The World Bank said on Tuesday that the spike in ‘unmet demand’ for MGNREGA jobs is an indicator of increasing rural distress. Since the scheme is the only and therefore the best bet India has for mitigating the impact on the poor of the recent unseasonal rains, the government should take steps aimed at arresting delays in wage payments and the rising unmet demand for jobs.

“If you are a State hit by the unseasonal rains, now is the time to tell those responsible for implementing the MGNREGA to give their best…it is the only insurance India has…,” said World Bank Country Director in India Onno Ruhl. He was speaking at the release of the Bank’s latest India Development Update which analyses the performance of the scheme in States such as Bihar.

The update projects that provided there is a pick-up to 11 per cent in the rate of investment in the economy, growth in the current year would be 7.5 per cent, 7.9 per cent in 2016-17 and 8 per cent in 2017-18.

“The government has made progress in several policy areas, and long-term prospects for growth remain bright for India,” said Mr. Ruhl. Continuous strong momentum in reforms aimed at strengthening the business environment and enhancing the quality of public spending will further unleash the productivity that Indian firms need for creating jobs and becoming globally competitive, he said. He stressed the need for reducing the pipeline of stuck projects, especially in the Public Private Partnership space for lifting the investments rate. Balance sheets of both companies and banks, he said, are stressed due to the stuck projects.

The analysis of MGNREGA in the update shows that the programme’s impact on rural poverty in Bihar is only 1 percentage point as against its potential of reducing poverty by at least 14 percentage points. Among the main reasons why the potential is not being realised, the study says, is that the supply side is too slow to respond to the demand for work from the poor, workers not receiving the full scheme wage and delays in wage payments. “Discrepancies in the stipulated wage rages and the actual wages received by workers are contributing to the gap between potential and realised impacts…payment delays have emerged as a major bottleneck and are a strong disincentive to participating in the programme,” said a statement. “If MGNREGA were to be implemented effectively, its design would ensure that there is no unmet demand for work,” said the study’s author and lead economist at the Bank Rinku Murgai.