Fund Crunch in MGNREGA


    In News

    • Recently, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme has run out of funds halfway through the financial year.


    • According to its own financial statement, the MGNREGA scheme shows a negative net balance of ?8,686 crores.
      • This means that payments for MGNREGA workers as well as material costs will be delayed unless States dip into their own funds. 
    • The supplementary budgetary allocations will not come to the rescue for at least another month when the next Parliamentary session begins. 

    Image Courtesy: TH

    • During last year’s COVID-19 lockdown, the scheme was ultimately given its highest budget of ?1.11 lakh crore and provided a critical lifeline for a record 11 crore workers.
    • As of October 29, the total expenditure including payments due had already reached ?79,810 crores, pushing the scheme into the red. 
      • Already, 21 States show a negative net balance, with Andhra Pradesh, Tamil Nadu and West Bengal fearing the worst.
    • MGNREGA data shows that 13% of households who demanded work under the scheme were not provided work. 
      • Even these figures are underestimated, as only demand that is registered in the system is included.

    About MGNREGA

    • It is a poverty alleviation programme of the Government of India, which provides the legal Right to Work in exchange for money to the citizens of the country.
      • On average, every day approx. 1.5 crore people work under it at almost 14 lakh sites.
      • It aims to enhance livelihood security in rural areas by providing at least 100 days of guaranteed wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work.
    • Funding: It is shared between the Centre and the States.
    • The Central Government bears 100 per cent of the cost of unskilled labour, 75 percent of the cost of semi-skilled and skilled labour, 75 percent of the cost of materials and 6 percent of the administrative costs.
    • Latest Budgetary Allocations
      • In the Union Budget 2021-22, the government allocated Rs. 73,000 crore for the MGNREGA.
      • It is nearly 34.5 per cent lower than the 2020s revised estimates of Rs. 1.11 lakh crore. The budget estimates were around Rs. 60,000 crore but had to be enhanced as the national lockdown happened.
      • This year’s budget was kept low assuming that the economic recovery would alleviate the need for such spending.
    • Features
      • Legal Right to Work: The Act provides a legal right to employment for adult members of rural households.
        • At least one-third of beneficiaries have to be women. Wages must be paid according to the wages specified for agricultural labourers in the state under the Minimum Wages Act, 1948.
      • Time-Bound Guarantee of Work: Employment must be provided within 15 days of being demanded to fail which an ‘unemployment allowance’ must be given.
      • Decentralised Planning: Panchayati Raj Institutions (PRIs) are primarily responsible for planning, implementation and monitoring of the works that are undertaken.
        • Gram Sabhas must recommend the works that are to be undertaken and at least 50 per cent of the works must be executed by them.
    • Transparency and Accountability: There are provisions for proactive disclosure through wall writings, Citizen Information Boards, Management Information Systems and social audits (conducted by Gram Sabhas).
    • Significance
      • It is a social security scheme to generate employment for the rural poor and ensure livelihood for people in rural areas.
      • The scheme sees large-scale participation of women, Scheduled Castes (SCs) and Scheduled Tribes (STs) and other traditionally marginalised sections of society.
      • It increases the wage rate in rural areas and strengthens the rural economy through the creation of infrastructure assets.
      • Migration has been reduced by 40 per cent because of the extensive irrigation system created through small dams constructed under the programme
      • It facilitates sustainable development which is very clear by its contribution in the direction of water conservation.
      • Over the last 15 years, three crore assets related to water conservation have been created through the rural jobs scheme with the potential to conserve more than 2,800 crore cubic metres of water.
      • It also provides rural India with vital safety, the absence of which could push labourers into distress and poverty, something which data on the latest farm and farm labourers suicides reflects.
    • Challenges
      • Low Wage Rate: These have resulted in a lack of interest among workers making way for contractors and middlemen to take control.
      • Insufficient Budget Allocation: The funds have dried up in many States due to a lack of sanctions from the Central government which hampers the work in peak season.
      • Payment Delays: Despite Supreme Court orders, various other initiatives and various government orders, no provisions have yet been worked out for calculation of full wage delays and payment of compensation for the same.
      • Corruption and Irregularities: Funds that reach the beneficiaries are very little compared to the actual funds allocated for the welfare schemes.
      • Discrimination: Frequent cases of discrimination against women and people from the backwards groups are reported from several regions of the country and a vast number goes unreported.
      • Non-payment of Unemployment Allowance: There is a huge pendency in the number of unemployment allowances being shown in the Management Information System (MIS).
      • Lack of Awareness: People, especially women, are not fully aware of this scheme and its provisions leading to uninformed choices or inability to get the benefits of the scheme.
      • Poor Infrastructure Building: Improper surveillance and lack of timely resources result in poor quality assets.
      • Non Purposive Spending: MGNREGA has increased the earning capacity of the rural people but the spending pattern of the workers assumes significance because there is hardly any saving out of the wages earned.
    • Suggestions
      • There is a need to carry out social audits as per rules and effective implementation of the delay compensation system.
      • Under the scheme’s compensation clause, agencies responsible for the delay are expected to pay 0.05 per cent of wages per day after the closure of the muster roll.
      • The participation of women and backwards classes must be increased by raising awareness and making it more inclusive.
        •  Also, the people should be sensitised to do away with the discrimination against them.
      • Reasons for poor utilisation of funds should be analysed and steps must be taken to improve them. In addition, actions should be initiated against officers found guilty of misappropriating funds.
      • Villages must also be allowed to take control of their own water security, noting that catchment areas for many villages are on land controlled and owned by the Forest Department.
      • The frequency of monitoring by National Level Monitors (NLMs) should be increased and appropriate measures should be taken by States based on their recommendations.
        • The NLMs are deployed by the Ministry of Rural Development for regular and special monitoring of MGNREGA and to enquire into complaints regarding mis-utilisation of funds, etc.

    Source: TH