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New Delhi: A group of 80 economists and other academics has written an open letter to Prime Minister Narendra Modi, requesting him to immediately release adequate funds for the Mahatma Gandhi National Rural Employment Guarantee Act. As employment and wage levels struggle to return to pre-pandemic levels, they argue, this scheme has served as a lifeline for the rural poor.
Funds allocation for the scheme, the signatories point out, was in fact cut by close to 30% in the second year of the pandemic, despite burgeoning demand for work under the MGNREGA. “Lack of funds results in suppression of demand for work and delayed payment of wages to workers. These are violations of the Act; they also constrain economic recovery.”
Workers are already owed pending dues to the tune of over Rs 1,121 crore.
Studies have found that significant amounts of this demand is going unmet, the letter continues. “Without further increase in funds, the programme will also be unable to meet its promise of providing 100 days of work to every household that demands it: over 51 per cent of households employed under MGNREGA this year got work for 30 days or less, and less than 10 per cent were employed for more than 80 days.”
Not only will funding the MGNREGA well lead to an increase in opportunities for and the well-being of rural households, the letter states, it will also aid in the process of economic recovery.
Signatories of the letter include economists Prabhat Patnaik, Jean Drèze, Jayati Ghosh, Ashwini Deshpande, Arjun Jayadev, Amiya Bagchi and others.
Read the full letter and list of signatories below.
The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has repeatedly proved to be a crucial lifeline for hundreds of millions of rural households. It has assumed more significance during the period of the pandemic. Even now, employment levels and wage incomes across the country remain significantly lower than before. This affects the living conditions of working families as well as the wider potential for economic recovery, which remains constrained by the inadequate revival of mass consumption demand. In this context, we are writing to express our concern about the ongoing funds crunch facing the programme and to urge the central government to immediately release funds to states to continue with and expand the programme as needed.
It is unfortunate that despite seeing evidence of the critical security provided by MGNREGA during the first year of the pandemic with 41% more rural households seeking work in 2020 compared to the previous year, the fund allocation for the programme was cut by nearly 30%. Lack of funds results in suppression of demand for work and delayed payment of wages to workers. These are violations of the Act; they also constrain economic recovery.
Of the central budgetary allocation of Rs 73,000 crore for the programme for FY 2020-21, Rs 17,451 crores (nearly a quarter of the amount) would simply meet the pending liabilities of previous years. With more than four months remaining in this financial year, the estimated expenditure has already exceeded the budget allocation. As per official data, the People’s Action for Employment Guarantee (PAEG) estimates that as of 15 November 2021 the programme was in deficit of Rs.10,000 crore. Over Rs.1,121 crore is due to the MGNREGA workers as wage payments. 24 states and Union Territories have negative balances, having spent more than they received from the central government for this. This implies that the state governments are in no position to implement the Act.
There is evidence of significant unmet demand. 13% of households that demanded work did not get work. This is a highly conservative estimate, as it does not include the massive extent of demand for work that is not even registered on the MGNREGA Management Information System (MIS) on account of shortage of funds. Unmet demand is as high as 20% in the states of Gujarat, Telangana and Bihar. Without further increase in funds, the programme will also be unable to meet its promise of providing 100 days of work to every household that demands it: over 51 per cent of households employed under MGNREGA this year got work for 30 days or less, and less than 10 per cent were employed for more than 80 days.
As per a recent study by LibTech India of 1.8 million wage transactions across 10 states for the first half of this financial year, the central government alone is responsible for delays in transferring wages for 71% of the transactions. Moreover, in violation of the Supreme Court orders in the Swaraj Abhiyan vs Union of India case, the central government still does not compensate the workers for the delays it is causing in the payment of wages.
We therefore urge the central government to strengthen and expand the MGNREGA, by providing additional funds to meet the demand for work and to ensure that the programme functions as the law requires. Through its effects on mass demand, this will also contribute to recovery of the overall economy and micro and small enterprises that are currently facing extreme difficulties.
