55% wages still delayed: Why more funds for MNREGA in Budget not enough

New Delhi: Last year, while replying to the debate on the motion of thanks to the President’s address in Lok Sabha, Prime Minister Narendra Modi had said that the Mahatma Gandhi National Rural Employment Guarantee scheme, a UPA legacy, was a living monument of poverty in the country. Since then, the Modi government has obviously done some re-think on the efficacy of this scheme since no one now refers to the scheme and poverty in the same breath.

In fact, with the Budget Finance Minister Arun Jaitley presented on Monday entirely focused on reviving the rural economy though, it is no surprise that MNREGA is now the cynosure of all eyes. The allocation for MNREGA was the "highest ever" according to the FM at Rs 38,500 crore for 2016-17. This year the amount stood at Rs 36,967 crore.

NREGA needed in urban areas too. Reuters

NREGA needed in urban areas too. Reuters

MNREGA guarantees 100 days of employment to a household or an unemployment allowance within 15 days of an applicant seeking a job under it. Enhanced allocation in the Budget for this scheme is a welcome move but even more money may yet be needed under this scheme as the Mahendra Dev Committee has recommended that wages under MNREGA be linked to CPI (Rural) against the CPIL (Agricultural Labour or AL) index wages are linked to as of now. In 2015, the average wage of a beneficiary was just Rs 150.

This, Rural Develpoment Minister Birender Singh said on Tuesday, could mean additional burden of Rs 2,000 crore. "We have accepted the recommendations of the Mahendra Dev Committee and have written to the Finance Ministry, seeking the Rs 2,000 crore needed for this."

Earlier this year, MNREGA completed a decade of offering employment guarantee to the rural poor, with mixed results. Enhanced allocation for next fiscal could mean the scheme may get more people employment or an unemployment allowance (which the states are mandated to offer if no work is provided within 15 days of request). But a glance at the parameters so far, even under the NDA government, does not paint a pretty picture of this scheme.


The 21 months of this government have shown improvement in some parameters under the MNREGA compared to the last two-three years of the UPA regime but even now, the scheme needs far better focus. And yes, it could do with more funds than allocated for even 2016-17.

According to the latest data from the ministry of rural development:

1) Only 6.35% households or 27.17 lakh households have completed 100 days of employment as of February 25. Though the ministry says another 38.58 lakh households are expected to reach the 100-day employment completion benckmark by 31 March, this obviously leaves a lot to be desired as far as offering employment to the needy is concerned.

During 2014-15, only 24.92 or less than 6.35% households had completed 100 days of employment. Will increased Budgetary allocation for MNREGA in FY17 help more households find jobs?

2) Delayed wage payments is one of the biggest problems under MNREGA. Even when employment is offered under the scheme, delayed payments don't help the intended beneficiary in any way.

According to the ministry's own statistics, 45% of payments under MNREGA have been made in the stipulated time period against just 28% in 2014-15. This is an improvement for sure but look at it this way: more than half the payments are still delayed.

The ministry has already introduced the facility of electronic transfer of payments in Kerala from January to ease this payments delay and 10 more states are to be brought into this scheme through 2016-17. It remains to be seen whether these efforts are enough to cut wage delays substantially.

3) Let's now look at total expenditure under the scheme. In 2012-13, the penultimate UPA year, Rs 39,778 crore was spent under MNREGA and this fell to Rs 38,553 crore in 2013-14.

In the first year of the NDA too, the expenditure on this scheme declined further to Rs 36,024 crore. But now, ministry officials say Rs 47,000 crore is the estimated expenditure for the current fiscal, of which Rs 43,000 crore has been spent till February 25. This includes the share of states' expenditure too under MNREGA.

4) This brings us to another issue plaguing this programme. Each year, back payments or payments of arrears under MNREGA have been criticised by social activists who say this propensity then leads to under-funding and delays in release of payments to states.

According to ministry officials, pending liability this fiscal (which will be carried over to 2016-17) is estimated at Rs 6,500 crore, a tad lower than the Rs 6,955 crore carried forward this fiscal from 2014-15.

A senior ministry official said already nine states are offering not 100 but 150 days of work under MNREGA and these are mostly drought affected states. She also said there has been a substantial increase in the number of person days generated under MNREGA this fiscal, refuting a charge that employment under this scheme is shrinking.

As we have said earlier, the Centre has done well to hike the allocation under MNREGA for 2016-17 but now, it must ensure much better implementation of this scheme than the last years of the UPA and its own 21 month regime.

Updated Date: Mar 01, 2016 18:12 PM

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