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Is MGNREGA really meant to reduce the inequalities in India?

MGNREGA, an acclaimed policy initiated in 2006 by the then UPA government (under the leadership of Congress); aimed to reduce the economic inequalities in India. It provided job to the rural people for a minimum period of 100 days in a year at a minimum wage rate. The job was principally for the unskilled labour to provide them with a source of living. However, there is ambiguity related to the policy actions: whether the policy has sincerely reduced income inequalities or increased them.

The intention of MGNREGA cannot be doubted. It is considerably a ‘positive step in a negative way.’ Positive step because it provides a means of livelihood to those who don’t have any. While on the other hand, nothing productive is coming out of it and hence increasing the pressure on the government.

MGNREGA has increased economic inequalities since the past few years, supported theoretically by economics. Unskilled job opportunities are put forth the people, thus this is not increasing their skills in any way possible. In other words, people are being paid for doing nothing productive. This results in increased purchasing power, with no increase in the supply of goods. The demand being greater than supply (excess demand), leads to a rise in prices, therefore there is a boost in the price level. This increase in the price level, commonly known as inflation, majorly hits the lower sections of the society. This brings us back to square one. Where the government assumes MGNREGA to be a very innovative policy, from an economist’s point of view, the situation has worsened.

MGNREGA, could have been initiated in a much productive way by helping the poor sections of our society. The concept of this act should merge with the concept of ‘on-the-job training’. In that way, it can provide the rural unskilled workers with training in a specialised skill, and also it can help people in gaining/acquiring a permanent job for not just 100 days in a year, but till the time he/she is willing to work.