Responding to a debate on the President’s Address in Lok Sabha [1], Prime Minister Narendra Modi took a dig at the opposition over rumours about the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA or NREGA) being stopped by calling it “a living example of your (Congress) failures”, citing it as a scheme that the Congress had formulated which was forcing people to “continue to dig holes in the ground” even after 60 years of independence.

MGNREGA is a one-of-a-kind legal entitlement which guarantees 100 days of wage employment a year to a rural Indian household at the minimum wage rate. The scheme was enacted in 2005 amid much fanfare and unanimous support from all parties. With the recent change in government at the Centre and budget 2015, not much support seems to be coming in the way of social sector programmes, most definitely NREGA. Apparently, there has been talk of a re-aligning of plan outlays which is in line with the government’s priorities and focus on infrastructure spending. This looks to be true with the discontinuation of eight centrally sponsored schemes (CSS) amounting to a total of Rs.67773 crore as per budget estimates for FY 2014-15.

The issues such as implementation woes, leakages, etc. in the country’s various social sector schemes are quite well known. However, cutting budgetary allocations from such programmes does not sound like an answer to this. While none deny the significance of various other technologically strong development projects which might be doing the rounds of discussions in the country, the importance of social welfare programmes such as MGNREGA cannot be undermined. MGNREGA has had a significant impact in raising standards of living, nutrition levels, school enrolments, etc. and cutting funds would surely bring down the performance of the programme (if it has not already done so) and its impact on development itself.

The budgetary allocation for MGNREGA for the financial year 2014-15 was Rs.34000 crore, while the estimated calculations required to sustain 227 crore person days of work which had been approved by the Ministry of Rural Development amounted approximately to Rs.60000 crore. The GoI allocations for MGNREGA have increased only marginally to Rs.34699 crore in 2015-16 (an increase of 5% between 2014-15 and 2015-16). This, however, is a drop of 13% from allocations for MGNREGA in 2010-11 according to Accountability Initiative’s figures in MGNREGA Budget Brief.

The release of funds in the first quarter of the financial year has also dropped dramatically, from 60% in 2013-14 to 43% in 2014-15. This is true from official figures, according to which, MGNREGA had an outstanding liability of Rs.5512 crore from 2013-14 at the beginning of the financial year 2014-15 owing to low budgetary allocations and slow release of funds. This fund crunch has affected the district administration rather adversely, who in the absence of funds are unable to implement the programme effectively at the district level, an official even found saying how fund allocations had reduced substantially ever since the new government had come to power. This is also consistently visible on the ground when one visits regions where people have not been paid for work done over six months ago. While works under NREGA were initially carried out quite enthusiastically, a visit to district West Singhbhum in Jharkhand showed the impact of the delay in payments for months on end. At first, people stopped doing the work they were engaged in and then began dismissing NREGA as yet another government programme mired with issues.

It is, however, important to note that while UPA-II had also cut down funds for MGNREGA from Rs.40100 crore in 2010-11 to Rs.33000 crore in the 2013-14 and 2014-15 budgets, it had kept this flexible with a provision to meet any additional demands which the States might require. The BJP government, on the other hand, has imposed a cap on the expenditure refusing even legitimate demands for more allocations on the basis of the work which is being demanded, only proposing to increase allocation by Rs.5000 crore, tax buoyancy permitting. The demand-driven nature of the Act has slowly changed to one based on allocations wherein, the percentage of allocation has been decreasing constantly over the years. MGNREGA is an Act passed by the constitution on which the government cannot use budgetary cuts and fund squeeze to diminish the entitlements provided under it by law. Such an imposition is a clear violation of the law which legally guarantees 100 days of employment based on the demand for work.

Eleven states, including BJP-ruled Chhattisgarh and Madhya Pradesh, have either passed a resolution in their Legislative Assemblies or have written to the Central government requesting for a raise in their existing funds for the year. People who have worked under MGNREGA have not been paid for several months which has led to a decrease in demand for work. From this, it seems that the squeezing of funds has led to a fall in demand and not the other way around, as is being alleged by the Centre. Figures state that the proportion of payment delays was as high as 72% in 2014-15, discouraging people from demanding work.

Several studies have provided evidence of how MGNREGA has had an impact in terms of curbing distress migration, on the consumption and poverty levels of the marginalised social groups, women’s participation in the labour force, providing a safety net for the poor during the lean period of agriculture, leading to higher nutritional standards, expanded financial inclusion in the country, etc. In light of these effects, how can one even consider squeezing funds from this scheme? While all is not hunky dory, and NREGA does have its fair share of flaws such as the programme being riddled with corruption, the question to ask really is – should this be the way to go about it?

While on one hand, the government has accepted the 14^th Finance Commission’s recommendation to increase the devolution of funds to the states by 10 percentage points, it has slashed social sector spending of centrally sponsored schemes. The PM’s address could only be seen as a trivialisation of a very important legislation, one which promises to bring the poor out from hunger and deprivation even if it is at the cost of digging pits 60 years post independence.

References:

http://www.livemint.com/Opinion/mc2eAHfLiK2Hl7cAIbqdfL/Unpacking-cooperative-federalism-and-social-policy.html

http://www.thehindu.com/news/national/rural-job-scheme-facing-funds-crunch/article6850028.ece

http://www.indiaspend.com/latest-headlines/budget-2014-costing-indias-flagship-programmes-46546

http://indiatogether.org/letters-to-pm-on-proposed-changes-to-mgnrega-government

http://www.business-standard.com/article/economy-policy/nrega-fund-allocation-cut-by-45-this-fiscal-till-sept-114103100908_1.html

http://www.thehindu.com/opinion/op-ed/ending-destitution-and-distress/article6530852.ece?homepage=true

http://www.firstpost.com/business/economy/budgetary-cuts-mgnrega-may-be-the-worst-hit-1998329.html

http://208.175.66.104/article/2014/10/15/foundation-india-employment-poor-idINKCN0I422O20141015

http://www.accountabilityindia.in/sites/default/files/mgnregs_2015.pdf

http://articles.economictimes.indiatimes.com/2015-02-28/news/59613143_1_mgnrega-budgetary-allocation-prime-minister-narendra-modi

 

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[1] http://www.deccanherald.com/content/462471/mnrega-proof-cong-failure-modi.html, http://www.telegraphindia.com/1150228/jsp/nation/story_5999.jsp#.VQJ8LfyUehs