Are states with high levels of poverty spending less on MGNREGS?

During the pre-pandemic era, around 50-55 million households used to seek work regularly under the scheme in a year. This number, since the pandemic struck, has jumped to over 70 million per annum.

Also, in terms of budgetary provisions, before the pandemic, annually around Rs 70,000-80,000 crore used to be spent on the scheme which since the pandemic has jumped to almost Rs 100,000 crore per year.The government has constituted a high powered panel under the chairmanship of former agriculture secretary Amarjeet Sinha, to study various aspects of the marquee flagship scheme, MGNREGS, including its role in poverty alleviation over the years, governance structure and systems in place and perhaps most importantly, the spending pattern.

Sources said the panel which was formed in October is slated to give its report by January, just ahead of the Union Budget 2023-24 that will be placed in Parliament in February.

So, before moving forward, let’s take a look at the scheme and the status of some of its characteristics before and after the Covid-19 pandemic.

During the pre-pandemic era, around 50-55 million households used to seek work regularly under the scheme in a year. This number, since the pandemic struck, has jumped to over 70 million per annum.

Also, in terms of budgetary provisions, before the pandemic, annually around Rs 70,000-80,000 crore used to be spent on the scheme which since the pandemic has jumped to almost Rs 100,000 crore per year.

The continuing large spending on the scheme and the steady work demand from rural areas despite visible signs of economic recovery has also raised some suspicion in government quarters on the nature of spending though there are multiple reports which show that the quality of MGNREGS spending has undergone a shift and a big chunk of the funds are now being spent on creation of individual assets which typically is done on lands of very marginalised sections. Notably, in FY23 too around Rs 100,000 crore has been sought for the scheme against the Budget Estimates of Rs 73,000 crore for the same year.

Recent reports said that MGNREGS work across 341 blocks spread across 25 states are under the scanner of the Central government for which it has deputed special audit teams to understand the ground situation.

Clearly, the setting up of the panel and sending audit teams are not isolated actions and there is clearly a concern somewhere in some circles of the government.

But, as against the perception in some quarters that the MGNREGS work demand could be artificial or doctored a report by Dalberg Advisors titled 'The state of rural employment: A look at MGNREGS across 5 states in India' released few months back revealed that in the last few years, almost 70 per cent of job card holders wanted MGNREGS jobs at least once during the last year.

Also, 18 per cent of job card holders who tried to apply for work, could not submit their application, the report said. It also said that all households that applied for work, received it but most of them got less work than they wanted.

“On average, households applied for 95 days of work against their annual entitlement of 100 days but received 66 days of work,” the report said, underlying the scheme’s primacy in providing rural employment.

The Dalberg Research focused on five states namely Andhra Pradesh, Jharkhand, Karnataka, Rajasthan, and Uttar Pradesh which accounted for more than one-third of all employment provided within the scheme and have over 40 per cent of the total registered MGNREGS workers in the country.

A broad look at the MGNREGS spending pattern in Fy22 and also the work demand pattern during months with high requirements does show some pattern but it isn’t very concrete.

It is important to that here that a more granular analysis will definitely throw some more lights which the panel and the audit teams perhaps aim to discover. Also, actual spending depends on a state’s ability to generate demand and provide an environment for the demand to get materialised and not suppressed artificially.

Nonetheless, if 2011-12 poverty numbers (the latest available official data on poverty in India) are taken as the benchmark, West Bengal, Rajasthan, Andhra Pradesh and Tamil Nadu were the states with the highest actual expenditure on MGNREGS in FY22.

All these states had poverty numbers lower than the national average of 21.9 per cent as per 2011-12 data.

However, actual expenditure of the scheme was relatively less in the states with poverty levels higher than the national average, such as Bihar, Odisha, Chhattisgarh, Madhya Pradesh and Uttar Pradesh. (see chart)

So, while Odisha had almost 33 per cent of people living below the poverty line, as per 2011-12 data, its actual expenditure on MGNREGS in FY-22 was Rs 5,988 crore.

At the same time while Rajasthan had around 14.7 per cent people living below the poverty line, as per the 2011-12 data, its actual expenditure under the scheme was Rs 10,462 crore in FY22.

Similarly, while in Bihar, as much as 33.7 per cent of the population was living below the poverty line, as per the 2011-12 data, its expenditure under the scheme was Rs 6,502 crore only in FY22.

Andhra Pradesh, on the other hand, had a mere 9.2 per cent people living below the poverty line, however, its spending under the scheme was a relatively higher at Rs 8,069.8 crore in FY22. West Bengal also had a poverty ratio of around 20 per cent, which was lower than the national average of 21.9 per cent, however, its spending was amongst the highest at over Rs 10,895 crore in FY22.

There is of course, a big issue of relevance of the poverty estimates given that updated data isn’t available and much might have changed on the ground between 2011-12 and 2021-22, especially since the country experienced two years of pandemic.

That is why a more granular and minute analysis is needed before arriving at any firm conclusion.

However, critics said it was an exercise in futility and just strengthening the provisions of mandatory social audits of the work done which the MGNREGA itself provides would have solved much of the problem and cleared lots of doubts.

“I don't understand what the government is solving for and what this committee would reveal that we do not know already. We see huge leakages and systemic bottlenecks, malpractices everywhere. Wherever stringent social audits happened, it revealed great corruption at NREGA worksites. However, it is sad to see that due to various reasons and vested interest groups social audits have never been established in any of the states. Independent social audit agencies don't get established as a society and it remains under some or the other department, further dissolving its relevance,” Debmalya Nandi from the MGNREGA Sangharsh Morcha, an organization working for the rights of MGNREGA workers for years said to Business Standard.

He said that it is not difficult to understand that in order to curb corruption in NREGA, systematic monitoring by independent agencies is absolutely important and non-negotiable. He further highlighted that the Act itself takes care of it through mandatory provisioning of social audits.

“No over the top technological intervention can address the issue of leakages and corruption. It is no rocket science to understand that greater transparency and accountability in the governance of NREGA can be ensured only with measures like strict monitoring and action taken by top bureaucracy. This can further help in strengthening leakage free implementation,” Nandi said.

He added, "Rather than the Centre’s current approach of forming the committee, what makes me nervous is the selection of states, sending monitoring teams there and freezing fund release citing corruption as being the reason."

“This centralised monitoring looks politically motivated and biased... There is no alternative to strengthening independent social audits. So, to cut the long story short, the government neither wants social audits to work nor is it helping NREGA's purpose by withholding funds,” Nandi added.