According to the World Economic Outlook report of April, 2021 of the International Monetary Fund (IMF), almost all countries, except China, experienced economic contraction last year.
The global GDP shrunk by 3.3%.
The contraction in the U.S., Brazil, Japan, Canada and Euro Area was in the range of 3.5%-7%. India’s GDP plummeted by 8%.
The report stated that 95 million people have fallen into the ranks of the extreme poor category.
As per the Centre for Monitoring Indian Economy’s estimates, the unemployment rate in India peaked to 23.5% in April 2020 before falling to 6.9% in February 2021.
Rural –Urban divide:
the need is to approach this from a rural-urban perspective for two reasons. First, when there is an economic shock, it is essential to provide people with formal access to a livelihood safety net. Second, the livelihood safety net must have comprehensive
Though the Indian government operates the National Urban Livelihoods Mission, which is focused on self-employment through skill up-gradation and credit linkages through banks, the scheme does not have guaranteed wage employment provisions akin to what MGNREGS provides.
migrant labour were moving in large numbers from the urban to rural areas, which is symptomatic of the rural-urban livelihood security divide.
MGNREGS, designed to check such migration, provides a livelihood safety net in rural India.
Learning from Himachal Pradesh
Himachal Pradesh (H.P.) launched the Mukhya Mantri Shahri Ajeevika Guarantee Yojana (MMSAGY) last year with the objective of enhancing livelihood security in urban areas by providing 120 days of guaranteed wage employment to every household at minimum wages in FY 2020-21.
There was scepticism due to lack of fiscal space during the pandemic to launch a new scheme. The government then decided to fund the wage component from the grants already available to ULBs under the State and Central Finance Commissions.
Success of Urban job safety scheme in Himachal Pradesh
In a year of its operation, a quarter million man-days, benefiting about 3% of the total urban households in H.P., were generated.
An urban livelihood scheme can be launched within the existing fiscal space. If not, the Union and States can provide resources together.
Separate minimum wages for rural and urban areas do not cause migration to urban areas since the higher cost of living in urban areas has an offsetting effect.
The focus must shift from asset creation to service delivery.
such a scheme is like an ‘economic vaccine’ and will protect people against unemployment. It should be administered at the national level rather than at the State level.
1.png)
