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Win some, lose some: the surprising post-pandemic changes in wage growth
Sachin P Mampatta Mumbai
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Wages in India are slowly picking up from their pandemic dip but remain in single-digit territory.
Wages have grown at 8.7 per cent on an annualised basis since 2018-19, shows data from the Centre for Monitoring Indian Economy (CMIE) based on its Consumer Pyramids Household Survey. This is lower than the 12 per cent growth in 2018-19 and 31 per cent growth seen in 2017-18, though recovery from demonetisation and associated disruptions may have played a role in the latter figure. The latest growth figure is despite a nearly 19 per cent year-on-year growth in 2024-25, the fastest in seven
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The year 2025 marks two decades since the implementation of MGNREGS, which aimed to provide at least 100 days of guaranteed wage employment to one member of every Indian rural household. The scheme was implemented against the backdrop of declining real agricultural wages after the 1991 economic liberalisation. MGNREGS (based on MGNREG Act, 2005) also came against the backdrop of rural development policies shaped for poverty reduction and capital formation. The scheme sustained over the years, and notably during Covid-19 lockdown absorbed a large number of returning migrant workers. However, in recent years, the scheme faced issues such as inadequate budget allocation and delayed wage disbursement. As of 2018-19, only 7.4 per cent of rural households, on average, availed of 100 days of work. In 2023-24, an average MGNREGS household worked only for 52 days. Since the pandemic, there has been a rise in the number of people demanding MGNREGS work. 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The mainstream view holds that Green Revolution technologies, by boosting agricultural productivity and farmers' income, create consumption linkages that generate demand for goods and services produced by small-scale, labour-intensive rural entities. This, in turn, creates backward linkages and spurs demand for agro-processing goods. Studies indicate that states like Punjab, Haryana, and West Bengal have benefitted from such growth patterns. However, there's a flipside to it – a contrasting perspective suggests that because of rising input costs and uneven distribution of the benefits of the Green Revolution, many rural households were pushed to opt for alternative non-farm sources of income. Hence, it has been argued that rural non-farm employment was often driven by distress. In fact, the nature of the emergence of the rural non-farm economy is contentious. There is, however, evidence that a large number of farmers are increasingly relying on borrowing to manage their agricultural activities as a result of rising costs of cultivation, including the cost of labour, fertilizers, and machinery. The larger question on the current rural distress indicates that despite growth in the agricultural sector, rural workers struggle to find adequate employment. While supply side policies like easing credit access, reducing direct taxes (like corporate taxes), and promoting the ease of doing business are important, they fall short of addressing the basic concerns of job creation and the quality of employment available to rural workers. MGNREGS, for instance, was implemented on the basis of a legal right to employment. But the spending cap neglects the demand-driven nature of the scheme. Moreover, public investment in agriculture needs to be scaled up, particularly in areas like irrigation, storage, and climate-resilient farming practices. 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Stay updated with the latest UPSC articles by joining our Telegram channel – IndianExpress UPSC Hub, and follow us on Instagram and X.
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India's foreign equity listings went cold after 2018, shows data
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