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The finance minister announced a slew of measures to deal with the negative economic impact of the ongoing nationwide lockdown to curb the spread of Covid-19. 

About the Scheme:

MNREGA also known as MNREGS

Paradigm Shift

  • Agency to people - provided Legal Right to Work.
  • Bottom-Top approach - Demand for work coming from Gram Sabha.
  • Right to get unemployment allowance in case of non availability of work.
  • Transparency and Accountability - Social Audit

Guarantee for work

  • The legislation provides a legal guarantee for 100 days of employment in every financial year.

For whom

  • Willing adult members of any rural household.

Nature of work

  • Public work-related unskilled manual work.

Wages 

  • Statutory minimum wage. 

Monitoring Agency

  • The Ministry of Rural Development (MRD), Govt of India

Objectives

  • Bridge Inequalities
  • Women Empowerment
  • Strengthening Grassroot democracy
  • Agricultural asset creation


Govt. initiatives to contain economic impact of lockdown

  • Steps such as providing free rice/wheat and pulses over and above the current allocation, ₹50 lakh insurance cover for health workers and ₹500 a month for women Jan-Dhan account holders in the next three months have been taken.
  • The Centre has raised the wages under the National Rural Employment Guarantee Act (NREGA) by ₹20 to ₹202 a day.
  • RBI cut the repo rate by 75 basis points to 4.4%. The repo rate is the rate at which RBI lends to banks. The hope is banks will cut interest rates and make lending cheaper.

Concerns: 

  • High number of Informal workers in India: According to the International Labour Organization’s India Labour Migration Update 2018, the overall proportion of informal workers in total employment (unorganized sector workers, informal workers in the organized sector) has been stable (92%).
    • People working in the informal sector and those earning daily wages are suffering a lot as businesses and shops have shut down.
  • Closure of MNREGA sites: The trouble is the worksites under this job scheme are not operating due to the lockdown. So the wage hike doesn’t help. The scheme has 128 million active workers (see chart).
  • Low monetary transmission of rate cuts: The State Bank of India has cut interest rates already; other banks need to follow. But banks’ record on this front has not been good over the last one year. Also, lending will not pick up before the lockdown ends. So the Centre needs to do more.

Difference between unorganized sector workers & informal workers

  • An unorganized sector comprises of small-scale enterprises or units and is not registered with the government. They are not governed by any act and the remuneration is generally on a daily basis. 
  • An informal sector is neither taxed nor included in the GDP and Gross national product (GNP) of a country.


Way forward

  • Measures can be divided between Short term:
    • Amendments in the State DM's act to provide shelter, food to workers of informal sector.
    • Direct Benefit transfer: The govt.  should put money into all 382.8 million Jan-Dhan accounts. At ₹500 a month for three months, this would have cost the Centre ₹57,420 crore. 
    • MNREGA accounts: Money can be directly put into the bank accounts of MNREGA workers.
      • At ₹500 a month over the next three months, the bill works out to ₹19,195 crore. It should be noted that  Jan-Dhan account holders can also be working under the rural job scheme. 
    • Increase the amount of ration, etc.
  • Long Term:
  • Creating a data set of informal workers to track them.
  • MNREGA reforms - Budgetary allocations, Timely payment
  • Universal Basic Income
  • Investment in Health Infrastructure to tackle such pandemics

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