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In a highly developed state such as Tamil Nadu with a developed manufacturing and service sector, urban or rural job schemes such as MGNREGA skew labour markets and impede progress. Corruption is endemic in these schemes that serve largely people who are over 50 years old.

Tamil Nadu has achieved poverty eradication successfully, with a 5% poverty rate. The state is highly urbanised with about 60% of people living in urban areas. Out of the total urban population in the country, 11% live in Tamil Nadu.

Tamil Nadu is a $248 billion economy. Eleven percent of its GSDP comes from the agriculture sector, 33% from the manufacturing sector, and 54% from the services sector. This indicates the existence of competitive markets requiring a skilled labour force.

Tamil Nadu imports lakhs of labourers from north and north-eastern states. Four decades of Census data (1980-2011) analysis on migration patterns reveals that out of a total of 16.88 lakhs migrants from other States to Tamil Nadu, 4.84 lakh migrants came for employment, 40,000 came for business, 20,000 for education. Migration for employment was 4.83 lakh, out of which 2.75 lakh went to rural areas jobs and 1.95 migrants went for jobs in urban areas. Current figures for migrant labour are much higher.

Thus, out of a total of 16.88 lakh migrants from other States to Tamil Nadu, 8.48 lakh went to rural areas and 8.20 lakh went to urban areas. More than 50% of migrant labourers went to rural areas seeking employment. Studies indicate that if one northern Indian labourer comes to Tamil Nadu seeking jobs at least two educated people from Tamil Nadu migrate out of home state for jobs.

Tamil Nadu state leads with largest share all India for agriculture products like drumstick (98%), tapioca (44.4%), coconut (29.1%), tamarind (25.3%), banana (19.4%), turmeric (15%), floriculture (16.5%), gooseberry (18%), ragi (18%) horsegram (18%), sapota (17.4%), etc. In the manufacturing sector, Tamil Nadu is the largest producer of cotton yarn, accounting for 41% of India’s production.The state’s share in electronics and hardware is 16% in all of India. Tamil Nadu is the 4thlargest state in food processing units in the country. An analysis inferred that as compared to Karnataka and Maharashtra “Tamil Nadu has the most balanced growth model with manufacturing and high-tech services each contributing nearly one-fourth of the GVA.”

However, major crops in agriculture sectors in the state are struggling with many issues like shortage of labourers, higher input costs like the rise of wages, etc. Similarly, manufacturing and services sectors have also experienced labour shortages. Women’s labour force participation in economic activities is shrinking in the state.

One of the major distractions skewing the labour markets is the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA scheme) which provides 100 days of employment for unskilled labour in rural households. This scheme has been implemented as one size fits all model for over a decade and a half since 2006-07.

Mostly unskilled labourers aged 50 years and above are getting jobs in this scheme. In a highly urbanised state like Tamil Nadu, this scheme does not create many productive activities. They promote corruption among middlemen who distribute the wages.

Mostly unskilled labourers aged 50 years and above are getting jobs in this scheme. In a highly urbanised state like Tamil Nadu, this scheme does not create many productive activities. They promote corruption among middlemen who distribute the wages.

MGNREGA scheme is “fodder for fraudsters”. Moreover, auditing agencies like CAG have time and again warned the government authorities to set right the financial malpractices but none has bothered. Most NGOs have been largely silent on this anomaly.

The MGNREGA scheme has already created irreversible negative changes in a state like Tamil Nadu in several sub-sectors by creating labour shortages, a many-fold increase in wages, etc. Several studies have pointed to the unproductive works done under the MGNREGA scheme in Tamil Nadu and its negative impacts on farming activities.

It must, however, be said these studies have ignored the premise that the scheme helps poor people to get purchasing power and provides a society security net. In other words, elderly care has been centralised by this scheme with wages.

Maheshwari, M. Selva, and Gangwar, L.S (2011) study on dairy farmers in Thanjavur district found that farmers faced an acute shortage of labourers during peak paddy planting and harvesting due to MGNREGA. Labour wages have increased significantly since the implementation of the MGNREGA scheme. It was found that milch animals of some landless/small dairy farmers are being maintained by children or aged family members, a majority of adult family members prefer the MGNREGA jobs to earn wages.

Similarly, Carswell, Grace, and De Neve, Geert (2014) study in two different villages in the Tirupur district of Tamil Nadu revealed that waterbodies work completed under MGREGA did not create any “new or durable assets”. The study also concluded that “works are aesthetic rather than productive” under the MGNREGA scheme.

While this has been the case with the rural jobs scheme, the present ruling DMK government like other state governments in Odisha, Kerala, Himachal Pradesh, Jharkhand and Madhya Pradesh is implementing the Urban Employment Guarantee scheme for unskilled labour in urban areas. This scheme was recommended by a committee headed by economist and former governor of RBI Dr C Rangarajan. Though, there is no fixed number of days for jobs under the urban jobs scheme, the wages fixed are bound to skew urban labour markets too.

This new scheme covers two zones in greater Chennai Corporation, one zone in each of 14 city corporations, 7 municipalities, and 37 town panchayats for the pilot project.These job guarantee schemes are not in the best interest of labour welfare in terms of enhancing their livelihoods. Unskilled labourers have got into the habit of getting paid without working, which can have serious implications for India’s human prowess and outlook.

In a large city like Coimbatore, the urban job guarantee scheme is found to be not welcomed by city labourers and those who registered were all 50 years old or above. The scheme has several flaws in the design. The Rs 100 crore allocated for the scheme for financial years 2021-22 would become a source of potential corruption for vested interests groups like newly elected councillors, middle men, and government officials. The new urban jobs scheme also undermines the scope and targeted coverage in already existing schemes like Swarna Jayanti Shahari Rozgar Yojana (SJSRY), National Urban Livelihoods Mission (NULM), PM SVANidhi and so on.

In Tamil Nadu, if district-wise urbanisation is mapped, half of the districts would need to be delinked from the rural sector schemes like MGNREGA. This scheme is fiscally ruinous and incurred expenditures have been unproductive. It’s high time the MGNREGA scheme is properly reviewed in Tamil Nadu.

(The author is an economist and public policy expert)


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