By: Suhail Ahmad Khoja
Context
Union Finance Minister Nirmala Sitharaman on February1, 2023 presented her fifth straight budget and last full Budget of the second term of the BJP-led NDA government ahead of the general elections in 2024. In line with the recent trend of slashing the budget of its flagship rural jobs scheme, the Union Budget allocated only ₹60,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme for 2023-24. That is 18% lower than the ₹73,000 crore budget estimates for the current year, and 33% lower than the ₹89,000 crore revised estimates for the scheme. Much ink and air has been devoted to this decision, however we will analyze the trend of budget allocation to the flagship scheme and the empirically incorrect justifications of the govt and the way forward.
Budgetary allocation to MGNREGA over the years
Budgetary allocations to the flagship scheme has increased successively since 2013 from Rs 32,992 crore in 2013-21 Union Budget to Rs. 60,000 crores in 2023-24.But in recent years, the amount actually spent on the programme has consistently exceeded what was allotted for it at the budget stage. For instance, in 2022-23, while Rs 73000 crore was allotted to MGNREGS, supplementary allocations made later pushed up the revised estimates to Rs 89,400 crore, as funds had run out in the middle of the year. Even so, the Central govt once again allocated Rs 60,000 crore (32.8% lower than the previous year’s revised estimate and 18% lower than the budget estimate for the previous year) for the scheme in budget 2023-24.
In 2023-24, the MGNREGA budget is 1.3% of government expenditure (The govt proposes to spend Rs 45,03,097 crore in 2024, and budget allocation to MGNREGA is Rs 60,000 crore), which was 1.85% of government expenditure in 2022-23 (The govt proposed to spend Rs 39,44,909 crore in 2022-23, and budget allocation to MGNREGA was Rs 73,000 crore). This is the lowest ever allocation as a percentage of the GDP, at less than 0.2%. (See Fig 1)
Fig 1
Source: Budget from 2016-17 to 2023-24
MGNREGA: a lifeline to rural areas amid testing times
The Parliamentary Standing Committee on Labour 2021 noted that, “there is no better scheme than the MGNREGS to provide sustainable livelihood to the unskilled”. According to a study conducted by the Centre for Sustainable Employment at Azim Premji University, Collaborative Research and Dissemination (CORD), and Civil Society partners who are members of the NREGA Consortium, increased MGNREGA earnings could replace anywhere from 20% to 80% of income losses, depending on the block. The study also came to the conclusion that it makes sense to invest more money in the programme since it will result in stronger social protection. The study further concluded by remarking “It is also encouraging to note that, overall, MGNREGA played a positive role in absorbing some of the economic shock”. Moreover, The average monthly income of a person who took up the work offered under the scheme nearly doubled to a perfect Rs.1000, in April-July in FY 2020-21, from Rs.509 in the year ago period, CRISIL Researchhas estimated.
A hopeful trajectory: Case of female participation
The percentage of participationof women out of the total person-days generated in FY 2022-23 is 56.19%. The proportion of women workers participating in MGNREGA, has touched a ten-year high in the ongoing financial year, since 2012-13.Out of the 15 states (Kerala, Bihar ,Tamil Nadu, Maharashtra, Rajasthan, Andhra Pradesh ,Madhya Pradesh, Karnataka, Chhattisgarh, Telangana, Odisha, Jharkhand, Assam, Gujarat, UP), that The Hindu reviewed , 14 states reported an upward trend in women’s participation. Female Labour Force Rate has gone up to 25.1% in 2020-21 from 18.6% in 2018 19 , there is a notable rise in Rural Female Labour Force Participation Rate from 19.7% in 2018-19 to 27.7%..
Justification: A tryst with the facts
Chief Economic advisorV. Anantha said that the allocation for the MGNREGS has been reduced in the budget for 2023-24, as more funds have been allocated to towards PMAY (G), and JJM, which are expected to provide jobs to same set of workers in rural areas[1]. However, such a line of reasoning is faulty along several dimensions. The additional budget allocation in 2023-24 over RE 2022-23 to Jal Jeevan Mission and PMAY (G) is less than the cut in budget allocation to MGNREGA in 2023-24 over RE 2022-23 by Rs.8459 crores, as shown in table 1. Additionally, PMAY is a beneficiary driven material intensive scheme and JJM is mostly tender base material intensive scheme. So the additional allocation cannot compensate the loss of jobs under MGNREGA
Table 1
| RE 2022-23 | BE 2023-24 | Additional allocation over RE | |
| Jal Jeevan Mission | 54,808 | 69,684 | 14,876 |
| PMAY (Grameen) | 48,422 | 54,487 | 6,065 |
| MGNREGA | 89,400 | 60,000 | 29,400 |
While addressing the Lower House of the Parliament on December 14, 2022, Union Finance Minister Nirmala Sitharaman claimed that the demand for work under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is declining, “There is now very obviously a declining demand for jobs in the rural areas. In the rural areas, the demand for MGNREGA in the recent past has been coming down,” Sitharaman had said. However, the ground reality is quite opposite as depicted by data accessed on MGNREGA Dashboard Dec22, 2022. The demand for work in rural areas increased from 5.87 crore households in 2018-19 to 8.55 crore households in 2020-21, due to unprecedented covid-19 crisis and stringent lockdown of March 2020, when around 11.4 million migrant workers, who found themselves stranded in the employment hubs of urban India, returned to their villages. The demand for work in rural areas increased from 6.16 crore households in 2019-20to 6.25 crore households in 2022-23, even when three months have not been taken into consideration in current fiscal. So empirically, the demand for work under MGNREGS has not been declining as claimed by the Ministry of Finance.
Lastly, Ministry of Rural Development in a statement said that when additional funds would be needed for, MGNRGA “Govt. of India is committed to release funds for wage and material payments for proper implementation of the scheme, as per the provisions of the Act and guidelines applicable for Central Government as well as State Government”. However, the trend observed in the data over the years suggests that, actual estimates have been above the Budget Estimates since 2015-16. Curiously, a significant proportion of the budget has gone into clearing the arrears of previous years.
Way forward
MGNREGA has a significant influence on social protection, livelihood security, and democratic empowerment, making it a potent tool for inclusive growth in rural India. It has significantly reduced rural poverty and increased employment opportunities, there have nonetheless been cases of Act violations in India. The budget cuts to MGNREGA will have negative socio-economic implications ranging from its effect on income to employment and female work participation to asset creation in rural areas. The government must allot sufficient cash and resources, increase accountability and openness, and train the staff members in charge of carrying out the Act. Additionally, monitoring and reporting violations of the Act can be greatly aided by civil society organizations and workers’ groups.
The writer is a Postgraduate student of Economics at University of Kashmir
