The finance ministry announced an additional allocation of Rs 40,000 crore in May 2020 to boost India’s rural job programme. It was announced that the supplementary allocation will be over and above the Rs 61,500 crore that was the budgeted estimate for the financial year.
The increased allocation thus took the total Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA or NREGA) budget to Rs 1,01,500 crore.
However, at the beginning of the year, a little more than Rs 10,000 crore was pending in payments for previous years, which means effectively about Rs 90,000 crore was available towards expenditure for 2020-21.
In May, June and July, the country witnessed a great surge in NREGA demand, about 50% more than the same period last year. Soon after, however, the bulk of the allocation got exhausted due to extensive demand for work under the scheme. About half of the funds were used within the first four and a half months of the financial year. Despite various independent studies and news reports showing inadequate availability of work across the nation, the fact that the funds were used up very fast only highlights how the scheme needed much more than what was on offer.
Releases slowed down
Post-July, spending has been low. Releases were slowed down and demand for work, therefore, came down. Needless to say that the demand shown on the MGNREGA website is no measure to map the true scenario of the demand given that most demands neither get registered on the MIS (Management Information System) nor the dated receipt against demands are issued to the workers.
Indeed, contrary to the idea of a ‘demand-based’ job guarantee programme, in practice, the scheme is mostly supply-driven and contractor-led, which means people mostly work when the supervisor or the local contractor asks them to do so. In such a scenario, it is hard to measure the true demand and extent of need for the job scheme just by looking at the official website. The website only captures the data for demand when they are registered on the MIS by the local officials or the frontline functionaries. In such circumstances, one can hardly get a sense of the true requirement without carrying out a proper survey at the ground level.
That said, the Indian government did the right thing by increasing the allocation right away. The ideal next step would have been to get a country-wide rapid survey done for a proper assessment of demand and thereby arriving at a proper budget estimation. Instead, the Centre has gone in the complete opposite direction and slowed down releases when half of the funds were exhausted. By doing so, we have lost a great employment generation opportunity which could have in turn boosted the markets through an enhanced rural demand. By reducing the scope of more employment and asset generation, the Centre has done very little to help the rural workers in the crisis.
The Gaon Connection-Lokniti CSDS survey has revealed that only about 20% of willing people got work under NREGA during different phases of the lockdown, a time when people needed cash to cope with their income losses from the farm and allied sector. This also shows that despite a higher allocation and great surge in NREGA demand during the lockdown, only a handful could get the benefits of the programme and that the true requirement was much higher.
Several other reports have shown that there was a lack of approved schemes across states and procedural delays did not help the cause either. While in the first four months, nearly Rs 50,000 crore was spent, in the next three months only about Rs 20,000 crore could be made available to the states. Even a hasty survey would show that the decline in expenditure is not because of demands reducing due to farm activities but largely because of the unavailability of schemes and under awareness among workers about NREGA.
The programme was considered to be a major coping mechanism for the economic losses that were inflicted as a result of the lockdown restrictions. How well has it done so far? The government has managed to support about 6 crore households get an average of 38 days work each. While admirable, for a country of about 6 lakh villages and 2.5 lakh gram panchayats, it has largely failed to address the crisis for most rural residents.
Furthermore, the government has not extended the workdays beyond 100 days per household. Therefore, the scope of additional income or making up for the losses does not even arise. It was useful to certain families i.e. 43% of the total job card holding families to get some immediate cash against the work they did. It can’t be considered as an additional opportunity but immediate relief to a handful. It is to be noted that nearly 1 crore new job cards have been made this financial year as special drives took place for the creation of new cards across the nation but the same pace could not be maintained in work sanctioning, allocation and job creation. In a year when workers have queued up in great numbers to register for NREGA, it is a bureaucratic failure that only 43% of the job card holding families could receive work until the seventh month of the financial year.
Apart from announcing a supplementary budget, the Centre did very little to push the scheme. The clear lack of political priority has resulted in administrative mismanagement, lack of monitoring and leakages which are anyway common to NREGA. In short, a great opportunity was lost due to insincere management, halfhearted efforts and lack of political will. A programme which could have been revived for the purpose of rural reconstruction and help rural India fight the widespread economic crisis, the true potential of the demand-based employment guarantee was never realised.
Furthermore, according to the official website, 265 crore person-days were generated in NREGA last year against an approved labour budget of 277 crore person-days. This resulted in a revised estimate of Rs 71,026 crore allocated for the programme.
This year, while the Centre had announced Rs 40,000 crore as supplementary allocation over and above the original estimate of Rs 61,500 crore, the government raised the approved labour budget to 300 crore person-days only. It is beyond understanding how the ministry calculates the budget against the approved person-days. Even at the current per person per day average cost of Rs 258 (as per the official website), the cumulative budget of Rs 1,01,500 calls for an allocation of 393 crore person-days. According to a few news reports, the government has planned to further expand the scope of the programme by increasing the planned labour budget to 320 crore person-days. Even this is still completely non-commensurate with the announced allocation.
If the state-wise approved allocations are not increased, the government is not likely to even spend the announced budget. Also, if the Centre intends to enhance the cumulative labour budget by another 20 crore person-days, then it will also have to allocate another Rs 5,000 crore to the budget. However, no such announcement has been made so far but the official website is already showing 320 crore person-days as approved labour budget.
This is not only weird but raises questions on the sincerity of the ministry in dealing with the technicalities of the programme. Also, it is not clear why the release of money has been slow while the government has around Rs 30,000 crore more in the kitty to spend. Did the finance ministry approve and process the full budget to the Ministry of Rural Development towards NREGA expenditure or is it yet to release the full amount?
The intentions and numbers are unclear and surely do not match with what the situation on the ground demands.
Debmalya Nandy is associated with NREGA Sangharsh Morcha and has worked in the tribal areas of Jharkhand and Odisha for the last 11 years.