FY24 MGNREGS budget might last just a few months if enough work provided

The government’s FY24 Mahatma Gandhi National Rural Employment. Guarantee Scheme (MGNREGS) budget estimate pegged at Rs 60,000 crore could last for only six to seven months provided adequate work is provided and there is no artificial suppression of demand, experts and civil society representatives said.

This could also mean that unless there is an infusion of funds for MGNREGS during the middle of the year, allocations could start drying up around September when incidentally the possible impact of a likely sub-par monsoon could also start showing up.

During below-normal monsoon years, MGNREGS acts as a cushion for rural labourers who find it difficult to get work in the fields and farms.

This will also be the time when demand for poll-bound states namely Rajasthan, Madhya Pradesh and Chhattisgarh for MGNREGS work could increase as these have traditionally been among the better-performing states as far as providing work under the flagship scheme is concerned.

The FY24 budget in itself won’t be available fully as around Rs 11,000 crore for the same would go towards clearing pending dues from FY23, the bulk of which is on account of materials supplied.

This means that around RS 53,000-54,000 crore is actually available for the scheme in FY24. Though, MGNREGS revised estimates have been exceeding the budget estimate (BE) in the last few years by a significant amount which is a demand-driven scheme also means that as and when demand for work rises, the Centre has been more than willing to meet it.

Several civil society groups say that inadequate upfront funding leads to artificial manipulation of demand and its suppression who then tailor the actual work demand to suit the budgetary constraints.

In FY24, the Central government has pegged at 211.21 crore person days, which is among the lowest since the Covid pandemic struck.

This also is under the assumption that demand for MGNREGS work won’t be much this year as economic activities have picked up in other spheres.

Also, spending done for other rural schemes such as PM-Awas Yojana and the drinking water scheme will absorb some of the manual casual labour as the catchment area for both sets of the programme is the same.

But, the counter-argument to this is that MGNREGS is a demand-driven programme with verifiable outcomes while all others are contract-driven works and there is no record of how many people got work through these schemes and for how many days and at what wages.

Coming back to the approved labour budget for FY24 of 211.21 crore person days, this, when multiplied by the average cost per person per day of Rs 298.7, gives an estimated expenditure of around Rs 63,000 crore which is lower than the Rs 53,000 crore approximately available for FY24.

Even this reduced budget is inadequate to meet the full-year work demand for MGNREGS in FY24, not accounting for the expected surge in demand due to multiple factors later in the year.

Civil society groups say that usually the Budget is first decided and the person-days and labour budget are then attuned to that following which is the same is conveyed to states to provide work under the scheme.

The actual situation should be just the opposite, states should place their approved labour budget which then should be compiled to arrive at a national number and the budget allocation should be aligned to this national labour budget which is the sum total of the state’s demand.

“We know that in two consecutive Covid years, the expenditure on MGNREGS had been more than one trillion, even last year while the budgeted estimate was Rs 73,000 crore, it was supplemented later to allocate a total close to around Rs 90,000 crore for running the operations. With only Rs 60,000 crore this year and with pending payments of the previous year to be adjusted from this year's allocation only around Rs 50,000 crore is actually available for the programme implementation. The reduced budget will result in a slowdown of operations and exhaustion of funds within only a few months in the financial year. This will lead to payments getting delayed to workers eventually as well,” Debmalya Nandy of the MGNREGA Sangharsh Morcha told Business Standard.

He said the demand-driven nature of the Act getting compromised year after year and the participatory labour budget planning by states being dishonoured by this arbitrary allocation.

This is a blatant violation of the Act and acts against the true spirit of employment guarantee.

“The government is in every way trying to undermine NREGA... Ridiculously low budget allocations, and unnecessary introduction of technology like the National mobile monitoring system leading to procedural complexities in implementation are ways to make NREGA work unavailable for the workers and make the programme redundant slowly. The government does not want citizens to exercise their rights to a dignified living. This will result in more people being pushed towards abject poverty while millions of households have been struggling to get back to their normal livelihoods after Covid,” Nandy added.