of a smart choice for household asset creation and sustainable income generation than just being the last resort of village-resident families.
• The share of “works done on individual’s land” (which has been permitted) has increased from 16% of the total completed works in 2014-15 to 73% in 2021-22.
• These works include the creation of household assets such as animal sheds, farm ponds, horticulture plantations, vermicomposting pits, etc, in which the beneficiary gets both labour and material costs as per standard rates.
• Thus the assets created by individuals using MGNREGA have been observed to have a significant positive impact on productivity and income,
• A study by the Institute of Economic Growth, 2018 shows that due to asset creation short-term migrations have reduced up to 70-80% in states such as Bihar and UP in 2021-22.
• The monetary share of works on individual land in total completed works has also risen from about 12% in 2014-15 to 32% in 2021-22.

MGNREGA aids to financial inclusion:

• As per National Bank for Agriculture and Rural Development’s(NABARD) All India Rural Financial Inclusion Survey (NAFIS) 2016-17, more than half of all rural households depend on more than one source of income.
• The survey shows that many households have significantly higher incomes than those depending on a single income source and MGNREGA has its implications.
• The assets created through MGNREGA on individual land can therefore aid income diversification, lift households’ supplementary incomes, and infuse resilience in rural livelihoods.
• It might have led to a drop in casual labour and a rise in self-employment seen in PLFS data.

Agriculture sector and COVID-19 :

• The agriculture sector, employing close to 60% of the rural workforce, underwent robust growth despite covid, aided by favorable monsoons.
• This is evident in high terms of trade for agriculture during the pandemic period and manifested in high domestic tractor sales.
• PM-KISAN, now operational for three-an, has benefitted close to 120 million farmer households in 2021-22, amounting to more than half of the rural population.
• For non-agricultural households that are net buyers of food, the PM Garib Kalyan Anna Yojana

Social Sectors and COVID-19:

• The NFHS data for 2019-21 shows that there is an improvement in an array of indicators concerning the quality of rural lives.
• The proportion of rural households living with electricity rose from 83% in 2015-16 to 96% in 2019-21.
• Households with an improved drinking water source increased from 89% to 95%;
• Institutional births increased from 75% to 87%,
• Women with bank accounts used by themselves increased from 49% to 77%,
• The proportion of households with any member covered by a health insurance scheme has improved from 29% to more than 42%.
• Most indicators concerning the health of rural women and children have improved.

Way forward:

• Outcome-oriented statistics reveal medium-run progress in rural living standards, which are aided by the government’s policy focus on basic amenities and efficient programme implementation
• In any crisis, MGNREGA can play a pivotal role in providing employment as well in the creation of large-scale assets which can improve agricultural productivity and ensure prosperity in villages for the years ahead.
• In the last few years the rural economy has seen some positives in a few sectors but at the same time, the psychological impact of COVID-19 and rising inflation in the present times shows a different picture than the statistics.
• Therefore it is completely wrong to say that the rural economy is not under stress based on statistics. At the same time, there is a need to revisit and reassess the Rural economy to reach the real issues and facts.
• Thus rather than arguing based on some statistical data a comprehensive strategy by the government which makes rural community members and PRI representatives confident and provides them opportunities of rejuvenating their natural resources and strengthening livelihoods is the need of the hour.

Source: Live-Mint

Mains Question:

Q. The statistical data on rural economic distress does not reflect the true state of the economy amid the rising inflation and unemployment in rural areas, do you agree? Justify your stand (250 words).