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Massive Slump in MNREGA Work After Centre’s Unofficial Instructions

The Centre’s off-record instructions through WhatsApp and a squeeze on funds made the rural work programme crash after a roaring first half of the year.

Women working on an NREGA site building a pond in Gopalpura, Jhabua, Madhya Pradesh. Credit: UN Woman/Gaganjit Singh/Flickr CC BY-NC-ND 2.0

Women working on an NREGA site building a pond in Gopalpura, Jhabua, Madhya Pradesh. Credit: UN Woman/Gaganjit Singh/Flickr CC BY-NC-ND 2.0

This is second of a two-part series. Read part one here.

The WhatsApp messages from the central rural development ministry to states had a chilling effect on the work given under the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) after the roaring demand growth in the first few months. The states took the instructions and signals sent in August seriously and reduced work for future as arrears piled up.

The Union government prepares a labour budget at the beginning of the year – the persondays of labour work it estimates to be generated through the financial year. It is done in consultation with the states but the Union government has the final say. The labour budget helps estimate the budgetary support required for the scheme in a particular year. But, legally this is supposed to be only an estimate and the Centre is required to provide additional funds if demand for work exceeds projections – as is always likely to happen in a drought year. This year the government approved a labour budget of 2.17 billion person-days days – 980 million persondays less than what the states had asked for. It told states not to exceed the limit set without prior approval.

But, aware that the country was facing drought and after being criticised by the Supreme Court for not providing funds, in the early part of the year the centre encouraged states to register demand from the poor and assured them of funding support. When it became evident that the drought was widespread it also announced an extra 50 days of work in drought-hit districts, above the legally guaranteed provision of 100 days of work.

As states took up the registration of demand in right earnest the work provided to the rural poor surged, exceeding the central government projections and approved labour budget for April-July by a whopping 277. 94 million person days. By July the rural development ministry had consumed 76% of its original budgetary allocation of Rs 38,500 crore. Rs 12,580 crore of this had gone towards paying arrears of the previous year’s arrears that the Centre owed to the states. It sought an additional Rs 15,000 crore from the finance ministry but got only a third of it in August.

But the rural development ministry’s changed tone in August conveyed through the off record WhatsApp group had an immediate impact. In July states had generated 30.5 million persondays of work above what had been planned. In August the work given was 7.47 million days more than what was planned. But, by September the trend reversed dramatically. The work provided was 54.8 million days less than what had been planned to be given to the people in rural India.

The rural ministry explains this dip as part of the usual trend when the monsoon is normal in the country.  It said, “A total of Rs.35,793.40 crore against the total revised allocation of Rs.43,499 crore under MGNREGS has been provided for MGNREGS so far.  This comes to 82.29% of the revised Budget Estimate for MGNREGS in the current financial year.  This level of release is unprecedented and has been resorted to given the high demand for work in the drought-distressed months of April, May and June.  On account of a good monsoon in most parts of the country, the demand for work has come down in subsequent months. There is a complete commitment of the Ministry to honour the demand for work.”

This is partly true. The demand does ebb in a normal monsoon period, data shows. But, the ministry had planned ahead of time for this dip. Its approved labour budgets for work to be given in each month after May were less than the previous month’s. In July it planned to give 67.40 million less of personday than in June. For August the work to be given had been pared down by yet another 27.03 million days as compared to July and in September by 2.5 million more days below the work given in August. Yet, the actual work given was even much less compared to even this lowered projection. In no other previous year for which the data is available in public domain (2013-17) has work demand crashed so rapidly in August or September as compared to previous months.

This is also evident from a letter that the Karnataka chief minister personally wrote to Union rural development minister on August 18, saying, “It is unfortunate that wage payments have not been released by the ministry since June 24, 2016. As a result farmers and labourers in the state are facing extreme financial stress….more than Rs 250 crores are pending for wage payment.”

Before this in July the Madhya Pradesh government too had written, “Even with the reduced labour projections for the second quarter due to rains, the labour budget sanctioned by the government of India is 1.91 crore mandays, which would entail an expenditure of Rs 530 crore. The current liabilities for wages and material amount to Rs  238 crore. It would not be possible for state to meet its wage liability if funds are not made available immediately.”

Rajasthan wrote in early August pointing to Rs 137 crore of pending funds from the Centre and how the delay in payment was adversely affecting the scheme in the state.

The ministry in its response said, “From the total allocation made to the Ministry, we still have resources available to release to States on demand.  A demand for additional Rs.10,000 crore has been projected at the second supplementary stage by the MoRD.” So far the government has already spent Rs 35,793 crore but it owes the states yet another Rs 5,600 crores for work already done so far. The sudden dip in work could now help the government keep a budgetary leash on the programme. But the ministry states that “There is no dearth of funds at present. Depending on the demand for work, appropriate demand for funds would be made as and when required.  This is in line with the demand driven work provision under MGNREGS.”

