NREGS and Agriculture: Manifestations and Opportunities

The National Rural Employment Guarantee Scheme (NREGS) is an important milestone and mechanism, the manifestations of which help us in reviewing crucial issues regarding the impact of development interventions in Indian rural ecosystems. This commentary by Shailly Kedia, Anandajit Goswami and Shilpi Kapur, from the Energy and Resources Institute (TERI), New Delhi , India , revisits manifestations of such large-scale government interventions to discuss some cross-cutting issues and opportunities pertaining farm labour, multiplier effects and human capital. Government emphasis needs to continue focus on need of the hour, which is that of effectiveness and efficiency in public delivery by consolidation and convergence of government programmes that could be vital in synchronizing livelihood security and rural agriculture.

The link between livelihood security and rural agriculture can be derived from the stated objective in the National Rural Employment Guarantee Act, which mentions the creation of durable assets and strengthening "livelihood resource base" of the rural poor. Moreover one of the stated goals of the National Rural Employment Guarantee Scheme (NREGS) is to act as a "growth engine for sustainable development of an agricultural economy" through provision of employment in public works that address causes of chronic poverty such as drought, deforestation and soil erosion. When over 58.4% of the nation's population is dependent on agriculture for their livelihoods, it becomes an important imperative not to digress from the conceptual basis of programmes like NREGS in terms of its relevance as a poverty alleviation measure that links livelihood security to long-term enhancement of rural livelihood resources, rise in agricultural productivity and increase in income earning of rural farmers. Also, a synergy between rural employment guarantee programmes and agricultural activities could lead to better domestic agricultural output, which in turn would be vital in ensuring that the country is self-reliant in terms of food sufficiency.

India is facing agricultural challenges. Trends in growth rates of different agricultural indicators (viz. irrigated area, input use, credit, and capital stock) have been declining in the post-reform period. Production of foodgrains has slipped during 2009-10 mainly owing to a fall in the Kharif output. This decline was mainly attributed to drought that has affected 316 districts in 13 states; other factors like lack of crop diversification, and water availability.

The 2010 report to the citizens, speaks of NREGS as the “forefront” of government's effort to promote inclusive growth. GoI also talks of measures taken in the agriculture sector in context of food security and welfare of farmers, which include investing in land, focus on inputs, the National Food Security Mission (NFSM), Rashtriya Krishi Vikas Yojana (RKVY), and support to state extension reforms.

Interrelating development is- sues becomes important for considerations and re-considerations that need to be made for large-scale government programmes like NREGS to evolve simultaneously and converge with other related rural agricultural interventions.

NREGS has demonstrated an immense potential to reach the rural population and benefit agriculture through public works in water and irrigation works, and weather risk mitigation. With this rationale, we comment on the manifestations and opportunities relevant to NREGS and agriculture under three heads:

  1. Farm Labour
  2. Multiplier Effects, and
  3. Human Capital.

Farm labour

Evidence shows that rural employment guarantee schemes have led to an increase in bargaining power in agricultural markets. Theoretically in an agrarian ecosystem, the demand for work by rural beneficiaries under employment schemes should vary inversely with agricultural wage rates and public works programmes should not compete with agricultural labour hiring decisions – this balance is important as the trade-offs should not occur at the cost of agricultural activities.

Agriculture in rural India is largely rain-fed, and is characterized by seasonality that results in slack season when agricultural labour demand is low and a peak/harvest season when labour demand is high. Moreover there is movement of labour across and within states. In India , rural-rural migration contributes substantially–an estimated 62% of all migratory movements. Studies find that NREGS has led to reduction in migration. Here it would be interesting to see how in the long- run, the additional agricultural labour availability within states responds to implementation of the first element of the four-pronged strategy as announced by the government in the 2010 budget, that mentions of extending the green revolution to states like Bihar, Uttar Pradesh and Orissa.

Anecdotal evidence has linked poor agricultural performance to NREGS induced rural labour market distortions. In Tamil Nadu for instance, NREGS is said to have created multiple impacts such as diverting large tracts of agricultural land for non-agricultural purposes along with causing shortage of farm labour in rural areas. Similarly Punjab has reported of acute farm labour shortage and shifts to mechanical ways of agricultural processes. Despite a fair agricultural wage of Rs 100 in Punjab , there has been shortage of migrant agricultural labourers from Bihar and UP, who have preferred the marginally lower NREGS wage and the comfort of staying back in their home states.

