Tejas Misra, I-year student at National Law University, Delhi The recent cut to the budget allocated for the MGNREGA scheme now poses yet another difficulty bringing to light a host of problems that have come to being associated with the MGNREGA scheme. Despite remaining one of the largest national employment schemes anywhere in the world, with almost 15.4 crore active workers as of 2022-23, the policy stays plagued by problems yet continues to rise in importance to the sustenance of rural livelihoods. The primary objective of the scheme is to guarantee 100 days of employment in every financial year to adult members of any rural household willing to do public work-related unskilled manual work, covering all districts across the country except those with a 100% urban population. However, the policy has long been subject to harsh criticism and likened to a “living monument of failure”. Years of neglect by the Government has left the scheme in disrepair at a time when it is needed by rural workers more than ever.
Now, coming alongside an ambitious 37.4% increase to capital expenditure aimed at pushing for growth, the NDA government has cut the outlay for NREGA by 33% down to ₹60,000 crores, down from 73,000 the previous year, after already being cut by 25.5% from the year 2020-21. This is the lowest ever allocation as a percentage of the GDP, with less than 0.2% of the total gross product. As part of the budget, it has gone done from being 3.4% of the national budget under the UPA in 2009 to 1.3% in 2023. This is despite the fact that demand for guaranteed employment remains high, with proven and exceptional results – during the pandemic years it was estimated that about 20-80% of the rural income was made up by the MGNREGA scheme. [1] Demand for work soared during and after the pandemic, with the Economic Survey 2022-23 showing about 6.49 crore households demanded work during this period, despite Finance Minister Nirmala Sitharaman’s comments that demand for work under NREGS has been declining in the recent past.
The recent cut showcases a reversal of rising budgetary allocation over the past decade, with no evidence to the contrary that the livelihoods of rural workers have become any more resilient in the post-pandemic recovery period. The government has raised the defence that the outlay under scrutiny is in fact the Budget Estimate (BE), and additional funds would be released if and when required, citing that the actual amount released to the States is usually much higher than the BE. [2]
Though this remains true, the primary problem remains the fact that the total expenditure remains much higher than the budgetary outlay and has so since the year 2013, with the gap continuing to rise every year. For instance, in 2021-22, while ₹73,000 crore was allocated to MGNREGA, supplementary allocations made later pushed up the revised estimates to ₹98,000 crore, as funds had run out in the middle of the year. Even so, the Central government once again allocated ₹73,000 crore (25% lower than the previous year’s revised estimate) for the scheme in budget 2022-23, then seeking an additional ₹45,000 crore as supplementary grants in the Winter Session in December. [3]
Given below is the budgetary outlay (BE) alongside the actual total expenditure incurred over the Scheme’s history:
Data: 2006-07 to 2014-15 from Outcome Budget Reports, https://rural.nic.in/. 2015-16 to 2022-23 from Financial Statements, https://nrega.nic.in/
From the year 2014 onwards, the budgetary outlay for the scheme has been woefully inadequate compared to its actual demand. The continual rising expenditure reflects the fact that the amount actually spent on the NREGS remains much higher than its budgetary allocation. The government persistently argues that the NREGS being a demand-driven scheme, more funds will be allocated if and when required, despite its severe budgetary cuts.