Business Standard spoke to several state MNREGA commissioners who were on the WhatsApp group. All of them preferred to speak off the record. “The problem is not with running a WhatsApp group. It could have been easily made part of the official communication and put on record. What was happening on the group was disturbing. If this was group chat was on official records you wouldn’t have seen such conversations.”

“It is not as if this is happening the first time. There is an inherent contradiction and conflict between what the law requires and how the budgetary provisioning system works. The law requires a bottoms up approach and budgetary support is driven by other fiscal considerations as well,” said another state MNREGA commissioner.

Recently the rural development ministry amended its master circular for the scheme, deciding that the first tranche of funds it gives to the states in April will now also be dependent on the provisions of the Vote on Account. This was not the case earlier.

The full response of the Union rural development ministry to detailed queries by Business Standard:

1. What was the original purpose of running the WhatsApp group ‘Encore’ for officials of Ministry of Rural Development and state officials?Enabling Communication on Rural Employment (ENCORE) is a WhatsApp Group of District, State and Central Government functionaries working as part of the MGNREGS team.  It is simply a convenience for follow-up and reminders as also for showcasing good work by States through uploading of pictures.  It was never intended as a substitute to official communication.  All substantive issues are addressed through formal letters of the Ministry and not through WhatsApp messages.  It is an informal platform for ease of quick communication and follow up and definitely not a substitute for formal Government to Government communication.
2. Was a government record maintained of the communications exchanged on the ‘Encore’ group from the date of its inception till now? If so what is the file number of the file in which the transcript and all correspondence of the chat group was maintained in the rural development ministry?
The WhatsApp messages are kept as a backup for future references, if need be. However, no formal arrangement has been made in this regard. It is not a formal Government communication.
The Ministry is committed to implement the MGNREG Act in letter and spirit. While work on demand is being made available as reflected in the very high persondays generation especially during periods of drought and distress, a demand based programme also requires proper record keeping, financial management and full transparency and accountability.  The Government has made serious efforts to improve transparency, focus on durable assets and livelihood security, and strengthen systems of intensive monitoring of outcomes.  States and districts have actively tried to provide work on demand especially to the deprived households on priority.
3. Out of the total budgeted estimate and revised estimate how much funds had actually been disbursed to the states by end of August?
A total of Rs.35793.40 crore against the total revised allocation of Rs.43,499 crore under MGNREGS has been provided for MGNREGS so far.  This comes to 82.29% of the revised Budget Estimate for MGNREGS in the current Financial Year.  This level of release is unprecedented and has been resorted to given the high demand for work in the drought-distressed months of April, May and June.  On account of a good monsoon in most parts of the country, the demand for work has come down in subsequent months.  There is a complete commitment of the Ministry to honour the demand for work.
4.  What was the unique situation that arose in August forcing the MORD to ask states to not generate additional PDs but work in a ‘targeted fashion’?
The Ministry of Rural Development has not made any changes in its approach in the month of August as is borne out by all formal communications to the States.  The Ministry of Rural Development is committed to respecting the provisions of the MGNREG Act in letter and spirit.
5. What are the reasons for sudden drop in persondays of labour generated across the country against the monthly labour budget starting September 2016?
As mentioned above, this year the monsoon has been good.  This generates larger employment in the agriculture sector thereby reducing the demand for work under MGNREGS.
6. What were the reasons that only an additional Rs 5,000 crore was released by the finance ministry for MNREGA against a demand made by the ministry of RD of Rs 15,000 crore?
As is clear from the statement at Sl.No. 4 above, from the total allocation made to the Ministry, we still have resources available to release to States on demand.  While it is true that the Ministry of Rural Development asked for Rs. 15,000 crore on account of the fact that arrears of 2015-16 paid in 2016-17 for wages and material amounted to Rs. 12,581 crore, against the demand, Rs. 5000 crore was made available at the first supplementary stage itself which is in the month of August, 2016.  It shows the commitment of the Government to the programme.  A demand for additional Rs.10,000 crore has been projected at the second supplementary stage by the MoRD.There is no dearth of funds at present.  It must also be stated that the highest expenditure in MGNREGS since it was launched in 2006 was in the year 2015-16.  The allocation of Rs. 43,499 crore in the Central Budget for MGNREGS at the revised stage in 2016-17, makes it even higher than the 2015-16 allocation.
7. How much additional funds does the MORD expect it will require beyond the funds already allocated for MNREGA to continue unfettered over the remaining duration of the year?As stated above, at present the Department has asked for an additional provision of Rs. 10,000 crore.  Depending on the demand for work, appropriate demand for funds would be made as and when required.  This is in line with the demand driven work provision under MGNREGS.

By arrangement with Business Standard.