The rural wage growth rate in India has declined from an average 11 per cent in 2013-15 to just 0.45 per cent during 2016-18 because of a slowdown faced post-demonetisation, according to a report by India Ratings. The company did an analysis of 25 different occupations in rural areas revealing growth rate declined sharply from the double-digit growth rate over the last three years. Also Read - GDP to Contract by 5.3% in FY21: India Ratings
India Ratings report states on post-demonetisation efforts, “While these measures may have helped shield the nominal wages from falling, they did not provide the necessary impetus to strengthen real wage growth and reduce rural distress in a significant way.” Also Read - Swiftly Implement Stimulus to Benefit NBFCs: India Ratings
The report further states, “In August 2016 the government had raised the minimum wage for non-agricultural labourers by 42 per cent. As a result, when demonetisation hit the cash-based rural economy, it did not have a drastic effect on non-agricultural rural wages. In addition, the highest ever budget allocation for Mahatma Gandhi National Rural Employment Guarantee Scheme was made in the period after demonetisation to shield the rural/informal economy from the after-effects of the regulatory move,” the report explained. Also Read - Yes Bank: Chidambaram Links Crisis With Note Ban, Raises 5 Questions
Not only agriculture occupations, animal husbandry also slipped from 21.48 -34.77 per cent in FY13-15 to 7 per cent FY17-18.
About an increase in minimum support price for the Kharif season, the report said, “It will provide only notional comfort. It requires a far more concerted effort including a strategy to augment rural infrastructure.”