CDS (2009) also finds negative impacts in the agricultural sector in Kerala, where frequent replanting and harvesting in rice fields have been delayed because of NREGS induced labour shortage. The study recommends a proper work calendaring so that NREGS works are done during agricultural lean season to reduce the problem of labour shortage in agricultural peak season. Andhra Pradesh in this regard has responded with a rationing mechanism to ensure that local farming activities are not impacted due to shortage in labour.

From an environmental perspective, the increasing farm mechanization as already happening in case of Punjab may in the long-run further add to environmental degradation and depletion at the cost of agriculture if technologies deployed herein are not environmentally- benign. These apart, for the small and marginal farmers—many of who are already reeling in debt—the trend towards increased mechanization and greater capital investment in farm machinery and equipment could prove to be uneconomical.

In absence of detailed studies, such reported cases are however not sufficient by any means to say that NREGS wages have competed with agricultural wages at the cost of farming activities. Nevertheless, it is of relevance that agricultural activities continue uninterrupted provided farmers are able to anticipate and adequately respond to uncertainties pertaining agri-labour.

Multiplier Effects

Public works under NREGS include flood control and protection, water conservation and harvesting, drought proofing, micro-irrigation, provision of irrigation facility, and renovation of traditional water bodies, rural connectivity and other land development activities as approved by the Ministry of Rural Development (MoRD). The non-inflationary nature of the expenditure under NREGS could be further justified if ‘multiplier-accelerator' benefits from public works could lead to a spur in agricultural growth. This aspect is of further relevance to agriculture due to the recent amendment by MoRD that has enlarged the scope of NREGS works to small and marginal farmers.

A study finds that deepening and widening of canals have curbed the flow of saline water to agricultural lands in pockets of Kerala. This apart, according to the study, micro irrigation works and renovation of small irrigation have benefited collective farming in Kerala. Also, CSE (2008) finds percolation of benefits to the agricultural sector from NREGS works—the survey finds a 14.5% increase in sown area under vegetables due to increased water availability from public works under NREGS in Nuapada (Orissa). The survey also reports of increase in crop diversification due to improved access to irrigation brought by NREGS and Rajiv Gandhi Watershed Development Programme in Sidhi district (Madhya Pradesh). Moreover, an additional 371.6 acres of fallow land was brought under cultivation in the state.

Civil society groups have often expressed concerns on lack of technical capacity at the field level in terms of designing and implementing public works under NREGS. In Kerala, CDS (2009) finds overburdening of field level technical personnel leading to irregular supervision by engineer and overseer. Both CDS and CSE studies find that even though there were many works created under categories like water conservation, most of the funds were actually diverted towards the category of rural connectivity. For example in Trikarpur Panchayat, rural connectivity accounted for 28% of expenditure compared to its recommended limit of 10% in 2008- 09; same was the case in districts of Nuapada (Orissa) and Sidhi (Madhya Pradesh). A reason for this is that remuneration is easily calculable in road works and hence implementing agencies preferred rural connectivity to water conservation. This apart, the 60:40 fund allocation rule between wage and material have restricted quality asset creation in coastal areas of Kerala, according to the CDS study. NREGS has been successful in targeting and as a risk mitigating mechanism by providing a source of income for the poorest of poor households. For households, ensuring food security includes both physical availability and economic accessibility to sufficient, safe and nutritious food. Provision of supplementary wage employment under NREGS is creating the minimum purchasing power for household food security. Furthermore, additional income from NREGS can facilitate investments in better quality seeds, and agricultural assets like tractors and livestock.

Whereas evidence of actual impact of additional income on improvement in farm asset holdings has been scarce, studies paint a mixed picture. A survey on the earlier Maharashtra Employment Guarantee Scheme has found that additional income has led to increased investment in construction of wells and installation of pump sets in farm households. However in case of NREGS, an IAMR survey finds negligible impact on farm asset base like cultivable land, tubewells, bullock carts and tractors owing to additional income; for example, a mere one percent increase in bullock cart holding and less than one percent in other categories.

