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MGNREGA and the Budget

With the Union Budget set to be tabled on February 29, there is much speculation that the NDA government is set to raise expenditure in the rural sector. Apart from a proposed hike in expenditure on irrigation and crop insurance to reduce rural distress, recent reports suggest that the Modi government may increase spending on its rural employment guarantee scheme by 4 percent to Rs 38,500 crore. Under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 100 days of work a year is guaranteed to every rural household. The provisions of the scheme adhere to the principles enunciated in the Constitution of India under Article 21 of the Constitution of India that guarantees the Right to Life with dignity to every citizen of India. The major responsibility of the implementation of MNREGA rests with Panchayati Raj institutions. Besides state apathy, the rising discontent in rural India has been primarily triggered by two consecutive years of drought. The calamitous defeat in the recent Bihar elections and upcoming Assembly elections in nine States has also forced the NDA government to revert its focus back on the rural sector. It is fair to argue that India’s villages, home to 2/3rds of the nation’s population, are not receiving the benefits of its fantastic 7.3 percent GDP growth. Rural wages have plummeted and India’s villages are battling high levels of employment. Shrinking employment generation under the rural job scheme has only added to the crisis while emergency relief measures for drought-affected farmers take months to arrive. 

It is prescient to remember Prime Minister Narendra Modi disparaging comments on MGNREGA when he took office in May 2014. He had ridiculed the scheme as a “living monument” to the failures of the previous UPA government. However, since then, the NDA government has changed its position. Speaking at a recent government-sponsored event to mark the 10th anniversary of the rural job scheme, Union Finance Minister Arun Jaitley said that the NDA government has boosted spending to a record high and will for the first time release more funds than budgeted. The minister was unequivocal in contesting the perception that the BJP government is neglecting the jobs scheme, which was created by the Congress-led United Progressive Alliance government. Jaitley argued that during UPA rule, the final amount spent used to be lower than what was budgeted under the scheme.  Electoral compulsions aside, it is good that the Centre wishes to increase expenditure in MGNREGA. A majority of the works under the scheme had to do with rural sanitation. Further delving into the data available in the public domain, it is clear that the scheme has been used to create assets which have improved rural connectivity, water conservation and drought proofing. Given the empirical evidence on record, it is fair to say that MGNREGA has not merely been a wages for work scheme. Moreover, evidence from independent research studies has shown that it has successfully curbed distress migration, increased nutritional standards of households, provided risk resilience to small and marginal farmers and vastly expanded the financial inclusion net in the country.

Despite the NDA government’s best efforts, the scheme has witnessed a downward spiral. According to recent figures, less than 5 percent of rural households have completed 100 days of work in 2015-16. A fundamental reason behind this downward spiral could be delays in wage payments. “Nearly half of all NREGA transactions worth Rs 7,200 crore until November (2015) were delayed,” according to a recent Hindustan Times report. “Of this, 62 percent payments saw delays of up to a month, 29 percent payments were held up for up to two months, and around 3 percent wages took over three months to reach workers.” In its recent bid to offset the distress caused by the recent rural crisis, the Centre had declared 50 additional days of employment in drought-affected districts. Unfortunately, data available in the public domain clearly states that in the nine worst drought-affected states, less than 10 percent of households could complete the mandated 100 days of work, with the sole exception of Maharashtra. Instead of merely throwing more money at the scheme, the Centre, and its partners in the States must find a way to improve basic accountability. Structural reforms in the agriculture sector will take some time to arrive before India’s farmers feel the benefits. Until then, the government can look to fix these loopholes and give its rural brethren a chance at gainful employment.
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