Rural India left hurting as wages drop sharply under Modi government

Sowing but not reaping.
Sowing but not reaping.
Image: Reuters/Munish Sharma
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Never mind the promise of achhe din (good days). Under the Narendra Modi government, Indians in the hinterland have seen a significant decline in their incomes.

Rural wages have reduced dramatically since 2014, making it a period of distress according to the Reserve Bank of India (RBI). At this rate, Modi’s dream of doubling farmers’ income by 2022 seems like a tall order.

“During the last 10 year period, a high growth phase in rural wages from 2007-08 to 2012-13 was followed by a phase of significant deceleration,” said the RBI report, released last week.

Between October 2007 and October 2013, the report noted, wages in the agricultural and non-agricultural sectors grew at 17% and 15%, respectively. Since November 2014, however, agricultural and non-agricultural sector wages grew at only 5.6% and 6.5%, respectively.

Inflation turned out to be a double whammy. After November 2014, there was the gap between the rise in prices and growth in wages narrowed, further impacting the purchasing power of Indian farmers.

A perfect storm

A whole host of factors including the global slowdown in growth, collapse of international primary commodity prices, and major contraction in food prices led to the decline in growth of rural wages, according to the RBI report.

The Indian economy also suffered two consecutive droughts in financial years 2015 and 2016, which wreaked havoc in rural India.

The ineffective implementation of the Mahatma Gandhi National Rural Employment Generation Scheme (MGNREGS) in recent years has also contributed to the decline in farm income. This government-funded scheme aims to provide 100 days of unskilled manual work to all rural households in India.

“The average employment days per household has generally been between 40 and 50…While the average person days per household employed under MGNREGS recorded some moderation during this period, the number of households getting the full 100 days employment in a year also declined. MGNREGS wage growth also witnessed some moderation in the recent years,” the report said.

Then, the growth in the construction sector, which saw a significant pick up during 2000 and 2012 and was the major driver of rural non-farm employment, slowed down in recent years.

The grim situation has also driven about 12,000 farmers to suicide every year since 2013. In the last few years, farmers have made several desperate attempts to attract the government’s attention. Last year, there were prolonged protests in New Delhi, where farmers from Tamil Nadu consumed their own excreta in a show of desperation. In March this year, about 35,000 protesting farmers from the drought-hit areas of Maharashtra walked about 180 km over six days to reach Mumbai, the country’s financial capital, seeking loan waivers and land ownership.