Budget 2020 Fails MGNREGA, Yet Again

According to the NREGA Sangarsha Morcha, an allocation of a minimum Rs 1 lakh crore is required to ensure a smooth running of the scheme.

New Delhi: Despite an acute funds crunch faced by the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme, the budgetary allocation for the 2020-2021 financial year (FY) has only been increased marginally, from Rs 60,000 crore to Rs 61,500 crore. This increase, however, when compared with the revised estimate of FY 2019-20, is actually 9.1% less. In 2019-20, the revised estimate was Rs 71,002 crore.

For the last few years, rural distress has been visible across India. There has been a sharp rise in the number of people dependent on the rural employment scheme for their sustenance. The Centre, right now, is on the verge of running out of funds to run the scheme.

According to the scheme’s financial statement released last week, as many as 15 states are in the red. According to a report in The Hindu, more than 96% of the allocated money has already been spent or is needed to pay pending dues. Less than Rs 2,500 crore is left to sustain the scheme for the next two months, the report says.

The scheme has to still run on the earlier allocation until March end and the newly announced budgetary allocation will be available only from April 1.

According to the NREGA Sangarsha Morcha, a national platform of workers’ collectives, trade unions, organisations and individuals, an allocation of a minimum Rs 1 lakh crore is required to ensure a smooth running of the scheme.

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Explaining the breakdown of the figures and the rationale behind the estimate given by the organisation, NREGA Sangarsha Morcha, in its press note released on January 31, says with a projected labour at 270 crore person and considering Rs. 248 is paid per person per day on an average, an estimated Rs 66,960 crores would be needed to only pay wages. Among other expenditures, there are material components, which the organisation has studied to be around Rs 16,740 crores.

In the last five years, the organisation says nearly one-sixth of each year’s allocation have been pending wage liabilities. “Assuming that the pending wages would be the same proportion going in to FY 2020-21, the component of pending wage liabilities is 79,515/6, which account to about Rs 13,252 crores.” The total expenditure of Rs 92,767 crore and an additional average 10% inflation would amount to about Rs 1,20,050 crore.

Taking the budgetary distributions and the supplementary allocation of funds to the programme for the last few years into account, it can be deduced that though the demand for employment under the scheme has been on a steady rise in the past years, the government has failed to address it fully. This has only added to the pending liabilities.

In its press statement, Peoples Action for Employment Guarantee, a civil society collective has said, “All eyes were on the Union Budget 2020-21 to see how the Central Government would leverage its only legislative mechanism to provide employment and alleviate rural distress i.e. the MGNREGA. And the result has been worse than expected, and deeply distressing.” The statement further points to the BJP government’s decision to reduce the budgetary allocation of MGNREGA by Rs 9,500 crore from its revised estimate of 2019-20. “The reduction in the budgetary allocation is taking place when the minimum allocation needed to protect the MGNREGA as status quo is nearly Rs 85,927 crore.”

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Responding to the budget, James Herenj of the Jharkhand NREGA Watch, a civil society initiative floated to ensure efficient implementation of the scheme said, “The budget has not taken the dire requirement of the scheme into consideration. In Jharkhand alone, of the total 26 lakh labourers with active job cards, only about 20 thousand labourers have got 100 days job. This situation will only worsen in the coming years,” Herenj says.

In 2019-20, Herenj said Jharkhand could only ensure an average of 35 days work and around Rs. 83 crores are pending to be paid in wages. “Almost all of those dependent on jobs under the MGNREGA are from Bahujan communities. Like, in Jharkhand, 41% belong to the Scheduled Tribes (ST) and the Scheduled Castes (SC) and the rest are from Other Backward Classes (OBC). This would be the case more or less in every state,” Herenj added.

Finance minister Nirmala Sitharaman took over two hours and forty minutes, the longest speech in 17 years, to present the budget. But the annual outlay for the MGNREGA – the only government programme providing direct employment – was not a part of her speech. Herenj says this pretty much sums up the government’s intention and interest to run the scheme.