The
Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is
meant to be demand-driven in the sense that work should be made
available to anybody on demand for a maximum of 100 days per year per
household. This implies that there cannot be arbitrary cap on the
budgets. However, the programme has been made supply-driven and stifled
due to — (a) Insufficient budgets, (b) Lack of timely payment of wages,
and (c) Low wage rates, among others.
Insufficient Budgets
At
an average cost per day person of Rs 255.08 and including pending
liabilities of Rs 8707 crores from previous years, the allocation for
2018-19 should at least be Rs 74,805 crores. However, the total
available budget in 2018-19 is only Rs 50,480 crores. As on 22nd
October, 2018, about Rs 39,825 crores have already been spent. The total
payments due for this financial year (FY) is Rs 3668 crore. Thus about
86% of the available funds for MGNREGA in this FY have already been
spent. We still have 5 months left in this FY.
Contrary to lofty
claims of “highest ever budget for MGNREGA” made by the Finance
Minister, after adjusting for inflation, the MGNREGA fund allocations
have actually decreased over the years. Independent estimates had
indicated that at least 1.7% of the GDP needs to be allocated for the
programme to run robustly. In reality the allocation has only been
around 0.25% of the GDP in each of the last 5 years. The
inflation-adjusted budget for 2018-19 is much lower than in 2010-11.
This is even more pitiful as the Centre claims that the tax to GDP ratio
has been increasing and so the reasons for the gross underfunding of
the Act is unacceptable. Table 1 in the annexure gives the MGNREGA
budget over the years as a percentage of GDP.
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