|1||Jayati Ghosh||University of Massachusetts Amherst, USA|
|2||C. P. Chandrasekhar||Professor (Retd.), JNU, New Delhi|
|3||Satish Deshpande||Delhi University|
|4||Rajendran Narayanan||Azim Premji University|
|5||S Subramanian||Independent Scholar, former MIDS Chennai|
|7||Surajit Das||Assistant professor, CESP, JNU, New Delhi|
|8||R Nagaraj||Centre for Development Studies, Trivandrum|
|9||Pronab Sen||Retired government servant|
|10||E A S Sarma||Forum for Better Visakha|
|11||Sunanda Sen||Former Professor of Economics JNU|
|12||Chandan Mukherjee||Retired Professor, Centre for Development Studies, Trivandrum|
|13||Prabhat Patnaik||Professor Emeritus, Jawaharlal Nehru University, New Delhi|
|14||Alex M. Thomas||Azim Premji University|
|15||Jean Dreze||Department of Economics, Ranchi University|
|16||Vikas Rawal||Jawaharlal Nehru University|
|17||Aditya Bhattacharjea||Delhi School of Economics, Delhi University|
|18||Sushil Khanna||IIM Calcutta|
|20||Vamsi Vakulabharanam||Department of Economics, University of Massachusetts Amherst|
|21||Praveen Jha||Professor of Economics, JNU, New Delhi|
|22||Prof. S. Mahendra Dev||Indira Gandhi Institute of Development Research, (IGIDR), Mumbai|
|23||Arun Kumar||Retd Professor, JNU|
|24||Jesim Pais||Society for Social and Economic Research, Delhi|
|25||Rohit Azad||JNU, New Delhi|
|26||Mritiunjoy Mohanty||IIM Calcutta|
|27||Kade Finnoff||Azim Premji University|
|28||Rahul De||Azim Premji University|
|29||Anjor Bhaskar||Azim Premji University|
|30||Zico Dasgupta||Azim Premji University|
|31||Dipa Sinha||Ambedkar University Delhi|
|32||Ruchira Sen||Assistant Professor, Jindal Global University|
|33||Debabrata||Jawaharlal Nehru University|
|34||Himanshu||Jawaharlal Nehru University|
|35||Abhijit Sen||JNU (Retired)|
|36||Ritu Dewan||Director ( r) Mumbai School of Economics and Public Policy|
|37||Pulin B Nayak||Delhi School of Economics (Retired)|
|38||Ragupathy Venkatachalam||Goldsmiths, University of London, UK|
|40||Prof. Biswajit Dhar||JNU|
|41||KP Kannan||Centre for Development Studies, Trivandrum|
|42||Arindam Banerjee||Ambedkar University Delhi|
|43||Nalini Nayak||Associate Professor (Retd) Delhi University|
|44||Nandini Dutta||Miranda House, University of Delhi|
|45||Jayan Jose Thomas||Economist, New Delhi|
|46||Venkatesh Athreya||Hon Professor, GIFT, Thiruvananthapuram|
|47||V. Kalyan Shankar||Symbiosis School of Economics, Pune|
|48||Anjana Thampi||O. P. Jindal Global University|
|49||Anamitra Roychowdhury||JNU, New Delhi|
|50||Ashwini Deshpande||Ashoka University|
|52||Kedar Kulkarni||Azim Premji University|
|54||Anand Shrivastava||Azim Premji University|
|55||Rahul Lahoti||ETH Zurich|
|56||Radhika Balakrishnan||Rutgers University|
|57||Farzana Afridi||Indian Statistical Institute (Delhi)|
|58||Radhicka Kapoor||Senior Visiting Fellow, ICRIER|
|59||Deepti Goel||Azim Premji University|
|60||Nandini Nayak||Ambedkar University Delhi|
|61||Arjun Jayadev||Azim Premji University|
|62||Paaritosh Nath||Azim Premji University|
|63||Amit Basole||Azim Premji University|
|64||Narender Thakur||University of Delhi|
|65||C. Rammanohar Reddy||Editor, ‘The India Forum’|
|66||Jeemol Unni||Ahmedabad University|
|67||Manish Kumar||Delhi School of Economics|
|68||Taposik Banerjee||Ambedkar University Delhi|
|69||Mrinalini||Azim Premji University|
|70||Ravinder Jha||Miranda House|
|72||Rajiv Jha||Shri Ram College of Commerce|
|73||Rosa Abraham||Azim Premji University|
|74||Parag Waknis||Ambedkar University Delhi|
|75||Reetika Khera||Department of Humanities and Social Sciences, IIT Delhi|
|76||Amiya Bagchi||Prof Emeritus, Institute for Development Studies, Kolkata|
|77||Amit Bhaduri||Former Professor, JNU|
|78||Atul Sood||Professor, Centre for the Study of Regional Development, Jawaharlal Nehru University|
|79||Deepak Nayyar||Prof Emeritus, JNU|
|80||Smita Gupta||Independent economist|