The key to proving that NREGA may be doing less for the worker than growth lies in comparing relative GDP growth rates during the four-year period from 2010-11 to 2013-14, NREGA spends, and wage growth trends.
This is what the numbers show. The overall NREGA wage spends remained in the range of Rs 26,000-29,000 crore all through these four years. In other words, they plateaued. Since minimum wages were raised every year by indexing to inflation, this means fewer people got jobs under NREGA even though their wages were higher. (The wage figures here are not the total annual spends on NREGA, as administrative and material costs are excluded. These figures indicate only the wage element in NREGA costs. Actual NREGA expenditures were higher.)
But between 2010-11 and 2013-14, GDP growth fell from 8.9 percent to 4.7 percent steadily. And rural wages followed the same trajectory.
Wage inflation peaked in 2010-11, and then started falling to reach last November’s dismal number of 3.8 percent (see this telling chart from the government’s Mid-Year Economic Analysis below).