Fund shortage, delayed payments put MGNREGA and workers in peril

Though the BJP government wished to do away with the scheme, the sheer scale of it is stopping them. In fact, the budgetary allocation and expenditure for the scheme increased year on year. | Photo - iStock

For Yellavva Shivanappa Yandravi (40), a farm labourer in Hirenandi village of Karnataka’s Belagavi district, the July-August rains and floods last year meant poor livelihood prospects. While every year, she found work in neighbouring farms during the harvest season between June-October, in 2019, she was left at the mercy of the government’s Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) that guaranteed 100 days of work a year for every rural household.

Yandravi usually opted MGNREGA jobs between January and May, but last year, she badly needed the scheme during the monsoon season too to run her family. By November last, she and two others of her family exhausted the 100 days of guaranteed work but they are yet to receive payment for the month. And now, she is worried as summers are approaching.

Yandravi sought more work under the scheme as the state government had assured additional 50 days of work in case of natural calamities, but she could not find work. To make matters worse, her village panchayat faced fund shortage and delayed payment from the government under the scheme. The Centre owed Karnataka nearly ₹2,000 crores in MGNREGA dues.

Siddappa one of the panchayat member says besides payment delays, the 60:40 wage- material ratio was making it difficult for them to come up with new jobs as the floods had filled tanks and ponds in the village and they were not in a position to allocate the pit digging (for ponds) work that they do every year.

In another case in Haveri district which faced severe drought last year, many people skipped MGNREGA work as they were busy collecting water for survival.

Lalitavva Banakar was among the many in the district who walked over a kilometre to get water just to feed her livestock which was her source of meagre livelihood. The water conservation work done under the MGNREGA scheme over the past decade was not effective enough as it could not help her during distress years. She was however given work as the rainy season approached. The panchayat allocated work for construction of her house under a housing scheme and accounted the labour under MGNREGA.

Dip in MGNREGA work

Between April-December, 189 crore person-days were accounted as against the estimated 219 crore person days of work. The employment generated this fiscal was lower than the previous year, and far below the estimated numbers. Across the country, while 8 crore people demanded jobs, only about 6.5 crore people were given jobs and there is a rise in demand for work from various drought/flood-hit states.

Interestingly, in the last five years, the number of people aged above 60 demanding jobs almost doubled. In 2013-14, while 3.8 crore card above-60 people registered under the scheme, nearly 29 lakh people were given jobs, constituting 8.5% of the total workforce. Post demonetisation, this gradually increased and in 2019-20, this share increased to 12.2%, i.e. nearly 57 lakh people.

In times of distress, the scheme, however, failed to cater to the needs of rural population, despite the state assuring additional work days.

Also read | Why the govt could look at MGNREGA in the time of distress

Disbursal delay hampering works

During a visit by Prime Minister Narendra Modi to Siddaganga Mutt in Tumakuru on January 2, this year, Karnataka Chief Minister BS Yediyurappa embarrassed the BJP brass by pointing fingers at the Centre for not allocating flood relief on time. Yediyurappa and his predecessor HD Kumaraswamy had time and again reminded the Centre to release long pending GST, MGNREGA and flood relief funds.

“Karnataka saw losses to the tune of Rs 30,000 crore due to unprecedented floods this year. I have brought this to PM’s notice and requested for funds three-four times. But until now not much funds are sanctioned. I request the PM with folded hands to release the funds,” the CM said.

However, Modi, who spoke after the CM, minced no words about flood relief. It drew quick criticism from the opposition.

Congress’s Siddaramaiah called Yediyurappa “a weak CM”. “He should have taken all 25 BJP MPs and gone to the PM’s house and demanded the Rs 36,000 crores needed to rebuild. But he did not dare,” Siddaramaiah said.

Under pressure, a day later, Yediyurappa issued a statement saying the Prime Minister had assured assistance.

Apart from Karnataka, Rajasthan too has demanded the release of funds in 2019 although they were delayed by more than six months. While Rajasthan government claimed Rs 745 crore in dues, by September, Karnataka claimed nearly Rs 2,000 crore in pending payment.

According to the Karnataka rural development department, as of January 6, 2020, the Centre owed it Rs 1,374.45 crore (Rs 301.56 crore for wages, 269.34 crore for materials and Rs 803.55 crore pending dues from last year).

However, the Centre kept on claiming that over 90% of the payments had been made within 15 days of the completion of work. But in reality, payments to nearly 90 lakh people have been delayed beyond the stipulated 15 days.

According to the MGNREGA management information system, close to Rs 33,000 crore, nearly half the whole scheme’s outlay was pending to be disbursed. Of this, Rs 1,234 crore were due for more than 90 days.

