Union Budget 2023: Many surprises on rural development front

The budgetary allocation for the Pradhan Mantri Gramin Sadak Yojana has been retained at Rs 19,000 crore.

The budget is being hailed for its emphasis on government capex, infrastructure development and reduction in income-tax burden for the middle class.

It also has many surprises on rural development schemes. For example, even as the budgetary allocation for rural housing has seen an unprecedented jump, the allocation for the largest centrally sponsored scheme, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), has been slashed.

Allocation for rural roads has been retained at last year’s level.

MGNREGS: It remains perennially short of funds, with expenditure higher than the funds available and pending liabilities rising as each fiscal year progresses.

Wages paid to workers under this scheme remain beneath the notified rates for the year. According to the Economic Survey of January 31, 2023, 5.6 crore households availed employment and 225.8 crore person-days employment has been generated under the scheme till January 6, 2023.

The scheme, originally known as NREGA, was renamed MGNREGA in 2009 through an amendment to the National Rural Employment Guarantee Act, 2005.

In FY23, as on January 24, 2023, 6.49 crore households demanded jobs under the scheme, 6.48 crore were offered employment and 5.7 crore took up work. But the average number of days for which households got the work demanded did not even reach 50.

MGNREGS is demand-driven and it promises at least 100 days of guaranteed wage employment in a financial year to every rural household that demands work.
To meet wage arrears and ensure more people got more work days in a year, activists had been pressing for elevated budgetary allocation in FY24, compared to the current fiscal.

But the BE for FY24 has come at Rs 60,000 crore, nearly 18 percent lower than the BE in FY22, at Rs 73,000 crore. This, despite the RE (revised estimate) for the current fiscal already showing an allocation of Rs 89,400 crore.

MGNREGS has been the largest centrally sponsored welfare scheme but its importance in the Centre’s budgetary allocation math has receded drastically in the Union budget for FY24.

Even in the current fiscal, MGNREGS BE accounted for more than half the budgetary allocation of the entire department of rural development. But in FY24, this scheme has been allotted only about 38 percent of the department’s budget.

The release of funds for MGNREGS is based on both labour and budget estimates prepared at the start of the year and the actual demand for work during the year.

In 2020-21, when COVID-19 broke out and widespread lockdowns forced migrant workers to return to villages and seek work under the scheme, the allocation had to be raised to the highest ever to Rs 1,11,500 crore at the RE stage.

But the BE for 2021-22 was still Rs 73,000 crore, and, subsequently, the Centre had to allocate more funds. In any case, since 2015-16, which was the second year of the NDA government’s first term, annual budgetary allocation has never been sufficient to provide work to all who demanded work.

The RE figure has always exceeded the BE. For 2022-23, activists had demanded another record allocation, of Rs 1.5 lakh crore, at the BE stage since demand for work in rural areas had remained high and not everyone who got work was paid in time. Arrears of the previous year get settled after the BE amount arrives.

Also, while the Act guarantees 100 days of work to every willing rural household, employment has been provided for less than 50 days a year in the last five years. In FY23, the BE was again Rs 73,000 crore and the RE Rs 89,400 crore. Finance Minister Nirmala Sitharaman told Lok Sabha in December that demand for work under the MGNREGS had declined in the current fiscal.

PMAY-G: There has been a substantial increase in the budgetary allocation for the Pradhan Mantri Awaas Yojana – Gramin (PMAY-G) scheme for 2023-24 at Rs 54,487 crore from the Rs 20,000 crore BE in the current fiscal. The revised estimates for the current fiscal are also at an eye-popping Rs 48,422 crore.

This scheme promises housing for the rural poor and provides central assistance. The implementation of PMAY - G started in 2016, the second year of the NDA government’s first term, with a target of constructing 30 million rural housing units by 2022.

But according to the department of rural department’s (DoRD) latest data, only about 18.23 million housing units were targeted for completion this fiscal. The PMAY -G scheme accounts for the second-highest allocation under the department.

A parliamentary standing committee, which has assessed the action taken on the demand for grants by the DoRD, has reemphasised the difference in central assistance being provided for housing units under this scheme to rural and urban areas.

For building houses in villages, the assistance provided is just Rs 1.2 lakh (Rs 1.3 lakh in case of hilly areas), and in urban areas, the amount is nearly double -- at Rs 2.5 lakh.

The panel has sought parity. The same committee had also pulled up the department for missing the target for 2020-21 (63.76 lakh housing units) by a wide margin since just about a third were actually constructed. “The committee apprehends that with this pace of house construction, the target for 'Housing for All by 2022', which is not very far, is hardly achievable,” it had said in a report.

Year 2022 has come and gone and the target for building 2.95 crore houses has been delayed by two years to 2024 now.

PMGSY: The budgetary allocation for the Pradhan Mantri Gramin Sadak Yojana has been retained at Rs 19,000 crore, the same as the current fiscal. The scheme seeks to provide all-weather road connectivity to unconnected habitations in rural India.

Since 2016-17, the actual expenditure on this programme has been less than the budgetary allocation each year, with the lowest spend in FY21 at just 70 percent of the allocation.