The finance ministry is not in favour of revamping the jobs scheme under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) by increasing spending as recommended by a government-appointed committee, and instead prefers pushing more funds towards infrastructure building.
“We (finance ministry) are not in support of the suggestions made by the committee. We can spend on higher capex instead of hiking MGNREGA wages as suggested by the Sinha committee,” a senior government official told Moneycontrol.
The nine-member panel headed by former rural development secretary Amarjeet Sinha was set up in October 2022 and tasked with making the rural job guarantee scheme more effective. According to media reports, the committee has suggested an overhaul of the scheme by linking employment generation with asset creation. It also suggested increasing the budgetary allocation for the programme and reassessment of wages every five years.
While the government reduced the budgetary allocation for the job scheme under MGNREGA to Rs 60,000 crore in the current fiscal from Rs 89,400 crore in 2022-23, the target for capital expenditure in FY24 was increased to a record Rs 10 lakh crore from Rs 7.28 lakh crore in the previous fiscal.
According to a media report last month, the Centre may have to sharply increase the outlay for the rural job guarantee scheme with much as 58 percent of the budgeted allocation for this fiscal utilised in the April-June quarter itself.
To be sure, the finance ministry will assess around October-December if there is a need for additional funds for the employment guarantee plan under MGNREGA in the current fiscal based on the demand scenario going ahead, the official added. In FY23, the central government increased the allocation for the rural job scheme to Rs 89,400 crore from Rs 73,000 crore due to a spike in demand for jobs under the scheme.
The law governing the flagship rural job programme, passed in 2005, provides guaranteed wage employment of 100 days in a financial year to a rural household whose adult members are willing to take up manual work. The demand under the scheme rose drastically during the COVID-19 pandemic.
MGNREGA leakages
A second government official said that the focus should be on plugging leaks in the rural job scheme to ensure that the benefits are only provided to deserving individuals.
"MGNREGA is a safety measure, it is not an employment generation programme. The idea behind the scheme was to provide jobs between sowing and harvesting when there is a lean period," this official said, adding that states should also participate in financing the rural job plan particularly since the scheme is being misused.
"The biggest problem with MGNREGA is that there is no participation of states in whatever is spent on the scheme. Since the programme is entirely funded by the central government, states demand more and more money. So the stake of states should be increased in MGNREGA," the second official added.
The central government has already taken steps intended to plug leakages in the scheme, ranging from making digital attendance of workers through the National Mobile Monitoring System mandatory since January 1, 2023, to ensuring that wages are paid through Aadhaar-linked bank accounts.
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