Rural job guarantee should be used to spur manufacturing
The production units being set up by the small and micro enterprises are facing financial stress because of several reasons, which include smaller tenure of repayment, high interest cost and so on.
India has to press the accelerator to seize the emerging opportunity as the global supply chains adjust to a post-pandemic world order. India must board the manufacturing bus. Over 84,000 startups are dotting the tier-II and tier-III cities. They may be the engine that can drive Indian manufacturing in the coming years. Metro cities are already carrying peak population loads. It will be desirable that the economic activities shift to the tier-II and tier-III cities.
India has built robust infrastructure in the last few years. What Atal Bihari Vajpayee did during his tenure as Prime Minister in laying the foundation of connectivity in telecommunication, roads (urban and rural), ports and rails has taken giant leaps in the last few years under the watch of PM Narendra Modi. The gains of infrastructure must complement the push for manufacturing. This can be made possible by the government encouraging the fabricating units among the small and micro enterprises setting up their bases in smaller cities. For this to happen, there will be the need to bring an umbrella support system for industries and recognise them as vital for making social changes by promoting economic empowerment of the people.
The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) will soon be completing two decades of existence. Its earlier avatar—Grameen Swarojgar Yojna—had shown promise during Vajpayee’s tenure in mitigating acute poverty in rural areas. The UPA government brought a law to guarantee 100 days of rural employment through MGNREGS.
In times of distress such as the national lockdown, the scheme saw spike in demand. Over the years, it continues in all the states, while the government has formed a couple of committees to recommend ways to make the best out of the rural flagship scheme by way of creating durable assets in rural parts of the country.
At the cost of repetition, it may be stated that the MGNREGS was principally aimed at as a poverty alleviation measure by the Central government. The budgetary allocation for the scheme in the current fiscal year is Rs 73,000 crore. In the last fiscal year, it accounted for Rs 98,000 crore. The demand for jobs under the scheme is clearly linked with the state of economy and availability of better employment opportunities.
Also, MGNREGS provides unskilled jobs. Men and material ratio is mandated to be 60:40. Now that the scheme has already seen a significant time span, it is worthwhile to explore if the programme could be linked with efforts to promote manufacturing units in smaller cities, closer to the villages, to help people in the rural areas gain employment near their homes.
Some of the required skills are gained by workers within a few days of employment. For instance, packaging is a critical area, which India has to focus on to make a significant gain. This also deals with the post-harvest management of crops. Packaging is a low-skill job, which can be done with a few days of orientation. There are scores of jobs in manufacturing units that may not require skills.
The production units being set up by the small and micro enterprises are facing financial stress because of several reasons, which include smaller tenure of repayment, high interest cost and so on. But they contribute extensively in running the economy and also pushing India’s exports. The formula can be worked out by the policy-makers in consultation with the stakeholders such as the states, industries and representatives of the gram panchayat.
Director, Public Policy Research Centre