Budget 2023: Lower allocation not the only issue with MGNREGS

The budgetary allocation for the Centre’s biggest welfare scheme, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), has been slashed by nearly a third to ₹60,000 crore for 2023-24 from ₹89,400 crore in the Revised Estimate (RE) for the current fiscal. The cut is nearly 18 per cent when compared to the Budget Estimate (BE) of FY23.

Government officials have cited a drop in demand for work under the scheme to justify the drastic cut in budgetary allocation and indicated that, as usual, the allocation may be raised later in the year if demand were to increase. 

Per data provided in the Lok Sabha by MoS Rural Development, Niranjan Jyoti, from April 1 to February 2 this fiscal, the number of person days generated was the lowest in four years, at about 247 crore. Person days is the number of persons working per day, multiplied by the number of days worked.

Demand high, say activists 

But activists had demanded a record ₹1.5 lakh-crore allocation for MGNREGS for FY24, stating that the demand for work in rural areas had remained high and not everyone who got work was being paid on time. Arrears of the previous year get settled after the BE amount arrives. 

In reply to another question in the Lok Sabha, Jyoti said that till February 3 this fiscal, 57.8 million families had availed of employment under this rural job guarantee scheme. The question was whether the projection of 70 million families seeking employment under MGNREGS was an indication that economic growth had not reached the rural population.

In any case, the government’s assessment of the scheme is plagued with other problems too, not just lower budgetary allocation. Data presented in the Lok Sabha show there are mounting arrears under MGNREGS: for material components, pending payments have crossed ₹6,000 crore. And activists allege that another ₹4,000 crore is pending in wages.

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On its part, the government says that there is a calendar for clearing payments and the next tranche would be released at the beginning of the new fiscal year. Be that as it may, it is apparent that workers struggle to get paid under MGNREGS, which gives a guarantee for 100 days of paid work. 

Government data also confirm another pointer by activists: despite the 100-day work guarantee, not one household which looked for work under the scheme could find employment for all 100 days — in each of the last five years, any household demanding work under the scheme found it for less than 50 days.

What lowest allocation in four years means

Meanwhile, activists point out that just ₹60,000 crore for MGNREGS in FY24 — the lowest allocation in four years — would mean that around 10 crore active job card-holding households have the provision for work for just 20 days in the coming year, against the entitlement of 100 days of paid work. In other words, the number of days  that these poor rural households earn a wage under the scheme could fall to just a fifth of what they are guaranteed under the MGNREG Act.

MGNREGS is a demand-driven scheme and the release of funds is based on both the labour budget estimates prepared at the start of the year and the actual demand for work during the year.

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“There are 17 crore registered workers under MGNREGS and the current budget will only provide for 12 days of work on an average for each family…this is pathetic. MGNREGS needs at least ₹2.72 lakh-crore to cater to the needs of people at the grassroots…With high rate of unemployment and inflation in the country MGNREGS is the only fallback safety option for millions of families,” an activist told The Federal.

In FY21, the first pandemic year when widespread lockdowns forced migrant workers to return to villages and seek work under MGNREGS, allocation had to be raised to the highest ever to ₹1,11,500 at the RE stage. 

But the BE for FY22 was still ₹73,000 crore and, subsequently, the Centre had to allocate more funds to this scheme. In any case, since FY16, which was the second year of the NDA government’s first term, annual budgetary allocation has never been sufficient to provide work to all the people who demand work under this scheme. The RE figure has always exceeded the BE.