The government has signalled that it wants to revisit the Mahatma Gandhi National Rural Employment Guarantee Act scheme, arguing that it has not met its expected outcome of poverty alleviation. File
| Photo Credit: The Hindu

Notwithstanding the BJP’s significant losses in rural constituencies in the 2024 general election, the first Budget of the new NDA government did not contain any directional shift for its flagship programme for rural India, the Mahatma Gandhi National Rural Employment Guarantee Act scheme (MGNREGS).

For the financial year 2024-25, ₹86,000 crore has been allotted for MGNREGS. This may be ₹26,000 crore more than last year’s allocation of just ₹60,000 crore, but it is still ₹19,297 crore less than the scheme’s actual expenditure of ₹1.05 lakh crore in the last financial year 2023-24, according to data available on the website of Union Ministry of Rural Development. As per an analysis by The Hindu data team, this year’s allocation for MGNREGS is just 1.78% of the total budgetary allocation, which marks a ten-year low in the scheme’s funding.

According to an analysis by The Hindu data team, the BJP lost 53 Lok Sabha constituencies that can be categorised as rural seats this year, in comparison to its 2019 tally.

‘Suppressing demand’

Every year, the rural jobs scheme has been dogged by this problem of under-allocation of funds. Finance Minister Nirmala Sitharaman has argued that MGNREGS is a demand-based scheme and that the government offers more money as and when the requirement arises. But activists have argued that the lower allocation contributes in artificially suppressing the demand for work under the scheme.

“Not only is the allocation for FY 2024-25 less than the expenditure in FY 2023-24, it also does not take into account the increased demand in the first quarter of this financial year. In comparison to 2023-24, in the first three months of the ongoing financial year, 5.74 crore more person days have been generated. Additionally, the increase in wages for the current year is also not accounted for,” said Chakradhar Buddha, who is affiliated with LibTech India, a consortium of academics and activists. Under MGNREGS, person days are defined as the total number of work days by a person registered under the scheme in a financial year.

In fact, ₹41,500 crore has already been spent under the scheme in the first four months of this financial year, leaving a mere ₹44,500 crore for the remaining eight months.

Reviewing outcomes

The government has signalled that it wants to revisit the scheme, arguing that it has not met its expected outcome of poverty alleviation.

Also read:MGNREGS would continue, but only as a living monument to failure Congress’ failure: PM Modi

“The Economic Survey, released on Monday, had laid the groundwork to justify the low allocation, by claiming that MGNREGS demand does not necessarily correlate with rural distress. As a percentage of GDP, this year’s allocation continues to be lower than 0.3% and if you adjust for inflation, this year’s allocation is even lower than last year’s. The steady mutilation of MGNREGS has been repeated continuously for 10 years now,” said Rajendran Narayanan, who is part of the economics faculty at Azim Premji University.

The Congress general secretary for communications and former Rural Development Minister Jairam Ramesh also expressed dismay at the sharp cut. Image for representation purpose only.
| Photo Credit: K.K. Mustafah

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.

In the last budget presented by Finance Minister Nirmala Sitharaman, the MGNREGA allocation saw a 25% cut to ₹73,000 crore. Left with a spiralling unpaid balance at the end of the year, the Rural Development Ministry had demanded an additional ₹25,000 crore to meet the shortfall in the scheme. The Finance Ministry only approved ₹16,000 crore, taking the revised budget for this financial year to ₹89,000 crore.

Also Read | MGNREGA needs at least ₹2.72 lakh crore for providing 100 days of work, say activists

Despite the higher revised estimates, less than 3% of the households employed under MGNREGA completed the 100 days of work they are legally entitled to. AsThe Hindu reported on January 26, the average days of employment provided per household is at a five-year low in this financial year. Till January 20, the average days of employment provided per household was only 42, while it ranged between 48 and 52 days in the preceding four years.

‘Killing the law’

On the eve of the Union Budget, a consortium of activists and academics working under the umbrella group of Peoples’ Action for Employment Guarantee and the NREGA Sangarsh Morcha had said that, in order to provide the legally guaranteed 100 days of work to all households who have worked in the current year, the scheme required an allocation of ₹2.72 lakh crore. According to their calculations, even giving each active household just 40 days of work would require funding of ₹1.24 lakh crore, more than double the current allocation.

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“Such a low allocation is clearly aimed at killing the law. This allocation does not meet even the minimum threshold. And you have to remember that even the revised estimate of ₹89,000 crore is after completely excluding West Bengal, which till the previous years had got 10% of the total MGNREGA budget,” Nikhil Dey, founder of Mazdoor Kisan Shakti Sangathan, said.

‘Brutal surgical strike on the poor’

The Congress general secretary for communications and former Rural Development Minister Jairam Ramesh also expressed dismay at the sharp cut. “Even assuming MGNREGA is demand-driven, the cut is rather savage. But it is in line with the government’s steps to keep demand itself suppressed,” he told The Hindu.

Kerala Rural Development Minister and CPI(M) leader M.B. Rajesh called this “drastic reduction” a “brutal surgical strike on the poor” which reflects the government’s “anti-poor” slant. “The current budget allocation is less than one-fourth of what the country needs to follow the law in letter and spirit. This is the culmination of a systematic effort by the Narendra Modi government to sabotage MGNREGA. They shouldn’t forget that it was MGNREGA that helped in staving off starvation during the pandemic years,” Mr. Rajesh said.

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