NDA planned to amend, restrict rural job Act

Limits funds to states under the scheme and still looking to reduce labour budget ratios

The National Democratic Alliance (NDA) government had begun work on amending the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), restricting the coverage to a few backward districts, leaving out large portions of Punjab, Haryana, Maharashtra, Gujarat, Tamil Nadu and Kerala from its ambit. The plan was eventually shelved after protests and a debate in Parliament in December.

This is disclosed in internal notes of the ministry revealed through a Right to Information application. The notes also disclose disquiet in the ministry over the proposal to change the ratio in the Budget provided for manual labour and material from 60:40 to 51:49 at the district level. The ministry officials noted in August 2014 that the decision would adversely impact five crore households and result in the employment provided to the poor coming down by 136 crore persondays. The officials also noted that while the move was 'technically possible', it ran contrary to the spirit of the law, which was meant to create employment opportunities for unskilled workers.

The officials pointed out that hiking the material component could also have an impact on the budgetary resources, as then almost 50 per cent of the total 2014-15 Budget will go for material, leaving very little for wages, necessitating an additional fund infusion of around Rs 20,000 crore in 2014-15 if the work provided under the law were to be maintained at the same level.

This proposal is still alive in the ministry, sources said. The proposal to amend the law to restrict it to backward districts only, which has now been put to rest, was originally mooted by the rural development ministry to the Prime Minister's Office (PMO) in June 2014. The ministry note reads, "The Act needs to be amended through Parliament to enable its coverage only in backward districts/blocks." The PMO asked the ministry to examine the possibility and the then Rural Development Minister Nitin Gadkari too approved of such a move. But, in August, the PMO held another meeting, after many activists and economists protested. In the meeting, it was decided to bury the decision, said sources. Now, within the ambit of the existing law, a special focus has been put on the backward districts but other districts cannot be outright denied monies under the scheme.

But a fund crunch imposed by the Centre and much-delayed release of these, began to squeeze MGNREGA anyway by then, documents accessed through RTI show. The labour budget (the estimation done at the beginning of the year of work to be provided under the law) was approved for 227 crore persondays. This worked out to more than Rs 60,000 crore. But the budgetary allocation (then under UPA government) was limited to Rs 34,000 crore.

Out of this, in the first tranche at the beginning of the financial year, only Rs 7,309 was released to states - just enough to pay the pending wages from previous year. In July 2014, the rural development ministry created another rule that put a cap on the funds the Centre would give to the states each quarter. This turned the scheme from a demand-driven one to one controlled by central government's purse strings. Then, in the mid-year revision of the Budget brought the allocation to the scheme has now been brought down from Rs 34,000 crore to Rs 31,000 crore.

The delay in funds from Centre made several states, including those under BJP rule, write to the Centre in January, documents show. These included, Chhattisgarh, Telangana, Bihar, Jharkhand and West Bengal. They noted that restrictions on funds were preventing them from offering work to the poor under the scheme.