Wages of fear: How did COVID-19 geographic shift affect MGNREGA implementation?

In 2020, during the first wave of the novel coronavirus disease (COVID-19) pandemic, when the country watched millions of informal workers trudging back to their villages due to lockdown-induced job losses, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) emerged as a safety net for the distressed rural households.

Between May and July 2020, the scheme generated the highest number of employment recorded since its launch in 2005. There was, undoubtedly, a surge in the demand for unskilled manual works under MGNREGA as few other employment opportunities were available in rural areas.

But at the same time, people were less fearful of venturing out to seek work as rural India had remained largely unscathed by COVID-19. Administrative apparatus at the panchayat level was also not fully engaged in the management of the pandemic and could implement the livelihood support scheme.

All this changed during the second wave, when the virulence of the pandemic shifted from urban to rural areas (see ‘Troubled interiors’, 1-15 June, 2021). In April and May 2021, rural districts — where at least 60 per cent of the population resides in rural areas — accounted for 45 per cent and 53 per cent, respectively, of the new cases detected.

In May alone, rural districts accounted for more than 50 per cent of the new cases and deaths in all large states except Gujarat, Kerala and Karnataka.

How has this ‘geographic shift’ of the pandemic impacted the implementation of MGNREGA, and thereby people’s livelihoods?

Understanding this is crucial at a time when studies indicate deepening poverty levels and soaring unemployment across rural areas. A recent report, State of Working India 2021, by the Azim Premji University, Bengaluru, estimated that during March-October 2020, rural poverty increased by 15 per cent as compared to the seven months preceding the study period and pushed 150 million more people into impoverishment.

Rural unemployment has spiked to 10.63 per cent from 6.15 per cent between March and May 2021, stated the Centre for Monitoring Indian Economy.

Second wave’s double blow 

To assess the impact of the second wave of the pandemic on rural livelihoods, we compared the demand for MGNREGA works during April and May 2021 with that of the corresponding months the previous year, both at the state and the district levels.

Our findings showed that the demand pattern not only offers an insight into what it takes to survive when caught between a contagious infection and the prospect of income loss, it also offers clues as to how the safety net can be utilised to ensure livelihood security for rural households during such times of crises.

First, let’s analyse the demand for MGNREGA works in April 2021. A simple comparison of data available on the MGNREGA portal would show that it surged 104 per cent more than the demand recorded during the same month in 2020.

But this is misleading as the recorded demand in April 2020 was only for one-third of the month; it may be recalled that between March 25 and April 20, 2020, almost every economic activity, including MGNREGA works, remained suspended because of the stringent country-wide lockdown.

So, we compared the figures with that of April 2019, and found that the demand for MGNREGA works during April 2021 registered an increase of 30 per cent.

This increased demand suggested that unemployment was widespread in rural areas during the second wave. It also indicated that spread of the pandemic in April was not severe enough to dampen demand for MGNREGA works.

The situation, however, changed drastically by the next month, when the rural spread of COVID-19 intensified further. At the macro level, the demand for MGNREGA works contracted by 26 per cent as compared to May 2020. A state-level analysis, however, showed a varied trend.

We analysed the demand for MGNREGA works in 17 large states for May 2021 and compared the figures with demands during the month last year. We found that the demand for MGNREGA works had increased in Madhya Pradesh (5 per cent), Odisha (19.5 per cent), Assam (42 per cent), Jharkhand (57 per cent) and Gujarat (a humongous 722 per cent).

It remained more or less unchanged in Bihar and Telangana, which reported less than 1 per cent of demand contraction. In remaining states, demand contraction ranged from 8 per cent in Andhra Pradesh to 82 per cent in Kerala.

Since the spread of COVID-19 too is not uniform across the country, we further compared the demand contraction in states with the caseload for that month, and found a positive correlation between the two.

In states like Assam, Jharkhand, Madhya Pradesh and Odisha, where the spread of the pandemic was less severe in May 2021, rural households could benefit from MGNREGA works.

