Budget 2023 cuts MGNREGS funds: the debate around the rural employment scheme

General Studies Paper 2

Context:

The Economic Survey 2022-23 showed that 6.49 crore households demanded work under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS). Of these, 6.48 crore households were offered employment by the government and 5.7 crore actually availed it. The Scheme was hailed for its role in mitigating the impact of the COVID-19 pandemic, when the number of workers had jumped post reverse migration from urban areas during the pandemic. In the Union Budget 2023-24, the Government has allocated INR 60,000 crore for the MGNREGS and has cut the funds by 33% compared to INR 89,000 crore in FY2022-23 (Revised Estimates). The step has been criticised as neglect of the poor sections and may lead to rural distress. However, the Ministry of Rural Development has sought to allay fears by clarifying that additional funds will be made available as and when the need arises.

Current status of MGNREGS:

• The Union Budget 2023-24 has allocated INR 60,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) scheme for FY2023-24. That is 18% lower than the INR 73,000 crore budget estimates for the current year (2022-23), and 33% lower than the INR 89,000 crore revised estimates (FY2022-23). The allocation in FY2023-24 is only 1.3% of the total expenditure compared to 2.1% last year.
• The average days of employment provided per household is at a 5-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.
• According to Ministry Of Rural Development, the total active workers in 2022–23 are 15.12 crores. The number of households benefited were 5.78 crore in 2022-23.

Benefits of MGNREGS:

• Rural Development: The programme mandates that at least 60% of the works undertaken must be related to land and water conservation. The creation of these productive assets boost rural incomes as the majority of villages are agrarian. In some instances e.g., in Barmani village of Madhya Pradesh’s Sidhi district, creation of water conservation assets have increased availability of water. Some people who used to migrate earlier have now taken up farming.
• Tackling Water Stress: The water conservation structures built under MGNREGS have potentially conserved at least 28,741 million cubic metres of water in the past 15 years. The scheme has helped to mitigate the water stress to an extent.
• Curtailing Distress Migration: The scheme provides support in times of distress and individuals are not forced to migrate into cities. For instance, distress migration has stopped in Bandlapalli village in Andhra Pradesh’s Ananthapuramu district and the village is drought-proof today.
• Women Empowerment: Women workers account for more than 33% of the workers under MGNREGS. Money is transferred directly into the accounts of these women workers. This has supported women empowerment e.g., MGNREGS has led to the formation of the country’s largest group of trained women well-diggers in Pookkottukavu village of Kerala’s Palakkad district.
• Battling Uncertainties: There was a big jump in the number of workers from 2019-20 to 2020-21 (pandemic year). MGNREGS proved to be vital in providing relief to the migrants during the distress. It ensured income support to the vulnerable during the pandemic.
• Community Assets: The scheme has led to the creation of common community assets. These assets are built by communities on common lands thereby creating a sense of responsibility towards the structure which results in better care e.g., many Johads(percolation ponds) had remained abandoned for several years in many villages of Haryana. However, villagers revived them under the MGNREGS.

