Modi Government’s Budgetary Allocation for MNREGA Is Barely an Increase

Two supplementary MNREGA allocations were made by the government last year. This means, there’s only a 1%, not 25%, actual increase in this year’s Budget.

MNREGA workers. Credit: Reuters/Krishnendu Halder/Files

MNREGA workers. Credit: Reuters/Krishnendu Halder/Files

New Delhi: The finance minister claimed that this year’s Budget allocations for the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) were a new “record”, at Rs 48,000 crore. But is this really a substantial increase? And, more importantly, is it enough?

The 2016-17 Budget had allocated Rs 38,500 crore for the scheme; if you compare this year’s number to that, you see an increase of 25%. But what these numbers (that Arun Jaitley proudly announced) hide is that two supplementary allocations were made in the last year, making the final allocation Rs 47,500 crore. The increase in this year’s allocation, then, is of a mere Rs 500 crore, or 1%.

Highlighting this point, the People’s Action for Employment Guarantee (PAEG, which includes activists such as Aruna Roy, Nikhil Dey and Annie Raja) has issued a press release that attempts to explain why this changed allotment isn’t really a considerable increase at all and why MNREGA would need higher allocations to function smoothly.

Being a demand-driven scheme, adequate resources for MNREGA need to be made available whenever there is demand for it. At the moment, the statement says, 22 of 34 states and union territories have negative balances in their MNREGA accounts. According to government data for the last year, 93% of the funds available for MNREGA have been spent while Rs 3,469 crore in pending liabilities have piled up. Given this situation, which the government has admitted, was the finance minister’s proud half-announcement an attempt to pull wool over people’s eyes?

Using the finance ministry’s mechanism for preparing labour budgets, the PAEG statement has said that “Even to honour only the approved budget for the months of February 2017 and March 2017, nearly Rs 10,013 crores would be required (at the average cost per person day of Rs 228)”. If that rate continues, pending liabilities at the end of this year would be at Rs 13,482 crore. These calculations are all based on government numbers and therefore could easily be calculated, if adequate funding was the government’s aim.

“This unpredictable under resourced fund flow mechanism has implications for implementation, particularly timely payment to workers, which greatly affects faith in the employment guarantee,” the statement reads. “The Supreme Court order emphatically stated that delayed wages were unacceptable and a violation of the rights of workers. Yet this continues with impunity. At present 54% of the wage payments continue to be delayed, and as a result Rs. 231 crores of compensation to workers also remains due.” This, the civil society members have continued, will particularly affect those already hit by demonetisation, who have lost other labouring jobs or not been paid wages on time, making it even more important for the government to go above and beyond this minor increase in allocations.

Several activists and academics have now pointed to this attempt by the government to portray the increase in MNREGA allocations as much more than they are. “As far as social policy is concerned, the budget has been a big disappointment,” economics professor at IIT Delhi Reetika Khera told The Wire. “For MNREGA, while the finance minister did make the ‘highest ever’ allocation, what he failed to mention is that in the previous financial year the revised estimate for MNREGA was Rs 47,499 crore (much higher than the budget estimate of Rs 38,500 crore). Further, once we factor in inflation to look at the change in real terms, that there is hardly any increase over the previous year’s revised estimates. This allocation to MNREGA is disappointing as it remains inadequate in comparison to demand: there have widespread reports of job losses in the informal sector and many people are turning to NREGA to tide over these bad times.”

NGO Swarah Abhiyan also mentioned this discrepancy in their press release on the Budget. “Govt proudly claimed that allocation for NREGS has been increased to a record Rs48,000 crore. But this is no different from Revised Expenditure of 2016-17 which was Rs.47,500 crores! Even this large expenditure of last year is no credit to the government. It was forced by the Supreme Court orders in the Swaraj Abhiyan case on the drought. In fact, as per demand projection of states, it should have increased to Rs 80,000 crores,” the statement says.