But in states where the caseload was high, people did not venture out for MGNREGA works, resulting in a demand contraction.The wide variation in demand contraction prompted us to probe further and explore to what extent the severity of the pandemic influenced people’s decision to seek livelihood support schemes.

We conducted district-level analyses for Rajasthan and Maharashtra, where rural districts accounted for 73 per cent and 61 per cent of the new cases detected in May 2021. While Rajasthan showed a 59 per cent demand contraction in May 2021, for Maharashtra it was 35 per cent.

The districts were selected on the basis of high demand for MGNREGA works. By comparing the districts’ positivity rates (a proxy for severity of the spread of infection) in the last week of May 2021 with the year-over-year change in work demand for the month, we observed a contrasting pattern.

In the selected Maharashtra districts, the severity of the pandemic’s spread when compared with the demand contraction for MGNREGA works showed a positive trend. This suggested a steep demand contraction at places where the infection was severe.

Contrary to expectation, the correlation was negative for Rajasthan districts, with the trend suggesting a moderate demand contraction at places with high spread of infection. What could be the reason for this anomaly?

It’s life vs livelihood

The demand for MGNREGA works by rural households in a pandemic situation is primarily determined by two factors. One, the compulsion to secure subsistence livelihood support notwithstanding the risk of infection (a push factor). Two, the apprehension among MGNREGA job-card holders to expose themselves to the risk of infection while seeking work, particularly in areas of high positivity rates (a pull factor).

The analysis of Maharashtra and Rajasthan districts showed that both the push as well as the pull factors were at play in all districts. And the overall effect on the demand for MGNREGA works depended on which of the two factors was dominant in a region.

In the selected districts where we observed an increase in demand in May 2021 compared to May 2020, the push factor appeared to have neutralised the pull factor; whereas in the districts with significant contraction, the pull factor possibly dominated and dampened the demand for work.

Widen safety net, now 

This understanding should be part of India’s contingency plan to support rural livelihoods in the event of a third wave of the pandemic, which experts warn could hit the country during the second half of the year. Though the ongoing kharif season is expected to generate sizeable opportunities for work, these will taper off around September.

By then, due to substantial coverage of COVID-19 vaccination, the pull factor among MGNREGA job-card holders would be less severe. But the push factor that drives households to demand MGNREGA works will remain, as the period between November and March is also the lean season for labour demand in agriculture.

So there is an urgent need for the government to widen the safety net for rural households by enhancing, among other measures, the guarantee limit of MGNREGA from 100 to 150 days.

In the past, such a dispensation has been allowed in regions affected by natural calamities, such as droughts, floods and cyclones.

Since COVID-19 has been treated as a disaster under provisions of the Disaster Management Act, 2005, the Union government would be well advised to follow the past precedent and increase household entitlement limit of work days under MGNREGA to 150 days for the financial year 2021-22 for the entire country, as the pandemic has not spared any geographical region.

Going by the past records, the highest number of households that have availed 100 days of work in a year has been around 7.2 million, recorded in the financial year 2020-21. Now, let’s assume that the same number of households would seek work during the entire entitled limit of MGNREGA this year also — in the current financial year, only 0.15 million households have completed 100 days of work under MGNREGA up to June 17, 2021.

Providing these 7.2 million households the extra 50 days of employment may require supplementary provision of around Rs 10,000 crore (at the current cost of providing a person day of work).

During a pandemic, this order of additional financial support to the most deprived and vulnerable rural households need not be seen as a breach of reasonable norm of fiscal prudence.

(Jugal Mohapatra retired as Union Secretary, Ministry of Rural Development. Siraj Hussain, visiting senior fellow at International Council for Research on International Economic Relations, Delhi, was Union Secretary, Ministry of Agriculture)

This was first published in Down To Earth’s print edition (dated 1-15 July, 2021)