MGNREGA, ‘living monument of UPA’s failure’ behind sharp dip in unemployment: SBI

Economists at the country's largest lender SBI on Friday attributed the sharp dip in unemployment to government efforts at pushing job creation in rural areas through the MGNREGA scheme.

MGNREGA, a scheme started by UPA in 2006 to eradicate poverty by giving jobs to poor and unemployed youth of rural India, was earlier criticized by PM Modi.

When the BJP came to power with an overwhelming majority in May 2014, Prime Minister Narendra Modi believed that the job guarantee scheme was the wrong way to utilise funds for the poor and declared it a ‘living monument of UPA’s failure.’

Though the party later changed it’s stance on the scheme and described it as ‘nation’s pride’ with one among many possible reasons could be the popularity of MGNREGA in rural areas and the party’s loss of ground in the rural belt.

However, the government in union budget 2017 had given the "highest allocation ever" of 48,000 crores targeted to provide jobs to an estimated 50 million households in rural areas of India.

Now, SBI's economic research department believes that the fund allocation has helped in declining unemployment and provided job opportunities in rural areas.

"We believe this decline is primarily due to Government's efforts in providing new employment opportunities in rural areas,” said SBI's economic research department in a note.

It said contrary to perceptions, the unemployment rate estimated by CMIE and BSE fell sharply in the six months to February to 4.8 per cent from 9.5 per cent in August 2016.

The note said the decline is also explained by household demanded and allocated work under the MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act), which increased from 83 lakh households in October 2016 to 167 lakh households in February 2017.

The number of works completed under the MGNREGA increased 40 per cent to 50.5 lakh in 2016-17 as against 36 lakh in the previous fiscal, it said, pointing out that increases were seen in works of Anganwadi (166 per cent), drought proofing (158 per cent), rural drinking water (698 per cent) and water conservation and harvesting (142 per cent).

The SBI note said this includes building 5 lakh new ponds over the 10 lakh ones to be done in FY17 and pointed out that this single measure will "contribute greatly to drought proofing of gram panchayats."

The CMIE and BSE data on unemployment, arrived at after studying a random household sample, said that a sharp decline in unemployment was registered in Uttar Pradesh

(2.9percent versus 17.1 per cent), Madhya Pradesh (2.7 per cent versus 10 per cent) and Jharkhand (3.1 per cent from 9.5 per cent).

(With PTI inputs)