Deep Dive

MGNREGA: Budget 2021 should maintain the pace

Radheshyam Jadhav Pune | Updated on January 31, 2021

The scheme provided momentum to the economy during Covid-19 and experts think the Budget allocation to the scheme can be increased in FY22

For the past three years, many adivasis from remote Peth taluka of Nashik district in Maharashtra have not migrated to cities in search of work and livelihood. They grow rice enough to sell at the local market, thanks to the construction of farm ponds, stone and mud bunds and other agriculture-related works carried out under Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).

Besides addressing the problem of migration from villages, the scheme has helped provide employment to migrant labourers dislocated this fiscal year due to the Covid-19 pandemic. As compared to the last financial year, the Centre has increased funding under MGNREGA scheme by ₹19,091 crore due to Covid-19 outbreak. Experts think that the Budget allocation to the scheme should be increased to help the rural economy in FY22.

The average per day wage rate for unskilled work under the scheme went up by 10 per cent from ₹182 in 2019-20 to ₹200 in the current year. There has been an overall rise of ₹42,700 crore in government funding from 2016-17 to the current financial year. During the same period, the overall rise in wages of ₹23,575 crore has been recorded (from ₹40,750 in 2016-17 to ₹64,326 crore in 2020-21).

 

Providing jobs closer home

“This scheme has brought a change in the lives of Peth villagers but there are many who still want to work. The government must provide more work as many of the villagers who had migrated to cities have returned after Covid-19 outbreak,” said Chandrakant Kuwar from Amlon village in Nashik. He added that even before the pandemic,the MGNREGA was drawing back villagers from the cities.

The Ministry of Rural Development, through independent evaluators, reported that the MGNREGA scheme has reduced the seasonal migration of workers. According to the Ministry, studies indicated a direct and positive impact of MGNREGA in the reduction of distress migration by providing work closer to home with decent working conditions.

According to data from the Centre for Monitoring Indian Economy, reverse migration due to Covid-19 has resulted in 16 per cent increase of people employed in the agriculture sector (in summer 2020) over the previous year’s overall farm employment. Even as the virus scare keeps many villagers away from cities, the MNREGA would be the major job provider for rural poor at least in the first part of 2021.

 

What is the MGNREGA scheme?

The scheme is a demand-driven wage employment scheme. Every adult member of a household in a rural area with a job card is eligible for a job under the scheme. The scheme envisages providing 100 days of guaranteed wage employment in a financial year to adult member volunteers for unskilled manual work.

There is also a provision for additional 50 days of unskilled wage employment in drought/natural calamity notified rural areas. As per Section 3(4) of the MGNREGA, the States may make provisions for providing additional days beyond the period guaranteed under the Act from their own funds.

The government data shows that the Centre has released ₹90,111.99 crore under the scheme this financial year and a total of ₹64,326.54 crore has been given as wages (by 29 January 2021). The average wage rate per day per person is ₹200.37 in the current financial year as compared to ₹161.65 in 2016-17. A total of 7.02 households and 10.25 crore individuals have benefitted under the MGNREGA scheme this year. These figures are recorded the highest as compared to the last four years.

According to the government data, in the last five years, expenditure on agriculture and allied works under the MGNREGA scheme has been above 65 per cent. A big chunk of assets created under the scheme include water conservation work which helped to resolve water problem in many villages. The programme has 261 permissible work out of which 164 types of work are relating to agriculture and allied activities. The Ministry of Finance stated that the agricultural sector remains the foundation of the Indian economy. Though the GDP contribution of the sector may not be large (in relation to industry and services), the growth of the sector has had a positive impact on the large population dependent on agriculture.

“The government must ensure that work is provided notwithstanding the demand. There is a demand for work in rural areas and the government must expand the scheme in the upcoming Budget. Besides that, the government must focus on value addition and multiply community asset works,” said Ashwini Kulkarni of Pragati Abhiyan, the organisation working to facilitate MGNREGS work in villages.

She added that the rural economy would get a boost only if there is money in the hands of rural people. “Many of those who had migrated to cities for work returned to villages during Coivd-19 and worked on the MGNREGA projects.

There is also a large number of working women. They could fight health issues like anaemia and malnutrition once they have money in their hands,” Kulkarni added. A total of 52 per cent of persons-day were women in 2020-2021 and has remained about 50 per cent in the last four years.

Strengthening the Scheme

The average days of employment provided per household was recorded at 45.42 in the current financial year.

“There is a need for better coordination between various government departments and the mechanism to allot and measure the work. This is one of the best welfare schemes in recent years and it has helped the rural poor. However, government officials must take the initiative to implement the scheme and must not block the work,” said one of the senior government officials who has worked on the scheme.

Gender wage gap

Some discrepancies in the payouts need to be addressed, too. The daily wage under the scheme is less than the general agriculture labourer. The National Sample Survey Office (NSSO), 2017 data shows that the average daily wage for general agricultural labourers is ₹264.05 for men, and ₹205.32 for women. Women in the sector, on an average, earn 22.24 per cent less than their male counterparts.

The International Monetary Fund’s (IMF) Chief Economist, Gita Gopinath, while delivering a lecture at the National Council for Applied Economic Research recently, insisted on expanding the scheme. “The policies of in-kind and in-cash support that were deployed in 2020, and expired in 2020, should be deployed again this year. Also, the employment guarantee scheme should be expanded again this year so that you are able to prevent this rise in inequality,” she said.

Published on January 31, 2021

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