The lowdown on the MGNREGA funding

Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) women workers seen at the site in Karnal Distric in Haryana.
MNREGA women workers seen at the site in Karnal Distric in Haryana | The Hindu

Interim finance minister Piyush Goyal announced in the Lok Sabha during his interim budget presentation on Friday that the government has allocated Rs 60,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA) for the financial year 2019-20 and that the allocation would be increased if required.

MGNREGA, which was the previous UPA government’s flagship, provides at least 100 days of manual work with daily wages to every household in the countryside.

What is the issue?
Data shows that the announced allocation is 1.8% less than what was given for the 2018-19 financial year. In January 2019, the government had to allocate an additional Rs 6,084 crore to the programme to meet its financial demands, thus taking up the total amount to be spent in the financial year 2018-19 to Rs 61,084 crore.  A look at the funding patterns over the last decade shows this is not the first time allocations for the scheme are lower than what was spent in the previous year. In most years, supplementary allocations later in the year have ensured that the final amount spent has risen at least incrementally each year.

MNREGA spending for the last four years | BloombergQuint

Why does it matter?
The demand for employment has been steadily increasing but the government has not been able to address it fully, leading to pending liabilities. Rural workers are being discouraged from registering with the scheme, being denied work even when they do register, and are facing long delays in payment of wages even when they do get work. Researchers, activists and elected representatives blame this on the lack of sufficient funding.

The promise of the MGNREGA is to enhance livelihood security by providing at least 100 days of wage employment a year to households that want it. If work is not provided within 15 days, applicants are entitled to an employment allowance. Thus, work is a legal entitlement under the scheme and funding should be demand-driven.

A study of 3,500 panchayats in 2017-18 found that the employment provided was 32% lower than the work demand generated. Researchers calculated that in order to meet the registered work demand last year, the scheme should have had an allocation of ₹76,131 crore.

What does the future entail?
The future funding situation is bleak, given that the government’s “highest ever allocation” tag disguises the pending liabilities. If the total allocation of ₹61,084 crore had come through on the budget day, the scheme would still have a negative net balance of ₹3,270 crore, according to its financial statement on February 1. With Central money running out, States have also been asked to use their own funds to pay workers over the next two months, with the promise of an April refund.

Failure of the scheme
Prior to the presentation of the 2018 full budget, NREGA Sangharsh Morcha, a country-wide coalition of organisations and individuals, had submitted a memorandum to the Union finance ministry stating that there should be an annual allocation in the range of Rs 80,000 crore to be able to minimally function as per its legal provisions.  As per a Supreme Court order, the government is supposed to pay a fine to the workers if it fails to pay them wages on time. The underfunding of the programme is leading to a violation of the SC order.

The financial statement of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme shows that as on January 30, 19 States and Union Territories were in the red, with liabilities ranging as high as ₹1,605 crore in Andhra Pradesh and ₹1,342 crore in West Bengal. Nationally, the scheme shows a negative net balance of ₹4,101 crore.

In case the additional funding does not come through, States will have to use their own resources to pay workers. West Bengal, Madhya Pradesh and Karnataka are among the States that are likely to use their own funds to pay workers, said the official.

Here is a bulletin on the MGNREGA fund allocation in Budget 2019-20:


Compiled by:
Deepika Agrawal & Leah Thomas

 Sources: The Hindu & The Wire