Centre's move to release MGNREGA funds early to help clear backlog only

Average daily wage under the MGNREGA for 2017-18 has been raised by a mere Rs 1 per day

The Centre’s reported move to release almost 50 per cent of 2017-18 MGNREGA labour budget by April 1 would only help it in clearing the backlog of funds, which till date is estimated to be over Rs 7,600 crore, but how far will it help in creating more work demand remains to be seen.

According to the 2017-18 Outcome Budget, the Centre has budgeted for 220 crore person days of work in the year, which is almost the same as 2016-17. 

The final work demand is still being tabulated as per estimates made from the state and the BE can be revised upward.

Some experts said front-loading of expenditure with the states will help in faster dissemination of wages and clear the backlog and prevent a repeat of the 2016-17, when much of the extra allocation of Rs 9,500 crore was spent on clearing the backlog. 

However, if the trend is not matched in the subsequent months, further delay in payments would start accruing as demand for work improves, impacting the demand itself.

In MGNREGA, if wages aren’t paid 15 days of closing of muster roll, it is included as delayed payment. Till date, around 46.12 per cent wages have been paid this year within the mandatory 15 days of closure, which also means a bulk over 54 per cent wages haven’t been paid on time.

“If half of the funds are allocated to the state by April 1, it will help in ensuring that workers don’t have to wait for days to get their wages. Till now, what used to happen is that work got done but wages didn’t come on time, which lowered the intention,” Reetika Khera, associate professor of Economics At IIT Delhi told Business Standard.

However, how far it will have any impact on job generation remains to be seen as timely payment of wages is just one factor which can help in creating more work.

For the 2017-18 financial year as per the outcome budget, the Centre has tentatively fixed a budget of creating work equivalent to 220 crore persondays, which is almost similar to the 2016-17 Budget.

This also means that creation of almost similar number of workdays has also been tentatively budgeted for the coming financial year.

Though, the final labour budget for each state is being finalised and this number can be revised upward, but experts said that if the estimate is correct, then the Centre plans to get the same amount of work done with the same amount of fund by not raising the daily wages.

According to a recent notification, the average daily wage under the MGNREGA for 2017-18 has been raised by the Central government by a mere Rs 1 per day, which is the lowest in the last 11 years and below the minimum wages fixed by the state in many cases.

“A mere Rs 1 per day increase in wages in 2017-18 as compared to the current year is nothing,” Khera said.

IN 2016-17, the Centre had budgeted Rs 38,000 crore as labour Budget for MGNREGA, but ended up spending over Rs 47,500 crore as almost Rs 12,000 crore was spend in clearing pending wages. The number of work provided persondays was budgeted at slightly over 220 crore persondays.

In 2017-18, according to available information so far, Centre has fixed a Budget of Rs 48,000 crore and tentatively Budgeted for 220 crore persondays of work. 

Its pending labour, material and administrative dues could top Rs 12,000 crore, if funds are not allocated in a third and final supplementary.