Noticing signs of rural distress, the finance minister had committed an additional sum of Rs 5,000 crore for MGNREGA, if tax collection went well.
Singh’s letter to the finance minister, accessed by Mazdoor Kisan Shakti Sangathan (MKSS) through right to information (RTI), was written on December 31, 2015. It states the Centre has already released 95 per cent of funds allocated in the Budget for the scheme and the demand from several states has arrived adding up to Rs 6,300 crore for the last quarter.
The MGNREGA law requires the Centre to provide funds to meet any and all demand generated in the states for rural employment under the scheme. Budgetary allocations are not meant to be turned into a cap on the work that can be given to the rural poor. Releasing the correspondence accessed through RTI, Aruna Roy and Nikhil Dey of MKSS emphasised the legal obligation of the government to provide additional funds without linking it to tax buoyancy. In the letter, Singh wrote, “My ministry has released Rs 33,448 crore to the states till date. Of this, the states and Union territories have spent Rs 31,830 crore (95 per cent of the amount released).”
He added, “Since MGNREGA is a demand-driven wage employment programme and funds are required to be released to the states on demand being raised at field level, I would request you to look into this matter personally and provide additional allocation of Rs 5,000 crore over and above the Budget provision of Rs 24,699 crore under MGNREGA.”
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Records of the ministry show that with the work generated and the funds provided by the Union government, 12 states are now running on deficit — they have no money to pay for the work already generated.
Singh’s letter came as a follow-up on another letter written by rural development secretary J K Mohapatra to the expenditure secretary in the finance ministry, Ratan P Watal. The letter dated December 23, too, had warned that funds were running dry even as the demand from several states was rising. The December-March period usually sees a surge in demand compared to the previous quarter and in a year when rains are scanty the differential has always been much higher.
The Union government had publicly approved an additional employment of 50 days in the drought-affected and notified areas of six states — Odisha, Madhya Pradesh, Karnataka, Andhra Pradesh, Telangana and Uttar Pradesh. The rural development secretary noted drought had occurred in more areas than recognised earlier and the ministry was looking at extending the additional 50-day labour budget (over the usual maximum of 100 days) in other parts of Odisha and Andhra Pradesh as well.
This too, he noted would entail additional expenditure for which funds are not yet available.
Jayati Ghosh, professor at Jwaharlal Nehru University, also at the press conference with the two activists, noted that in real terms to meet the labour budget set at the beginning of the year, the total allocation to MNREGA needed to be double and that the Rs 5,000 crore additional support was the bare minimum.
Labour budgets to estimate the work that can be generated in a fiscal year are drawn at the beginning of a calendar year in consultation with the state governments though the final approval lies with the Centre.
Business Standard had earlier calculated that with the increased wage rates for the year and the labour budget approved by the Centre, funds to the tune of Rs 58,000 crore would be required to meet the wage bill generated in the entire fiscal. This would be in addition to the Rs 5,972 required to liquidate the liability of arrears for the previous year when the National Democratic Alliance government had curtailed expenditure on MNREGA substantially.