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Can MGNREGA, farming sustain recent bump in rural employment post-lockdown?

India’s rural sector is showing definite signs of revival after the lockdown, with all major parameters, such as fertiliser sales, tractor sales, the pace of sowing and job generation showing signs of improvement.

While rural wages are missing from this matrix, it will be interesting to see what impact the lockdown had on them. However, that will still take time, as updated data is yet to come.

A big turnaround has been in the unemployment numbers driven largely by an improvement in rural job generation after the lockdown.

Data sourced from Centre for Monitoring Indian Economy (CMIE) shows that overall unemployment during the week ended June 21, 2020 dropped to 8.5 per cent down from a high of 23.5 per cent in April and May.

The fall has been largely because of a sharp fall in rural unemployment and not so in the urban unemployment rate.

Rural unemployment during the week ended June 21 dropped to 7.26 per cent from 8.3 per cent in the pre-lockdown period until March 22.

In contrast, urban unemployment rate during the week ended June 21 was 11 per cent while in the same pre-lockdown week that ended on March 22, it stood at 9 per cent.

This clearly shows that while the job scenario is still improving in rural areas, it is far from satisfactory in urban areas.

Two things are driving this improvement in rural India.

According to Mahesh Vyas, Managing Director, Centre for Monitoring Indian Economy (CMIE), sowing of kharif and pre-kharif crops along with the massive increase in jobs created under MGNREGA is fueling this growth.

Pre-Kharif and Kharif Sowing:

Much before the monsoons arrived in India, sowing of summer or zaid crops, cultivated between the rabi and kharif seasons, has reached record levels this year.

The sowing, which usually happens on around 4 million hectares and consists largely of moong and some amount of rice and coarse cereals, was almost 40 per cent more this year.

These crops are largely short-duration varieties, and an added source of income for farmers. They are sown in April while the harvest starts from May onwards.

In Madhya Pradesh, reports said farmers have planted around 500,000 hectares more of summer moong as compared to previous years.

Thereafter, sowing of the main kharif crop has started in a big way following the rapid progress of southwest monsoon.

Data sourced from the department of agriculture shows that Sowing of kharif crops gathered more pace during the week ended Friday, as monsoon reached fresh parts of the country with the total acreage under different crops almost 39 per cent more than the same period last year.

According to data from the department of agriculture, until last week kharif crops have been sown on around 13.13 million hectares of land, which is 39 per cent more than the same period last year.

The southwest monsoon during the same period was 114.7 millimeters, which is 30 per cent more than normal.

So far, in the first 19 days of the four-month monsoon season that started in June, out of 683 districts in the country, rainfall has been normal in about 74 per cent of them.

The agriculture ministry’s data further showed that among major crops, acreage of oilseeds and coarse cereals have been sharply up as compared to the same period last year so also for cotton, while sowing of paddy which is the main foodgrain grown during the kharif season is yet to pick up pace.

The acreage under kharif oilseeds, until June 19 is estimated to 1.43 million hectares, while it was 0.16 million hectares during the same period last year.

While, the acreage under kharif pulses this year has been around 0.45 million hectares until June 19, while it was 0.22 million hectares during the same period last year.

Meanwhile, as per the IMD’s projections, monsoon in 2020 is expected to 102 per cent of the Long Period Average (LPA) with almost all regions expected to get normal rains this year.

With such a sharp jump in sowing, the requirement of labour is expected to be good which the employment data is reflecting in June.

Apart from sowing, the overall rural sector has largely been spared from the harsh lockdowns barring the initial phases.

Rural-centric industries and workplaces in non-urban areas were among the first that were allowed to start by the Central government that also lead to lowering of unemployment rates as compared to urban areas.

Rural India has also been largely unaffected by the pandemic in comparison to its urban counterparts.

MGNREGA

Another major factor that economists have attributed to the bump in rural employment is the sharp increase in jobs provided under MGNREGA largely to returning migrants.

After stuttering in April, as worksites remained closed, MGNREGA roared back with full vigor in the month of May.

According to the MGNREGA website, in May 2020, around 3.30 crore households demanded work under the scheme which was 36 per cent more than the same period last year and among the highest in the past five years.

The sharp jump is also important given that in April, just around 1.10 crore households demanded under the scheme, which is 35 per cent less than the same period last year.

MGNREGA work could not be started in April as worksites were closed due to lockdown.

In June 2020, until 22, around 2.33 crore households have demanded work under the scheme which is over 91 per cent of the total work demanded in the whole of June 2019.

Clearly, this month also MGNREGA work demand will continue to remain strong in rural areas.

There is possibility of work demand spilling over to the monsoon months as well as Central government has allowed MGNREGA in the monsoon season as well.

April, May and June are usually among the peak demand months for MGNREGA, which tapers down from July onwards as laborers are engaged in sowing operations.

Is the trend sustainable?

While rural India has shown a faster drop in unemployment rates than its urban counterpart after the lockdown, experts said it might not be sustainable because there is a limit to which agriculture and MGNREGA can absorb labour.

“To me, more labour being absorbed in agriculture is, in fact, not a very healthy sign as the sector has a lot of disguised unemployment. How long can this be sustained is questionable as ultimately jobs have to come from the non-farm sector,” said Mahesh Vyas of CMIE. 

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