Centre Reduces States’ NREGS Demand by 980 Million Person-Days

The Centre says modest numbers make it easier to realign during drought-like situation; intent is to provide work to every household that demands it.

NREGA in Action: Villagers dig out a silted-up water tank. Credit: McKay Savage

NREGA in Action: Villagers dig out a silted-up water tank. Credit: McKay Savage

New Delhi: State governments asked the Union government to peg the estimated work to be given under Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) for 2016-17 at 3.15 billion person-days but the Centre reduced it by 980 million person-days. It fixed the approved labour budget for FY17 at 2.17 billion person-days, shows data.

The ministry of rural development, in response to queries by Business Standard, said, “The total approval (of labour budget) was kept modest, so as to be able to make significant changes, depending on the monsoon and the persistence of drought-like conditions. The intent was to provide work to every household that demands it. There has never been an intention to prevent states from creating work on demand.”

In terms of percentage, in FY16, the Centre approved 72.2 per cent of states’ recommended work projection. In FY17, when the drought is spreading in the first quarter, the government has approved only 69 per cent of the states’ recommended number.

Stating the labour budget is only an indicative number, the ministry explained how it went about paring and distributing the labour budget this year to the states. It gave a third of weight to the labour budget of 2015-16, a third to the percentage of landless casual labourers, based on data from the socio-economic caste census (SECC), and the remaining to the percentage of households with even single deprivation as per the SECC data.

The “approved labour budget” is an estimate by the Union government at the beginning of a financial year of how much work the states are expected to provide under the flagship scheme. While it does not formally put a cap on the work generated, the work provided at country-wide level in past five years has never exceeded the approved labour budget, according to government data in public domain.

In FY16, when demand for work surged in the second half, 13 states exceeded their approved labour budget but total work generated at national level remained below the total approved number.

At the beginning of FY16, states had recommended 3.19 billion person-days work be created for rural poor. However, the Union government approved a budget for 2.40 billion person-days. Ultimately, 2.31 billion person-days work was created, shows data.

Official guidelines, in the Master Circular 2016 on MGNREGAS, do not mention the term “approved labour budget” but only “labour budget” as prepared at the gram panchayat level and upwards, according to the works they want to undertake. This is as per Section 13-16 of the law. Since the NDA government came to power, the rural development ministry has worked harder on this process through “intensive participatory exercises” and by focussing on the poorer regions of the country.

In practice, since the law has been in place, the states present this bottom-up labour budget projection to the rural development ministry. The Centre holds meetings with each state government to decide what the final approved labour budget would be. In 2014-17, for which data is available on NREGA website, the approved annual labour budget has always been lower than the states’ proposals, based on the bottom-up exercise. In FY15, the states proposed 2.83 billion person-days of work and the Centre set the approved labour budget at 2.21 billion person-days. The actual performance was much less in that year.

The ministry explained, “This year, the focus was on vulnerable households and developing sustainable livelihood options for them using SECC deprivation criteria. States were clearly told that the labour budget was only indicative and will be increased if there is a need based on the monsoon and demand for work.”

On the legality and criteria for paring down the demand estimate developed through an extensive ground-level exercise, the ministry said, “The process is only to ensure that there is a thrust on productive assets that help poor households to improve incomes. The Budget had clearly mentioned about the focus on farm ponds, composts, and other initiatives in agriculture and irrigation. While appraising a state’s plan, these priorities are thoroughly examined. The appraisal is only to improve the quality of proposals.”

Sanction letters from the rural development ministry, which released the first tranche of money for FY17 to states, say that, if needed, the latter can come back to the Centre for the revision of labour budget in September. When Business Standard asked for details of instances when labour budgets of states had been revised mid-way in the past three years, the ministry replied, “In FY14, the labour budget was revised in four states. The revision of the labour budget follows demand of work. It depends on monsoon.”

On why the Centre has specifically told states not to exceed the labour budget in FY17 without its approval, the ministry said, “While it is true that prior approval for going beyond the labour budget is mentioned in the labour budget minutes for 2016-17, it has only been mentioned for the purpose of financial discipline and appropriate forecast of financial resources need. If there is demand, states do go beyond the labour budget without any prior approval of the central government. The same approach will be continued.”

This article originally appeared in Business Standard