Challenges with the working of MGNREGS

• Gender Issues: Women and Men get equal remuneration under MGNREGS. However, various cases of discrimination against women have been reported wherein some regions, less job cards are issued to women or there are delays in the issue of cards.
• Regional Inequality: The success of MGNREGS depends on the performance of individual States. Although centrally funded, studies show uneven outcomes across different States. The performance of the MGNREGS, in terms of accountability, is much better in States like Andhra Pradesh and Tamil Nadu than in states like UP and Bihar.
• Insufficient Budget Allocation: MGNREGS’s success on the ground is dependent on proper and consistent funding flow to the states. Funds have dried up in States due to a lack of “mother sanctions” from the Union government, causing work to be difficult during peak season. Almost every year, more than 80% of funds are depleted in the first six months. As a result, the government’s claim of “record allocation” does not hold up in practise. It has actually decreased because pending liabilities from the previous year are included in the current budget. Furthermore, the allocated funds are insufficient to ensure proper implementation on the ground.
• Regular Delay in Payments: There is a regular delay in payments. Moreover, there is no provision of compensation in case of delayed payments despite the order of the Supreme Court. The delay is mainly due to failed payment transfer arising from inactive Aadhaar, and closed, blocked, or frozen bank account.
• Workers Penalised for Administrative Lapses: The Ministry withholds wage payments for workers of States that do not meet administrative requirements within the stipulated time period (for instance, submission of the previous financial year’s audited fund statements, utilisation certificates, bank reconciliation certificates etc). It is workers who end up being penalised for administrative lapses.
• Issues with Rural Banks: The rural banks are lack capacity in terms of staff and infrastructure and thus always remain hugely crowded. The workers normally have to visit the banks more than once to withdraw their wages. Due to great rush and poor infrastructure, the bank passbooks are not updated in many cases. Often, the workers do not get their wages during times of need due to the hassle and the cost involved in getting wages from the bank.
• Deletion of Job Cards: There are reports of genuine job cards are being randomly deleted as there is a huge administrative pressure to meet 100% Direct Benefit Transfer (DBT) implementation targets in MGNREGA. In states like Jharkhand, there are multiple examples where the districts had later requested to resume job cards after civil society interventions into the matter.
• Centralisation: A real-time MIS-based implementation and a centralised payment system has reduced the role of the representatives of the Panchayati Raj Institutions in implementation, monitoring and grievance redress of MGNREGA schemes. They have little or no power to resolve issues or make payments. The over-centralisation of the scheme has diminished the local accountabilities.
• Neglect of Local Priorities: MGNREGA could be a tool to establish decentralised governance. However, with the centralisation, the local issues are getting neglected. Linking MGNREGA to construction of Pradhan Mantri Awas Yojana(PMAY), individual household toilets, anganwadi centres and rural ‘haats’ have been destroying the spirit of the programme and gram sabhas and gram panchayats’ plans are being neglected.
• Online Attendance: The National Mobile Monitoring Software (NMMS) App allows for real-time attendance and geo-tagged photographs of workers at Mahatma Gandhi NREGA worksites. However, there are some concerns, such as poor internet connectivity, limited access to smartphones, and app glitches that have disrupted workers’ daily activities. Workers are being forced to purchase smartphones, which is causing them to leave their jobs. Many workers have expressed dissatisfaction with the process, and many are illiterate.

What steps can be taken to improve working of MGNREGS?

• The Parliamentary Standing Committee on Rural Development and Panchayati Raj has made several recommendations to improve the implementation of the Scheme.
• Increase in number of days of work: Under the scheme, State governments can ask for 50 days of work, in addition to the guaranteed 100 days, in case of exigencies arising from natural calamities. It recommended increasing the guaranteed days of work under the scheme from 100 days to 150 days.
• Revision of permissible works: The Committee observed that the ambit of permissible works under the scheme requires frequent revision. It recommended the Ministry of Rural Development to consult stakeholders and include area-specific works under MGNREGA as per local needs. These may include, construction of bunds to stop land erosion during floods, and boundary works for agricultural fields to protect them from grazing animals.
• Uniform Wage Rate: Wage rates notified under MGNREGA range from INR 193 to INR 318 in different States/UTs. The Committee noted that this fluctuation in wage rates across States/UTs is not justified. It recommended devising a mechanism for a unified wage rate across the country.
• Increase in wages commensurate with inflation: The Committee noted that beneficiaries of MGNREGA generally belong to poor and marginalised sections of society. It observed that the nominal wages under MGNREGA discourage beneficiaries and propel them to either seek more remunerative work or migrate to urban areas. The Committee noted that indexing MGNREGA wages to Consumer Price Index (CPI)-Rural as opposed to CPI-Agricultural Labour, (as recommended by Dr. Nagesh Singh Committee), has not been implemented. The Standing Committee recommended the Ministry to review its position and increase the wages.
• Delay in Compensation: In case of delay in payment of wages under MGNREGA, beneficiaries are entitled to compensation at the rate of 0.05% of unpaid wages per day for the duration of delay.  The Committee noted that payment of delay compensation is not adhered to in most places in the country. The Ministry must ensure strict compliance in payment of compensation.
• Social Audits: Under MGNREGA, the Gram Sabha must conduct regular social audits of all projects taken up within the Gram Panchayat. The Committee observed that implementation of this provision is poor. The Gram Panchayats must not go unaudited during the financial year. Also, Social audit reports are not publicly available. These reports must be placed in the public domain promptly after the audit exercise is over.
• Appointment of Ombudsperson: Under the Act, there should be an ombudsperson for each district who will receive grievances, conduct enquiries, and pass awards. Out of 715 possible appointments, so far only 263 ombudsmen have been appointed which shows poor coordination between the Union and State nodal agencies. Punitive measures can be imposed or funds can be stopped for States for failing to appoint ombudsmen. The Committee recommended the Department of Rural Development to bring on board all State governments to comply with appointment of ombudsmen.