The annual wage growth rate for men working in agriculture being 3.1% in the most recent period (2004-09) compared with just 1.8% in the previous period (1999-2004). The difference is even starker for women at 5% annual growth for 2004-2009 and a meagre 1.2% for 1999-2004... But these figures cannot be analysed in isolation. They must be looked at under the light of changing agricultural conditions across the two periods... the increase in foodgrain yield in 2004-2009 of 2.5% per year, while it was at a record low level of 0.1% per year during 1999-2004... The net increase in men’s agricultural wages (subtracting the foodgrain yield growth rate from real agricultural wage growth rate) stands at 1.7% for the period of 1999-2004 and 0.6% for 2004-2009. Thus, 2004-2009 effectually experienced a lower rate of increase in agricultural wages once the growth rate in yield is netted out... at the all India level, growth in net female agricultural wages is a modest 2.4% in 2004-2009 in comparison with the 1.1% in the 1999-2004.
So what is the story? Why has agriculture productivity increased during the latest period? What's the contribution of NREGS to this, if any? Is the increase in farm wages concealed somewhere? A satisfactory assessment of these trends will require more data and their analysis.
But as the author herself indicates, one plausible mechanism would be through the assets created under the NREGS. A large share of NREGS works were irrigation related ones like water harvesting structures and field channels. These works, even if semi-permanent and of poor quality, are certain to have increased the water availability for significant acreage. Is this showing up in the productivity figures?
In any case, if this is true, it only means that farm productivity has increased due to better inputs and not increased labour productivity. In fact, the lower increase in wages in the latest period could even point to a slowdown or even reduction in labour productivity. Is there a causal role for NREGS in this trend? Is it the case that the more productive workers have preferred the more remunerative NREGS work to farm labour? Further, the figures also does not say anything about the non-farm rural wages, leave alone wages in other areas.