MGNREGS too can be bankrolled

Excellent study material for all civil services aspirants - begin learning - Kar ke dikhayenge!

MGNREGS too can be bankrolled

---

Read more on - Polity | Economy | Schemes | S&T | Environment

---

•  Putting money in poor's hands: The ANBA (Atmanirbhar Bharat Abhiyan) has some good components, but the process of putting money in hands of the poor must be continuously evaluated. The liquidity from Banks must be transferred to them, with mitigated risks.
• MGNREGS is the way out: The higher allocation for this scheme can be tweakd for micro-financing by banks. The demand will be boosted. More cash in households will push demand strongly (research shows).
• 2020 is MGNREGA year: Due to huge migrant worker problem and surplus labour in rural areas, MGNREGA demand will be much higher. The extra Rs.40,000 cr is being welcomed by all, and it will aid the livelihood component of Atmanirbhar Abhiyan.
• The law: Government has to provide 100 days of work to all who demand it. Total MGNREGS cardholders are 11.94 crore, and now the scheme has Rs.1 lakh crore to do so. But the priority has to be to ensure that payment for work actually gets done fast by Central & State governments. New restrictions should not demoralise the workers.
• A new approach: Let the banks of India, presently flush with liquidity, advance loans to MGNREGA workers, based on the formula - 40% of eligible amount (=minimum wage x 100 days). Since all MGNREGA workers hold bank accounts, it's very easy to do it.
• No interest: The government must reimburse full interest (upto 9%) on these small amounts. For just Rs.3600 cr, more than Rs.40000 cr can be pushed immediately into rural households (for consumption).
• Two promises: The large number of returning migrant workers must be promised two things - (i) 100 days of work, and (ii) full interest reimbursement on these tiny loans. 
• Micro Livelihood Loans: All the principal amount will be recovered within one year itself, as everything is in govt. control. Individual loans would be in the range of Rs.12 - 15000 per worker. Avoid paperwork, by taking consent by SMS, in local languages.
• Delinquencies: If workers take loans and do not turn up for work, block any future work allotment for them. But the chance of such problems is very low in 2020 at least.
• MPC: It is assumed that with the Marginal Propensity to Consume (MPC) will be 0.7 (during crisis, and with savings rate of 30%) the total boost in consumption may be upto Rs.1.33 lakh crore. [Consumption is the major component of aggregate demand. The MPC is always greater than zero (MPC > 0) and less than 1 (MPC < 1) because additional consumption (∆C) is less than additional income (∆Y). Higher MPC implies increase in consumption demand. According to Keynes, Demand creates its own supply.]

Read more on - Polity | Economy | Schemes | S&T | Environment

Join UPSC Self Prep course | Online Course (PT Gurukul) | Covid Special Course |Join PT courses