However, this also deflects attention from the ground-reality that monumental additions to the policy are required if the scheme is to make up for its shortcomings and ensure availability of work and salaries to the crores of people that require it. Labour activists argue that MGNREGA cuts send a message to try and kill the programme. In fact, the average number of days that have been actually given to eligible workers has fallen to 44.74 days, or less than half the days that they are actually entitled to. [4] To make up for the shortfall, some activists estimate that about ₹1.76 lakh crore would need to be infused into the scheme, and with material, administration and other costs, the amount goes up to ₹2.46 lakh crore. [5]
Moreover, continuing lack of funds lead to a chronic delay in wage payments. As on December 14, 2022, the government owed about ₹4700 crore in wages to MGNREGA workers, with a similar situation prevailing the year before, with ₹3,358 crore owed in 2022. [6][7] A particularly acute situation prevails in states like Rajasthan, where 18% of payments are pending, and in West Bengal, where a whopping 98% of wages are still in arrears. [8]
In 2015, the NGO Swaraj Abhiyan filed a PIL with the Supreme Court, aiming to use judicial activism to rectify many of the problems plaguing the scheme. Arguing that it was quite impossible to ascertain the actual demand for NREGS work, as it depends on various factors such as availability of alternative employment, wage revisions and crop yield, the group aimed at securing a higher budgetary allocation than was given, which ultimately found no favour with the Supreme Court. [9] It remains highly unfortunate that the delay in payments owing to the lack of available budgetary outlay, while to some might be mere procedural difficulties, pose existential problems for millions of workers who have to wait for their wages to trickle in.
In 2021 as well, the Parliamentary Standing Committee on Rural Development questioned the rationale behind the Centre’s budgetary allocations to MGNREGA. Pointing out that despite the total expenditure on the scheme in 2020-21 being more than ₹1 lakh crore, the panel found it “perplexing” that the BE for 2021-22 was just merely ₹73,000 crore. Advocacy group NREGA Sangharsh Morcha noted that “every year, about 80-90% of the budget gets exhausted within the first six months”, leading to a slowdown of work on the ground and a delay in wage payments to workers. [10]
The MGNREGA scheme remains one of the lifelines of rural livelihood, and of utmost importance to the most vulnerable and largest community in India. With about half the population of the country involved in drought-prone, labour-intensive and highly seasonal agriculture, the policy remains of the most potent poverty-alleviation and redistribution programmes introduced by the government. The lack of concern showed to it by the present regime is symptomatic of a much larger attitude that aims at limiting governmental social schemes in favour of higher commercial and economic growth, that ultimately might leave millions in the lurch due to procedural inefficiencies, paucity of funds and lack of adequate support. However, one might ask why it is usually the poorest and hardest-hit people of the working class that should bear the brunt and weight of economic development.
Endnotes[1] “MGNREGS made up for up to 80% income loss during pandemic: study”. The Hindu. https://www.thehindu.com/news/national/mgnrega-wages-helped-compensate-covid-19-income-loss-by-up-to-80-study/article66005556.ece[2] “More funds for MGNREGS if needed, says Rural Development Ministry”. The Hindu. https://www.thehindu.com/news/national/mnregs-budget-cut-will-not-affect-the-programme-rural-development-ministry/article66467464.ece[3] “Explained | The funding and demand for MGNREGA”. The Hindu. https://www.thehindu.com/business/Economy/explained-the-funding-and-demand-for-mgnrega/article66454860.ece[4] Ministry of Rural Development, https://dashboard.rural.nic.in/dashboardnew/mgnrega.aspx[5] “ ‘Bloodbath’: Activist Nikhil Dey on Budget Cuts to MGNREGA”. The Wire. https://thewire.in/government/nikhil-dey-mgnrega-budget-cut-2023[6] “Explained | The funding and demand for MGNREGA”. The Hindu. https://www.thehindu.com/business/Economy/explained-the-funding-and-demand-for-mgnrega/article66454860.ece[7] “₹3,358 crore in MGNREGA wages not paid”. The Hindu. https://www.thehindu.com/news/national/3358-crore-mgnrega-wage-payments-pending-government-tells-rajya-sabha/article38366264.ece[8] “MGNREGS Woes: Payment delays, tech issues, budget cuts”. The Hindu. 27th February, 2023.[9] “Activists Unhappy With SC Judgment on Centre ‘Curbing’ MGNREGA Budget”. The Wire. https://thewire.in/labour/activists-unhappy-with-sc-judgment-on-centre-curbing-mgnrega-budget[10] “Explained | The funding and demand for MGNREGA”. The Hindu. https://www.thehindu.com/business/Economy/explained-the-funding-and-demand-for-mgnrega/article66454860.ece
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