In future, convergence of NREGS with schemes such as the National Rural Livelihood Mission (NRLM) will be seen as an opportunity to enhance the potential to create a sustained income opportunity for the local people as has happened in case of Kalghati Taluka (Karnataka), where 7500 acres of mango plantations have been carried out. Similarly programmes under the Ministry of Environment and Forests (MoEF) have been scheduled for convergence with NREGS to enhance use of degraded forest land. NREGS in convergence with other government programmes thus has a potential to generate ‘multiplier accelerator synergies' for rural India by reaching out to agricultural households. However the realisation of this potential at the grassroots would still remain a challenging task.

Human Capital

At present, agriculture is a principal means of livelihood for over 58.4% of India 's population. In 2020, about half of the country's population would be in age group of 15 to 44 years, and a bulk of which could be concentrated in rural areas. Percentage of male and female population in age group of 15-44 years in 2020 is projected to be 24.52% and 23.11% respectively, which could mean nearly half of the nation's population. If the country wants to tap into this demographic dividend for its future economic growth, the challenge would be to create jobs in rural areas, which includes the agricultural sector. Whereas there might be a declining preference for agricultural activities, considerations for skill enhancement in the agriculture sector are important. Moreover from a gender dimension, contribution of rural women in farm labour is significant– about 55-66%. With employment guarantee programs becoming an additional (or alternate) source of employment for rural populace, it also becomes relevant to consider enhancement of human capital including components of skill enhancement, training and education.

With regard to NREGS and agriculture, a vital question would be whether we are ‘de-skilling' an agricultural economy without ‘re-skilling' the farm workforce. A survey in the Madikai, Ajanoor and Trikarpur panchayats of Kerala by the Centre for Development Studies (CDS, 2009) finds that many young workers who are coming into rural labour market as a result of NREGS are not willing to work in the agricultural sector. This unwillingness in the young rural workforce is attributed to low wages with more efforts in agricultural works.

The study also find that in case of women, NREGS has been able to bring some dormant labour force into the paid labour market by drawing majority of NREGS female work force from the female marginal workers category. However, despite the increase in wage rate for women workers in agricultural works from Rs. 80 to Rs. 110 for a full day's work in the regions, young women prefer employment in NREGS works over agriculture due to lack of skills related to replanting and weeding. Recently, the government announced a sub-scheme named “Mahila Kisan Sashaktikaran Pariyojana” under NRLM to meet specific needs of women farmers.

Scope of NREGS could be expanded to facilitate knowledge-intensive farm practices like precision farming, organic farming, integrated crop and nutrient management sys- tem. Presently, MoRD in its convergence guidelines lists basic human development as one of the building blocks for facilitating sustainable livelihood opportunities. The 115 pilot districts selected for convergence include schemes under the MoWR, ICAR and MoE, but none include schemes specific to skill building under the labour ministry.

In this regard, Rural Self Employment Training Institutes (RSETIs) and other provisions under the NRLM, and other ongoing state and central level vocational training programmes could have an immense potential to benefit rural beneficiaries in terms of skill enhancement activities in agricultural and other sectors.

Emphasis and Re-emphasis

It becomes essential to approach the threat of declining performance in agricultural productivity as an opportunity for a critical rethinking to make certain long-term considerations for development, implementation and consolidation pertaining large-scale government programmes for realization of the nation's development goals.

We summarize the imperatives for future pathways for synergies between agriculture and programmes like NREGS. First, it becomes important that changes in agricultural labour endowments be taken as an opportunity for revitalizing productivity of farms in home states—in this regard NREGS itself along with other agricultural programmes could play an important role. Second, it is essential that ‘multiplier-accelerator' effects be generated from NREGS public works to benefit agriculture. Finally, the dimension of human cap- ital also becomes important so that beneficiaries ‘graduate' from being mere receivers of cash to becoming informed and skilled citizens.

We conclude by considering two possible scenarios regarding the future of agriculture in India .

Scenario 1: Given that the future is possibly going to witness decreasing preference for farming activities—and perhaps the farming regime were to shift towards being intensive—it would be necessary to ensure a smooth transition to an era characterized by large farms.

Scenario 2: If small-scale agriculture were to stay, then there would be a need to pave development pathways so that we truly achieve the model of local self-governance or the “Gram Swaraj” as envisioned by Mahatma Gandhi.

In either of the two scenarios NREGS, along with other interventions like NRLM, RKVY and NFSM have an important role to play for a smooth transition in the challenging years ahead.

Tags: rural livelihood, National Rural Employment Guarantee Act, livelihood security, food security