MNREGS allocation unchanged despite elevated work demand, rural housing yet to pick up pace

Budget 2022: Nirmala Sitharaman carried the Budget in the paperless format in a tablet.

The Union Budget is being lauded by some for prioritising growth and investment, but allocations to a big welfare scheme has remained stagnant. Take the largest centrally-sponsored scheme - Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS). There was a widespread expectation of budgetary allocation for MNREGS rising substantially for 2022-23. But the BE has remained at the same level as that in FY22 at Rs 73,000 crore. This, despite the RE for the current fiscal already earmarking Rs 98,000 crore as allocation. Not just that. The wages paid to workers under this scheme too remain beneath the notified rates for the year.

The programme has perennially been short of funds, with expenditure overwhelming the funds available. The pending liabilities in terms of overdue wages have been rising in the past few years. Avani Kapur, Lead at Accountability Initiative in the Centre for Policy Research tweeted, “Budget cut for #MGNREGS - same as last year’s BE which was already low and necessitated more funds to be allocated in the supplementary budget. All the while demand outstrips supply.”

Budget cut for #MGNREGS - same as last years BE which was already low and necessitated more funds to be allocated in the supplementary budget. All the while demand outstrips supply.

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— Avani Kapur (@avani_kapur) February 1, 2022

In FY22, BE of Rs 73,000 crore was supplemented with additional Rs 25,000 crore at the RE stage. But even then, the total allocation has remained 12% below the RE for 2020-21. The programme saw its highest-ever allocation at Rs 1.1 lakh crore in FY21, as Covid wrecked livelihood, forcing many rural households to turn to MNREGS for work. In FY22, while demand has fallen off high of the previous fiscal, it is still above pre-pandemic years. Which means not all households that sought work under the programme managed to get, and almost no worker was employed for the promised 100 days.

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The NREGA Sangharsh Morcha had said in a statement earlier, that it expected an allocation of Rs 3.62 lakh crore for the program, with more than Rs 21,000 crore in pending wages. “As on 30th January, 60% of wage payments were pending for the month. Every financial year, from the third quarter onwards, the funds for MNREGS dry up. As a result, work slows down and delays in wage payments escalate. Every year, about 20 percent of the MNREGS budget is used to clear arrears. Within the first half of FY 2021-22, the programme showed a negative net balance condemning workers to “forced labour” by delaying wage payments. This cycle keeps continuing and adversely affects workers in the peak MNREGS season in the final quarter of the financial year. NSM has been constantly demanding that budgetary allocation for MNREGS should be adequate to meet the legal guarantee of 100 days of work for every rural household demanding work and timely payment of wages,” the Morcha had said.

MGNREGS is the largest centrally sponsored scheme, accounting for more than half the allocation of the ministry of rural development, and continued high demand for work that it witnesses, points to livelihood challenges in rural areas. MNREGS promises at least 100 days of guaranteed wage employment in a financial year to every rural household that demands work. It is a demand-driven scheme, and the release of funds is based on both, labour budget estimates prepared at the start of the year and the actual demand for work during the year.

With allocation frozen at last year’s level, the only option before Rural Devp Ministry is to seek substantially higher allocation at the RE stage. In any case, an analysis by CPR shows that even in 2021-22, while the annual notified wage increase under the program was 4%, the average wage a worker earned in most states was below the minimum wage for farm workers. So, even if the budgetary allocation for MNREGS goes up at the RE stage, the problem of low wages, late payments and lower-than-guaranteed work in a year might continue.

Also read: Budget 2022 | A breakdown of the key numbers for FY23

Take another scheme, that has seen stagnant allocation. The Pradhan Mantri Aawas Yojana-Gramin (PMAY-G) is the second largest scheme, after MNREGS, within the ministry of rural development. It has been allocated Rs 19,500 crore in 2021-22, same as the previous fiscal and  there has been a marginal increase in the budget  to Rs 20,000 crore for 2022-23. A CPR analysis points out that in the first phase of the scheme, the target was building one crore houses during FY17-19. “Sanctioned houses, however, were lower at 98 lakh. Of the total target of 1 crore households, 93 lakh houses were completed… The pace of construction slowed down in the second phase partly due to the pandemic. In the second phase till March 2022, the target was to complete another 1.95 crore houses. However, only 1.19 crore houses were sanctioned (61%) and of these, 65% had been completed till 25 January 2022.”

A parliamentary standing committee has already demanded a relook at the quantum of assistance being provided for the rural chapter of the housing scheme. It seems 'Housing for All by 2022' - a catch phrase coined under Modi 1.0 is far from being realised.

Also read: Budget 2022 | FM Sitharaman bumps up capex by 35% again to Rs 7.50 lakh cr