June 14, 2020

MNREGA Allocation Fails to Address the Crisis

Vikram Singh

FINANCE minister has announced an allocation of Rs 40,000 crore for MNREGA. The FM had claimed in her press conference on May 17 that additional funds would be provided for MNREGA and 40-50 per cent more workers will be enrolled under the scheme compared to May 2019. However, the total budget available, including the Rs 40,000 crore for the MNREGA does not concur with her claims.

The FM focused only to highlight Rs 40,000 crore and deliberately did not explain the real necessity of the budget according to the demand of work under MNREGA. It is a simple escape mechanism. Further, serious consideration of the ground reality of rural economy shows that this amount does not meet the mammoth task of providing employment to more than 14 crore existing workers enrolled under MNREGA and crores of migrant workers coming back to villages.

Under the given special conditions, there should be a provision of guaranteed 200 days of work and workers must be entitled to wage of either Rs 300 per day, or as per the minimum wage in that respective state, whichever is higher. Organisations working among agricultural and rural workers have been raising this demand for long and many economists have also made similar recommendations in the past. This will eventually result in increasing the purchasing power of the rural workers, primary step for the revival of economy.

The government is making hollow claims that it will support migrant workers with MNREGA, will not happen, when existing workers in the village are not getting the required allocation of work. The allocated amount under MNREGA in the budget for 2020-21 is Rs 61,500 crore, which is Rs 9,500 crore less than the spending on MNREGA in the year 2019-20. There are huge pending dues for the previous year. With the announcement of 40,000 crore rupees, the total amount available for MNREGA becomes 1,01,500 crore rupees.

As per MNREGA portal accessed on May 16, 2020, overall 1435.73 lakh people have applied for job card and 1374.39 lakh have been issued; it means there are 61,35,751 registered households to whom job cards are not issued. Out of these, only 766.75 lakh job cards are active with 1166 lakh active workers. An active job card means an individual of the household who has worked for even a day in the last three years.

If we follow a simple calculation to provide work of 100 days, active workers of 766.75 lakh job cards with Rs 200 daily wage, there is a need of Rs 1,53,350 crore. In the current situation of crisis if the government changes its approach and aims to provide 100 days of work to all families with job cards, it will require Rs 2,87,146 crore. Moreover, in these conditions of economic crisis there is a need to provide a minimum of 200 days of work to each household. Going by this, it will cost the exchequer Rs 3,06,700 crores. It is also important to underline that wage of Rs 200 is too little, but we are considering this as minimum wage only. The above calculations are only for the wage component but there are other expenses also involved in MNREGA work. Vikas Rawal of Jawahar Lal Nehru University, Delhi has proposed that in the last financial year 2019-20, the cost of one person day work under MNREGA is 290 and if we add 20 rupees of increased wage for this year it becomes 310 rupees. Accordingly, the total money required to provide 100 days of work to all job cardholders is Rs 4,26,975 crore (13,77,33,901 job cards at a rate of 2019-20 expenditure plus new wage increment; Rs 290 plus Rs 20 per day).

This entire statistics was based on the earlier existing workforce in the villages. Now, add to this the millions of migratory workers returning back to the villages and the need of work for them. Central government is trying to conveniently avoid the question that how the additional demand for work that will be generated following the mass migration of workers will be met with the sanctioned amount of funds. Lack of budget is seriously affecting the implementation of MNREGA. Irregular and inadequate release of funds by the Centre and inability of the state governments to contribute their share because of their poor financial situation has seriously affected the implementation of the MNREGA. In most of the states, the opening balance for April 2020 was inadequate to carry out work under the scheme even for a month because of the financial constraints and increase in the number of the applicant of the work as well as new job cards. There has been a net increase of 7.1 lakh in the number of applications for job cards after March 31, despite the lockdown. The largest increase in applications is seen in Uttar Pradesh, Bihar and Chhattisgarh. All of these states have also seen a large influx of migrants from the urban areas. This shows the importance of MNREGA during the present crisis.

We have already missed the opportunity to effectively use MNREGA during lockdown to give some relief to the rural workers and to mitigate the extra load created by the reverse migration. Normally this first quarter of the financial year (April to June) is the time when most of the MNREGA work is done and demand is high from the workers. Nearly 37 per cent of the ‘complete work’ under MNREGA is done during the months of April to June. Central government failed to understand the situation and without any pre-planning and applying mind there was a blanket ban on all the MGNREGS work for about one month during the COVID-19 lockdown first phase period. These restrictions were lifted on April 15 through a notification that came into effect from April 20. Although the government exempted the MGNREGS from lockdown the revival of work under the scheme has been slow.

As per the government data available, the number of people who have worked under MNREGA in the month of April is only 30 lakh which is about 17 per cent of the usual workforce. There is a drop of 82 per cent from the previous year’s figure of 1.7 crore workers. It was projected to generate 262 million person-days of employment under MNREGA during the month of April 2020 by the government, however, overall 30.8 million person-days of employment are generated, and the same was 202 million for the month of April 2019. Considering the fact that COVID-19 infection was mainly restricted to the cities and there was very less exposure to the village life, the loss of working days was an unnecessary loss. 

Earlier too, when the things were normal, no unemployment allowance was paid to workers. In 2019-20, Rs 12,000 was paid as an unemployment allowance in the country as a whole. What is appalling is the same government which could not provide unemployment allowance to workers under MNREGA is now appealing to the private sector for paying wages to the workers during the lockdown period.

Despite all its limitations in implementation, MNREGA has proved its utility in rural India in a period of economic and agrarian distress in the last ten years. It has helped the poorest and most oppressed sections of the rural masses to survive, while at the same time preventing general wages of the agricultural workers and rural labour from declining and in most areas, wages have remained stable or shown increases in monetary terms. The rural development ministry acknowledged the above mentioned fact and stated that "Of the workers, the percentage of scheduled caste workers has consistently been about 20 per cent, and scheduled tribe workers has been about 17 per cent". Similarly, the participation of women workers is also very encouraging. Not only participation but MNREGA also helped to ensure equal wages for women.

Due to the present lockdown, there is a huge increase in unemployment. According to Centre of Monitoring Indian Economy (CMIE), there is already a loss of 14 crore jobs in India and according to the UN after lockdown, more than 40 crore people of India are going to face a serious threat of poverty and hunger. The central government should come up with a clear cut road map for rejuvenation of rural economy, having wage workers as its focus.