GoI 'violating' NREG Act, unpaid wage dues to reach Rs 21,000 crore by March 2022

Percent of initial NREGA budget spent in clearing past dues

By A Representative 
A civil rights group, Peoples' Action for Employment Guarantee (PAEG), in a report ahead of the budget for financial year (FY) 2022-23 has said that though the destructive impact of the Covid-19 pandemic on health has impacted the poor most, and the Mahatma Gandhi National Rural Employment Guarantee Act (NREGA) has acted as a crucial shock absorber for the rural poor, the implementation of the Act is dogged by poor budgetary allocation and delayed wage payments.
“For instance, persondays generated increased by 46% in FY 2020-21, compared to the previous FY or financial year”, it says adding, “The persondays generated this FY till December 2021 have already exceeded FY 2019-20’s total persondays by 10%. In fact, the true demand is even higher than the nationally reported demand, the reasons for which are explained in an earlier PAEG tracker.”
Stating that “the FY 2020-21 ended up with unpaid dues of over Rs 17,000 crore despite an allocation of Rs 40,000 crore in addition to the original allocation of Rs 61,500 crore”, the report says, this is one reason why PAEG and the NREGA Sangharsh Morcha recommended a budget allocation of at least Rs 1.5 lakh crore for FY 21-22 to honour the demand driven nature of the Act.”

“However”, it regrets “Despite persistent need for work, the government allocated only Rs. 73,000 crore, 26% of which corresponded to previous years’ dues. Within the first half of FY 2021-22, NREGA coffers had become empty. PAEG’s half-yearly tracker showed that many states had a negative balance.”

Pointing out that “this prompted the government to allocate an additional Rs 25,000 crore in December 2021”, the report says, “However, official data as of January 24, 2022, shows that only Rs 7,114 crore of those Rs 25,000 crore has been released. 

So far, less than 5% of households employed have completed 100 days of work in the current FY”, while the official data suggest that “the number of households who have worked in this FY is 6.69 crore, whereas only 29 lakh households have completed 100 days of wage employment as of January 25, 2022.”
On an average, the report says, “Over the past five years, 20% of the budget has gone into clearing the arrears of previous years. The unpaid dues this year are already at Rs 12,494 crore. Assuming the expenditure trend so far in this FY continues, we estimate that over Rs 21,000 crore would be pending at the end of FY 2021-22.”
The the report notes, the MGNREG Act states in Chapter III, Paragraph 6, Section 2, “that wages must be at least as much as the minimum agricultural wage for each state. In our estimation, we take the minimum agricultural wages announced by the various state governments as given in Aggarwal & Paikra (2020) and adjust them by 5% for inflation in every successive FY. Using the number of active job cards in each state as weights, we estimate that the national average minimum wage rate is Rs 269.”

Taking Rs 269 as the wage rate, the report estimates that “the minimum budget for FY 2022-23 must be Rs 2.64 lakh crore, to provide legally guaranteed 100 days of work per household for at least those that worked in the current FY”, insisting, “This is a conservative estimate that considers only households that were employed this year – a mere 67.34% of the total active job cards as on January 24, 2022 – at the estimated minimum wage rate.”
Pointing towards “delays in wage payments”, which have persisted in NREGA for many years now, “and are a consequence of inadequate funds allocation as acknowledged by the Ministry of Finance itself”, and even “the Act stipulates that wages must be credited to the workers’ accounts within 15 days of completion of work”, the report says. 

Yet, the Government of India (GoI) “continues to violate the Act” as also Supreme Court orders “by not paying wages on time and not paying the corresponding delay compensation as mandated by the Act.”
Stating that “the delay compensation is rarely paid”, the report says, “Only 1.69% of payable compensation has been paid this year.” In fact, “This FY, the Centre took longer than the stipulated 7-day period to process 50.2% of wages – although we don’t know the extent of the delay.”
“Currently, 13% of transactions are pending, amounting to more than Rs 7,047 crore. Not paying wages on time is akin to forced labour and violates several fundamental rights of crores of workers”, it insists.