Extra Rs 10,000 cr allocated for MGNREGA inadequate: Civil society

Civil society activists claim that the extra Rs 10,000 crore won't go far as already pending payments are in excess of Rs 10,000 crore

Amid demands for additional funds for MGNREGA to meet the rising work demand, the rural development ministry on Thursday claimed that the finance ministry has allocated an extra Rs 10,000 crore in this financial year over the Buget Estimate and further allocation will be made based on the demand at the Revised Estimate stage for FY22.

The Union Budget had allocated Rs 73,000 crore for MGNREGA in FY22. Of this, according to the rural development ministry, a sum of around Rs 68,600 crore has already been released to various states and UTs for MGNREGA.

However, civil society activists and others working in the sector claim that even if extra Rs 10,000 crore has been allocated for MGNREGA, it is grossly inadequate and won’t go too far as already pending payments are in excess of Rs 10,000 crore.

The MGNREGA website shows that as of November 26 pending payments due to wages were around Rs 1,211 crore, materials around Rs 8,254.74 crore and administrative expenses around Rs 212.50 crore.

The total negative balance as per the MGNREGA wages was around Rs 10,087.31 crore as of November 26, with the biggest states showing a negative balance.

“The fact that the government has allocated just around Rs 10,000 crore against a minimum requirement of Rs 25,000 crore shows that it is just doing crisis management and not looking at emerging demand at all,” Debmalya Nandi from the MGNREGA Sangharsh Morcha told Business Standard.

He said post-harvest, usually demand for MGNREGA works rises and the administration could have pushed for more work if additional funds were allocated. “The current allocation is just an eye wash and it also means there could be artificial suppression of demand in the coming months to meet the reduced financial allocation,” Nandi said.

The Centre said that in the current financial year more than 2.4 billion persondays of work have been generated under MGNREGA.

“The Government of India is committed to releasing funds for wages and material payments for proper implementation of the scheme, as per the provisions of the act and guidelines applicable for Central Government as well as State Governments,” the official statement said.

Meanwhile, civil society activists and others believe that with rising demand for MGNREGA, the scheme would require an additional financial support of atleast around Rs 32,000 crore over and above the budgeted Rs 73,000 crore this fiscal.

However, considering that demand for work is expected to rise further in the Jan-March period as has been the norm in the past years and also as around Rs 17,500 crore has been pending from last year at the start of the current financial year, activists said to fulfill all the requirements of this year a supplementary budgetary support of around Rs 50,000 crore should have been appropriate.

In FY21, around Rs 1,11,000 crore was allocated for MGNREGA to meet the rising demand for work under the scheme from migrants returning to villages from cities impacted by the Covid-19 lockdown.

Several state chief ministers had approached the Centre to clear the pending payments saying that otherwise they would have to cut down on work which could be highly detrimental during the ongoing Covid crisis.

Recently, a group of economists and academicians had written an open letter to Prime Minister Narendra Modi to allocate additional funds for MGNREGA to meet the work demand so that the scheme works according to the law.

“This (allocation of extra funds) will through its effects on mass demand, will also contribute to recovery of the overall economy and micro and small enterprises that are currently facing extreme difficulties,” the economists said in the letter.

The economists, which included Jean Dreze, Prabhat Pattnaik, Dr Mahendra Dev, Pronab Sen, Himanshu, among others, said in the letter that it is unfortunate that despite seeing evidence of the critical security provided by MGNREGA during the first year of the Covid-19 pandemic with 41 per cent more rural households seeking work in 2020 compared to the previous year, the fund allocation for the programme was cut by nearly 30 per cent.

“Lack of funds results in suppression of demand for work and delayed payment of wages to workers. These are violations of the Act; they also constrain economic recovery,” the letter said.