Centre exhausts 66.44% MGNREGA funds in 4 months; workers reach Delhi to protest delayed wages

The Union government has already exhausted 66.44% of the funds allocated for Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in the current financial year 2022-23. Of the Rs 73,000 crore that was allocated, the total expenditure within four months of the current financial year stands at Rs 48,502 crore, which includes payments that have been due for more than six months.

This delay in getting paid timely has driven several MGNREGA workers to Delhi, where they are set to stage protests on August 2-4 against insufficient funds allocation, delay in wage disbursal and other issues currently dogging the employment scheme's implementation.

Of the Rs 73,000 crore, Rs 36,112 crore (49.5%) was the total expenditure for the last four months; Rs 12,390 crore (17%) is the amount that is due from the previous years and for material and administrative expenses. As of August 1, 2022, Rs 4,419 crore is owed by governments in dues, including wages, material and administrative expenses.

The highest payment due is for the state of Karnataka (Rs 665 crore), followed by West Bengal (Rs 482 crore), Madhya Pradesh (Rs 456 crore), Uttar Pradesh ( Rs 434 crore), Odisha (Rs 349 crore) and Telangana (Rs 257 crore).

Except for the pandemic period, a significant proportion of the MGNREGA budget is used to pay for previous years’ pending liabilities, leaving the budget remaining grossly inadequate for the current financial year. In FY 2022-23, Rs 11,464 crore has been spent as on July 31, 2022 to clear previous years’ liabilities.

The problem with MNREGA is that it has never been a demand-driven programme, in the sense that the government has always allocated a budget, said Ritika Khera, associate professor of economics at the Indian Institute of Technology (IIT) Delhi. “The real demand for work has always been much higher than what the government has been willing to budget for and has never been captured accurately by MGNREGA machinery,” she added.

In 2022-23, the Union budget allocated Rs 73,000 crore to the rural employment scheme as against the revised estimate of Rs 98,000 crore for MGNREGA in 2021-22. Of this, Rs 18,350 crore was liabilities pending from the previous year, effectively leaving Rs 54,650 crore for use. In 2020-21, the actual spending under MGNREGA was Rs 1,11,170 crore.

MGNREGA aims to guarantee at least 100 days of wage employment in rural India to at least one member of every household whose adult members can do unskilled manual work. The Act also states that wages shall be paid to the MGNREGA workers within 15 days from the date on which the work was done. If there is a delay in the payment, the workers are entitled to get delay compensation of 0.05% of the unpaid wages per day for the duration of the delay.

“The government is punishing the poor this way as they are working and not getting paid in a timely manner. The law states that the workers should be paid within 15 days, but the payment is getting delayed for several months,” Khera said.

“Employment generation under MGNREGA is determined by the budget, rather than it being the other way around. In the past few years, the allocated budget for the scheme was exhausted within the first two quarters of the financial year. Wages for work provided in the second half of a financial year don’t get paid until additional funds are made available (sometimes only in the next financial year), and that translates into massive delays in wage payments,” added the development economist.

For the current financial year 2022-23, the budget is a meagre 0.3% of GDP. The MGNREGA budget as percentage of the total government expenditure has also decreased since FY 2021-22 and stands at 1.85% for FY 2022-2, which is just about half the level in FY 2020-21 (3.65%).

According to World Bank estimates, for the scheme to run robustly, the allocation must at least be 1.6% of the GDP.

This rise in numbers, believes Khera, of those seeking jobs through MGNREGA is also a reflection of the rural distress.

As of August 1, 2022, in these four months, 5.10 crore households demanded work, of which 4.31 crore households were provided work. The People’s Action for Employment Guarantee (PAEG) stated that the recorded unmet demand for employment is currently as high as 20.6%. That is, 1 out of every 5 households that have demanded employment in these four months was denied the same.

Around 3.16 crore households demanded work under the scheme in June 2022, which was slightly lower than 3.40 crore who had sought work during the same month last year. In May 2022, 2.4 crore households demanded work under the scheme, which was 9.9% higher compared to 2.2 crore in May 2021 and 31.2% more than 1.86 crore in April.