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'Crucial Lifeline': 80 Academics Ask Modi to Increase Funds for 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."

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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.

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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.

Also read: High Demand for MGNREGA Is a Ringing Fire Alarm

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.

Signatories:

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
6 Devaki jain Independent
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
19 Rajashri Dasgupta Journalist
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
39 Ravi Srivastava IHD
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
51 Surajit Mazumdar JNU
52 Kedar Kulkarni Azim Premji University
53 Kiran Moghe CITU/AIDWA
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
72 Sudha Narayanan Researcher
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