These delays in disbursement come at a time when the Centre is said to be reducing its overall spending in the light of a deep economic slowdown and shortfall in tax revenues that threaten to upset its fiscal math.

India’s economic growth for the July-September slowed to a six-year low of 4.5%, and the government predicts that expansion for the fiscal year through March 2020 will likely touch an 11-year low of 5%.

According to a Reuters report, the government is likely to cut spending for the current fiscal by Rs 2 trillion, about 7% of the total outlay.

Analysts have pointed to discrepancies in the way in which the delays are calculated. The reality is that the delays in releasing funds after the panchayat prepares the payslips are not accounted for.

A report by Rajendra Narayan of Azim Premji University highlighted that the current method absolved the Centre and payment agencies for any delays in labour wage disbursal caused by them.

The delays were calculated only until the Funds Transfer Order (FTO) is generated at the block/panchayat level. As a process, subsequently, the Centre approves the FTO digitally and the payment is processed electronically. This delay is not accounted for.

Narayan points to their study in 2016-17, wherein they claim merely 21 per cent of wages were paid in the stipulated 15-day period. And in some cases, the wage payments were pending for more than 200 days.

BJP’s conundrum

Proposals to scale back MGNREGA were discussed during the first year of the Modi government. About 28 leading economists wrote to the PM against the move in October 2014.

On February 27, 2015, the PM told Parliament that MGNREGA, Congress’s pet project, was a monument of failure. However, he categorically refused to do away with the programme for political reasons.

Though the BJP government wished to do away with the scheme, the sheer scale of it is stopping them. In fact, the budgetary allocation and expenditure for the scheme increased year on year. The fund availability increased from ₹37,588.03 crore to ₹60,000 crore in 2019-20.

Rural development minister Narendra Singh Tomar soon after assuming charge this year said MGNREGA should not continue forever and that the government was making a multi-pronged approach to improve the lives of farmers in irrigation, subsidies and pensions, and has increased the minimum support price of crops.

While the Centre’s approach may be different, Karnataka Rural Development Minister K S Eshwarappa, told The Federal that MGNREGA is one of the most helpful schemes to uplift the rural masses and they can in no way do away with the scheme.

He, however, expressed his helplessness as the state was unable to create more jobs under the schemes due to lack of funds. “For a few months, we kept the show running with state funds. But we can’t continue for long and the Centre needs to take note of it,” he added.

Low wages

Another important aspect is, the wages under the scheme have been kept low, which in a way is resulting in fewer workers opting for jobs. Though the scheme was designed so that people get jobs in distress condition for 100 days in a year, the low wages is acting as a deterrent.

A high-level panel headed by S Mahendra Dev, former director of Indira Gandhi Institute of Development Research in 2014 had recommended revising MGNREGA wage rates every year based on the Consumer Price Index for Rural (CPI-Rural), besides saying that wages under the scheme should be equal to or higher than the minimum wage in the state.

Another expert committee set up by the ministry of labour and employment in 2017 under the chairmanship of Dr Anoop Satpathy, Fellow, VV Giri National Labour Institute (VVGNLI), came out with a recommendation last year to fix the minimum wage for India at Rs 375 per day as of July 2018, irrespective of sectors, skills, occupations and rural-urban locations for a family comprising of 3.6 consumption units.

Take for instance Jharkhand. Even as the national minimum wage based on composite index and region-specific national minimum wages asserts that workers should be given Rs 342 per day, the current MGNREGA wage rate in the state is just Rs 171, just about half of the recommended figure. Even the minimum agricultural wage rate is Rs 239.

While workers are already grappling with delay in payment of wages and Aadhaar linking issues, the low hike in wages is further hitting them hard. Jharkhand got Rs 5 wage hike in 2016-17 and Re 1 the subsequent year and Rs 3 recently. Many took to the streets to protest the wage hike that added little to their kitty. In extreme cases, people starved to death in Jharkhand even as the government failed them.

MGNREGA Sangharsh Morcha, a national platform of workers’ collectives found that in 33 states and UTs, the MGNREGA wages were less than the minimum wage for agriculture.

Narendra Pani, professor at the National Institute of Advance Studies says while the fund crunch could affect the entire scheme, it would not be prudent to compare the wages with the market rate and it would have disastrous consequences if done so and distort the labour market. He argues that the scheme is not just aimed at employment generation but also focuses on asset creation which is for the common benefit.

“The scheme is designed to provide jobs in distress conditions and not to compete with other labour work in the market. That said, the fund shortage or delays in payments will just kill the scheme,” he says.

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