Budget 2019: With signs of rural distress looming large on economy, MGNREGA could be hope for bringing some cheer

It remains to be seen whether the increased allocations will help manage clearing the wage dues as labour wage expenditure has already crossed Rs 55,000 crore under MGNREGA this year.

Happy Pant January 31, 2019 10:45:47 IST
Budget 2019: With signs of rural distress looming large on economy, MGNREGA could be hope for bringing some cheer
  • Latest estimates by the CMIE show that the number of unemployed people has been steadily rising

  • Though under attack from the prime minister in the initial years, MGNREGA now seems to have the government’s approval

  • To maintain the current level of spending for MGNREGA, the 2019 Budget should earmark not less than 70,000 crore

  • Allocation for Ajeevika is expected to go up by 16 percent in the new Budget

Before coming to power in 2014, the Bharatiya Janata Party (BJP) had accorded high priority to job-creation; with a promise of creating 10 million jobs being the highlight of the election campaigns. On the face of its professed emphasis on job-creation, the government is facing widespread criticism on account of its failure to create jobs.

On the one hand, the government has tried to defend itself by admitting to a parliamentary panel that it has no real data on the number of new jobs created during its tenure, and on the other hand, it has been arguing that growing Mudra loans and new EPFO registrations should be linked to job growth.

Post 2011-12, we are left in the lurch regarding any comparable information on the labour market situation in India after the NSSO-employment-unemployment survey (EUS) was officially scrapped. In the interim, the data sets we can refer to for job numbers range from the Labour Bureau surveys, to the privately conducted surveys by the Centre for Monitoring Indian Economy (CMIE).

Budget 2019 With signs of rural distress looming large on economy MGNREGA could be hope for bringing some cheer

Representational image. Reuters.

Latest estimates by the CMIE show that the number of unemployed people has been steadily rising. As in December 2018, the count of unemployed has increased by a substantial 11 million. So, the challenge is not only of lack of job creation, there is a very large fall in employment. Though both, rural and urban India are suffering from job losses, the loss in rural India has been a lot bigger, with rural India accounting for 84 percent of the job losses. In the aftermath of demonetisation and agrarian crisis, this holds heightened prominence.

Mahatma Gandhi National Rural Employment Gurantee Act (MGNREGA) is the flagship programme for creating direct wage employment in rural households. Though under attack from the prime minister in the initial years, it now seems to have the government’s approval. The original Budget estimates were supplemented by provisioning additional funds for the scheme to the extent of Rs 9,715 crore in FY 2016-17 and Rs 7,000 crore in the FY 2017-18.

The resources provided even after the hike were insufficient considering the pending arrears related to wage payments. There is a high prospect in the current fiscal that the supplementary Budgets would apportion a much greater raise than the funds supplemented in the previous two years.

It remains to be seen whether the increased allocations will help manage clearing the wage dues as labour wage expenditure has already crossed Rs 55,000 crore under MGNREGA this year.

The MTEF (medium-term expenditure framework) statement which was presented in the parliament in August last year, as required under the FRBM Act 2003, has projected a 7 percent increase in this Budget over 2018-19 Budget estimates, which was Rs 58,850 crore.

The stark meagerness of the increase supports the argument that the MTEF statement preparation process has completely overlooked the crucial need of a quantum jump in resource provisioning for MGNREGA, rather followed the incremental budgeting approach.

Recently, a group of lawmakers, civil society representatives, leaders of farmers’ movements and former bureaucrats wrote to the prime minister about Budget shortfalls in MGNREGA and its impact. This was also to share the concern on strategy of demand compression which impedes capturing the demand for work appropriately.

To maintain the current level of spending for MGNREGA, and given the concerns relating to inflation-indexed wage rate, going by conservative estimates, the 2019 Budget should earmark not less than Rs 70,000 crore.

As on 30 January, about Rs 56,454 crore out of the total available Budget in 2018-19 (Rs 59,709 crore) is spent; this excludes the dues of Rs 7,356 crore. Net balance for the scheme is Rs 4,101 crore in negative. Considering that two more months of this fiscal are left, and there could be more demand for work from the field, a much higher allocation should have been proposed for the scheme.

Scheme 2018-19 Budget Estimates (Rs) 2019-20 Projection (Rs) % Increase
NRDWP 7,000 8,365 19.5
NRLM (Ajeevika) 6,060 7,053 16.4
PMAY G 21,000 21,000 0
PMGSY 19,000 19,000 0

Other large rural employment generation schemes of India are National Rural Livelihood Programme (Ajeevika), Pradhan Mantri Awas Yojana-Gramin, Pradhan Mantri Gram Sadak Yojana and National Rural Drinking Water Mission.

Ajeevika provides alternative, non-farm activities and credit support through bank linkages to women self-help groups in rural areas. Allocation for this is expected to go up by 16 percent in the new Budget. A greater allocation for this could have gone a long way to enhancing women’s livelihood, and supporting household income.

With signs of rural distress looming large on the economy, MGNREGA could be the hope for bringing some cheer to the rural sector. It remains to be seen how the government plans to challenge the situation. In this election year, pumping money into the rural sector through MGNREGA could make a decisive impact.

(The writer is advocacy coordinator at Centre for Budget and Governance Accountability)

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