The Union Budget 2022-23 allocated Rs 73,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). This was nearly 26 per cent lower than the revised estimate (Rs 98,000 crore) for the scheme in the ongoing financial year (2021-22). There has been much discussion on MGNREGS fund allocation (such as here and here) and on its importance during the Covid-19 pandemic. The telephone surveys conducted by the Pandemic Studies Unit of the Foundation for Agrarian Studies found that MGNREGS was a crucial source of income for rural households during the lockdowns imposed by the pandemic. This blog examines the implementation of MGNREGS in the last few years in relation to budgetary allocation, wage rates and days of employment, and employment scenario of households during the Covid-19.
Budgetary expenditure
There has been a widening mismatch between budgetary allocation and actual expenditure for MGNREGS. Figure 1 shows that the actual expenditure has been more than the budgeted expenditure (budget estimates) from 2015-16. The additional expenditures show that despite the Central Government wanting to reduce spending on MGNREGS, it has been forced to reconcile with the ground realities.
The scheme was given the highest ever allocation of Rs 1.11 lakh crore in 2020 due to Covid-19 pandemic. However, the next financial year (2021-22), saw the initial allocation drop to Rs 73,000 crore. Even when there have been additional expenditures, these have not fully accounted for neither the work demanded nor for the dues (arrears). There is a large amount of pending wage and material payments from the preceding years. A recent news report highlighted several such issues that have persisted even during the Covid-19 pandemic. The workers are currently waiting for almost Rs 3360 crores wage payment, with the largest payment due in West Bengal (Rs 752 crore), followed by Uttar Pradesh (Rs 597 crore) and Rajasthan (Rs 555 crore). According to the NREGA Sangharsh Morcha estimate, only Rs 54,650 crore would be available for this scheme next year after taking all pending amounts into consideration. It also estimates that 80-90 per cent of the allocated amount would be completed within the first six months of the next financial year, possibly leading to a slowdown of works under the scheme.
Wage rate and days of employment
Another issue related to MGNREGS has been the low wage rates. The MGNREGA wage rates have not increased in relation to minimum wages. The minimum wages are set by State Governments from time to time. MGNREGS wages were paid to workers according to the statutorily-fixed State minimum wage until 2008-09. Since 2009-10, the wage rates for MGNREGS work have been notified by the Ministry of Rural Development. The average wage paid under MGNREGS was less than minimum wages set by many States after 2012-13.
In 2011-12, the minimum wage was Rs 95.65 in Maharashtra and MGNREGS wage was 27 per cent higher than this minimum wage. Similarly, MGNREGS wages were higher than minimum wage for Odisha and Tripura by 36 and 18 per cent respectively. However, there has been a drastic reversal in this relationship by 2018-19. The minimum wage for Maharashtra was 229.6 in 2018-19 but the MGNRGES wage was 18 per cent lower than this. The MGNREGS wages were lower than the State minimum wages by 35 per cent in Odisha and 41 per cent in Tripura in 2018-19.
Coming to the days of employment, while MGNREGS is meant to provide 100 days of guaranteed employment per household, the days of employment provided to each household have averaged between 40 and 50 days at the all-India level. Even though there is variation between States in terms of average days of employment, the trend has remained unchanged at national level from 2013-14. The most recent data suggest a slight downward trend (Figure 2).
During the initial days of the pandemic, when there was a national lockdown, all non-agricultural work stopped in many villages. Our surveys showed that MGNREGS was a source of employment to rural workers during that period. But as figure 2 shows, the average number of days of employment by households remained low even in 2020-21. The Management Information System of MGNREGS showed that only 9 per cent of all households received 100 days of employment in 2020-21. While many households found the scheme useful, they were still falling short of the guaranteed 100-days of employment under the scheme.
Employment scenario
A deeper look at the employment scenario during the pandemic showed that there has been an unmet demand in terms of MGNREGS work. According to the scheme, households that demand employment are supposed to be provided work within 15 days of their demand, or else are eligible to receive unemployment allowance from the government. However, in reality there has been a gap between demand and supply of employment under MGNREGS. The absence of recorded date of demand for many households mean that unemployment allowances are received by only a few households.
Figure 3 shows the number of households demanded and supplied work under the scheme from April 2019 to December 2021. It shows three distinct phases. The first phase covers the pre-Covid situation (April 2019 to March 2020). The second phase, coinciding with the first lockdown that extended from April to July 2020, saw a huge demand for jobs under MGNREGS. While the households accessing work reduced in the third phase, that is after August 2020, it was still higher than the pre-Covid period. This feature was noted in many recent reports. The third phase saw an increased gap between demand and supply of work. It must be noted that households receiving work in the second lockdown (blip around May – June, 2021), was not as high as during the first lockdown. The sudden increase in demand for work after the first lockdown has been partly explained by the movement of migrant workers. It is estimated that the highest demand for work under the scheme came from this section of the population.
Overall, even though the demand and supply for work increased, MGNREGS failed to generate enough employment per household during the pandemic. MGNREGS provided a lifeline to rural households during the pandemic and the periods of lockdown. However, the implementation of the scheme failed to meet the expectation with a large gap between the number of households that demand work and those who are supplied with work. The days of employment provided for a household has also woefully remained inadequate. Instead of regularly underbudgeting for the MGNREGS, the Central Government should give a new impetus to the scheme by acknowledging the facts from the ground.
About the author
Subhajit Patra is a Monitoring And Evaluation Analyst at CIMMYT. He previously worked as a Senior Data Analyst at the Foundation for Agrarian Studies.
Sudha is an Administrative Assistant of the Foundation. She assists the administrative division of the Foundation and also has taken part in fieldwork organised by the Foundation.
