Elevated inflation leads to negative growth in real rural wages: Economic Survey
The Hindu
While the survey is painting a positive picture about Indian economy recovering from the pandemic and its expected growth, rural wages do not seem follow the same trajectory
There has been nominal increase in rural wages but when calculated against the rate of inflation, the real rural wages have had a negative growth, the Economic Survey that was tabled in Parliament on Tuesday revealed.
While the survey is painting a positive picture about Indian economy recovering from the pandemic and its expected growth, the rural wages do not seem follow the same trajectory. The survey noted that there was a nominal increase in rural wages.
In agriculture, the year-on-year rate of growth of nominal wage rate in agriculture was 5.1% for men and 7.5% for women, during the period April-November 2022. In non-agricultural activities, the growth of nominal wage rates was 4.7% for men and 3.7% for women, during the same period.
“However, growth in real rural wages has been negative due to elevated inflation. Going forward, as inflation is expected to soften with the easing of international commodity prices and domestic food prices, it is expected that this will translate into a rise in real wages,” it explained.
The nominal wage is simply what an individual receives for their work. The real wage is calculated by how this sum changes in response to the changing inflation rates.
There are though other positive signs of recovery in the rural economy, the survey has stated, including the decline in monthly demand for Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) work. The survey credited this decline to “normalisation of the rural economy due to strong agricultural growth and a swift bounce-back from COVID-19.”
The MNREGA activists though do not agree with this assessment claiming that the demand has been artificially suppressed due to budget constraints put by the government. In FY23, as on 24 January 2023, 6.49 crore households demanded employment under MGNREGS, and 6.48 crore households were offered employment out of which 5.7 crore availed employment