'Grossly inadequate': NREGA allocation 0.29% of GDP, World Bank recommended 1.6%

By Rajiv Shah

A civil society tracker, seeking to periodically analyse the implementation of the Mahatma Gandhi Rural Employment Guarantee Act (NREGA), has said that NREGA budgetary allocation is only 0.29% of GDP and 1.85% of the total government expenditure of the financial year 2022-23, which is grossly inadequate. Thus, “As per estimates of researchers of the World Bank, for NREGA to run robustly, its allocation must at least be 1.6% of the GDP.”
Prepared by the People’s Action for Employment Guarantee (PAEG), a group of activists, academics and members of people’s organizations, who came together to advocate for NREGA in 2004 in order to catalyse discussion and strengthen the top Government of India rural jobs guarantee scheme, the tracker states, the NREGA budget as percentage of the total government expenditure has also decreased -- it stands at 1.85% for FY 2022-23, just about half the level in FY 2020-21 (3.65%).
The tracker, titled “Meagre Funds and Unlawfully Low Wages: How the MGNREGA is Being Squeezed”, says, “The programme guarantees 100 days of employment to each household at minimum wages. Yet, the provisioning has been significantly less than required, despite soaring demand for employment in recent years.”

The tracker raises the alarm, “By July 21, 2022, the Union government has already exhausted two-thirds of its budget, with eight months remaining”, predicting, “The pending dues are expected to increase.” It adds, “Pending payments at the end of FY 2021-22 amount to 16% of the budgetary allocation for FY 2022-23. Except for the pandemic year, FY 2020-21, the pending payment has been higher than 15%.”
Pointing out that “each year, a significant proportion of the budget allocated to NREGA is used to pay for previous years’ pending liabilities, leaving the budget remaining grossly inadequate for the current financial year”, the tracker notes, “In FY 2022-23, Rs 11,464 crore has been spent as on July 31, 2022 to clear previous years’ liabilities.”
“Another worrying concern”, says the tracker, is that “the NREGA wages have not increased in tandem with inflation. When we look at the national average, we find that the percentage increase in NREGA wages was about 4.7 percentage points less than the average rural inflation rate. Only in Kerala, Karnataka and Bihar was the percentage increase in NREGA wages higher than the rural inflation rate.”

Further, the tracker notes, “NREGA wage rates remain much below the need-based national minimum wage of Rs 375 recommended by the expert committee under the chairmanship of Anoop Satpathy in early 2019. Average daily NREGA wage per personday is 13.8% less than the national average notified NREGA wage rate. While this difference is close to 0 in some states, it is about 40% in Telangana.”
The tracker asserts, “In its pre-budget statement, the PAEG warned that with the pending dues of over Rs 21,000 crore by the end of FY 2021-22, and a meagre budget of Rs 73,000 crore for FY 2022-23, the programme would be able to provide employment of only 21 days on minimum wage to each household that demanded work in FY 2021-22.”
It adds, “The immediate result of the budget shortfall is reflected in the fact that the recorded unmet demand for employment is currently as high as 20.6%. That is, one out of every five households that have demanded employment in these four months has not been provided employment.”

Asserting that it had recommended budgetary allocation of Rs 2.69 lakh crore for the programme”, the tracker insists, “The government can and must allocate this much in order to ensure those who demand work under NREGA are employed for 100 days and are paid the minimum wages for their work, as guaranteed in the Act.”
It continues, “Recently, the government reduced the corporate tax rates by 8-10% that resulted in a revenue loss of Rs 2.09 lakh crore. Despite such high levels of corporate tax cuts, corporations have not created significant employment, while they have been registering record profits year after year. The tax cuts have also not increased investment, or thereby demand.”
Meanwhile, it says, “Unemployment rates have reached record highs and demand for NREGA work is still higher than pre-pandemic levels. At present, the economy is in a downturn and employment has still not recovered to pre-pandemic levels. Steep levels of unemployment and inflation add further distress to an already Covid-affected rural poor.”
“In such a situation”, the tracker believes, “NREGA becomes a crucial safeguard that ensures that poor workers can have at least some minimal incomes and security, by guaranteeing them the right to work. The Act specifies that up to the limit of 100 days of work per household, the actual employment provided must be driven by the demand for work, and not constrained by prior budgetary allocations.”
The tracker accuses the Government of India for “constantly allocating inadequate funding for NREGA” and “not providing funds as required by states”, which is in contravention of “both the letter and the spirit of the Act...” The result is, “In addition, by illegally fixing low wage rates, and not paying even these low wages fully, it has also slowly eroded workers’ interest in the Act. If the current trend continues, it will not be long before the Act becomes a hollow shell.”

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