Govt's MGNREGA spends pushes down unemployment in February 17: SBI

Economists at the country's largest lender SBI today attributed the sharp dip in unemployment to government efforts at pushing job creation in rural areas through the MGNREGA scheme.

"We believe this decline is primarily due to Government's efforts in providing new employment opportunities in rural areas," the SBI's economic research department said in a note.

It said contrary to perceptions, the unemployment rate estimated by CMIE and BSE fell sharply in the six months to February to 4.8 % from 9.5 % in August 2016.

The note said the decline is also explained by household demanded and allocated work under the MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act), which increased from 83 lakh households in October 2016 to 167 lakh households in February 2017.

"Hence on the one hand the unemployment rate has halved, on the other hand work demanded has doubled," it said.

The number of works completed under the MGNREGA increased 40 % to 50.5 lakh in 2016-17 as against 36 lakh in the previous fiscal, it said, pointing out that increases were seen in works of anganwadi (166 %), drought proofing (158 %), rural drinking water (698 %) and water conservation and harvesting (142 %).

It can be noted that the budgetary allocation for MGNREGA has been increased to Rs 48,000 crore in 2017-18.

The SBI note said this includes building 5 lakh new ponds over the 10 lakh ones to be done in FY17 and pointed out that this single measure will "contribute greatly to drought proofing of gram panchayats."

The CMIE and BSE data on unemployment, arrived at after studying a random household sample, said that a sharp decline in unemployment was registered in Uttar Pradesh (2.9 % versus 17.1 %), Madhya Pradesh (2.7 % versus 10 %) and Jharkhand (3.1 % from 9.5 %).