Budget 2017 may hike MGNREGA funds, but more needs to be done

Karma has a way of getting even. While Prime Minister Narendra Modi earlier mocked the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in Parliament, he is expected to fall back on the same scheme to offset the rural distress caused by his demonetisation drive that has led to reverse migration to villages.

While clearly more funds need to be allocated for the scheme in the Union Budget for 2017-18, it's also imperative to bring about certain reforms, including the removal of various hindrances, to effectively implement the scheme.

"Given the hardship, especially after the job losses post-demonetisation, the government should re-activate NREGA by providing it adequate funds. There should be at least one open-ended worksite in each Gram Panchayat and work should be provided to anyone with a job card, even if they have not applied for work or do not have Aadhaar-seeded bank accounts," says economist and activist Reetika Khera from IIT Delhi.

However, though the PM said in 2015 that he would keep the scheme going, the NDA government has not increased the allocation for the scheme by very much in the last three years. With wages for the scheme going up in the last five years, this means that actual employment created has fallen. The actual spending for MGNREGA in 2014-15 was ₹32,977 crore. It went up to ₹36,967 crore the next year. The Budget estimate for 2016-17 has been ₹38,500 crore, though that is expected to go up substantially in the revised estimates.

There are roadblocks, however. It’s not enough to just provide adequate funds, the manner of allocation is also important and the Centre ought to bring about many changes in the scheme for effective implementation.

Removing the hurdles

Khera says that it is important to "prevent the scheme's sabotage by hidden means." She points out hurdles created in MGNREGA implementation such as the requirements for Aadhaar numbers, which was being imposed in violation of Supreme Court orders; the insistence on work applications, use of E-muster rolls and so on.

"In recent years, as technocracy has replaced bureaucracy, 'techno-work' has slowed down implementation in the same way that paperwork did earlier," adds Khera, demanding the removal of all these impediments immediately.

The Ministry of Rural Development had issued a notification on January 3 that set a March 31 deadline for everyone seeking work under MGNREGA to get Aadhaar-enrolled. Of course, that could prove to be detrimental to millions of poor.

Biometric authentication, however, may create havoc as the workers may not have clear fingerprints due to the nature of manual labour that they perform. There’s also the problem of internet connectivity that would be needed for handheld devices to authenticate the Aadhar details.

The Centre may also need to have a relook at how it earmarks MGNREGA funds for states. It could be on the basis of poverty, just as in the Pradhan Mantri Gram Sadak Yojana, wherein funds are allocated in proportion to the particular state’s shortage of rural roads.

“The ‘free-for-all’ approach punishes poorer states as they are not able to compete with better governed states in attracting funds from the Centre,” says NC Saxena, former Member Secretary in the erstwhile Planning Commission. He points out that the scheme's impact on poverty reduction has been marginal.

"MGNREGA does not work well in many poorer states, such as Bihar, Odisha, Assam and Uttar Pradesh," says Saxena. Take for instance, the total expenditure on NREGA in Bihar; In 2015-16 it was ₹1,025 crore, whereas in Tamil Nadu it was more than four times at ₹4,633 crore, even though the number of rural poor in Bihar is more than six times the number in Tamil Nadu.

Khera says there’s a problem of over-centralisation to the extent that, instead of plans being drawn up by Gram Panchayats, the shelf of works is partly being dictated from the Prime Minister’s Office. For instance, the Centre converging the construction of toilets under Swachh Bharat Abhiyan with that of MGNREGA. Even state governments also have been drawing up plans such as building the dobhas (farm ponds) in Jharkhand.

While there have been practical problems with the idea of MGNREGA funding construction of toilets, getting funds from two schemes quickly at the village level is a daunting task to say the least. Besides, sanitation and MGNREGA guidelines are conceptually different too. Also, the construction of dobhas was taken up by the Jharkhand government in mission mode towards the end of April 2016 in order to deal with water conservation in the wake of severe heat and poor rains in the last two years. However, after the June 10 deadline, hardly half of the target was achieved.

Saxena points out that collective capability is required for management of common resources and for new structures created with MGNREGA funds. “Unfortunately, most projects have failed to generate sustainability because of the failure of government agencies to involve the people and build their social capital,” he says. There’s also a high percentage of incomplete works. As works are left incomplete, bunds are washed away during the monsoon, which leads to accumulation of silt on the river bed downhill, which in turn affects the check dams and adversely affects agricultural productivity.

However, a very serious problem with MGNREGA has been the irregular flow of funds. Many states have been stuck with their allocations not cleared by the Centre on time, which makes them delay the payment of wages to the villagers, and thereby creating a vicious cycle. The Centre needs to address urgently this issue in the forthcoming Budget.