Rural development minister Birender Singh Chaudhary has written to Finance Minister Arun Jaitley asking him to urgently release an additional Rs 5,000 crores for the Mahatma Gandhi Rural Employment Guarantee Scheme so that states – several of which are facing a drought for the second successive year – can address increased demand for work in the rural jobs scheme.
Chaudhary noted that states had already spent 95% of the funds allotted in the last budget as they faced a greater demand for wage employment in a year of farm distress. Only 5% of funds are left for the remaining three months of the fiscal year. This situation could mean wage disruptions and a shutting down of public works for three months in 12 states.
Under the scheme, the government provides a guarantee of upto 100 days of wage employment in villages to any household willing to do manual work. This year, the ministry has allowed six states that have notified a drought to provide an additional 50 days of employment under the scheme in the areas where farmers are facing distress.
The rural development minister wrote that the number of person-days, that is the estimated amount of work done by a person in one working day, had gone up up significantly compared to the previous year. As more states notify a drought, it is expected to rise.
Chaudhary's letter to Jaitley dated December 31 was accessed under Right to Information by Aruna Roy and Nikhil Dey, activists with Mazdoor Kisan Shakti Sangathan. The activists said the repeated shortage of funds was a blatant violation of the legal guarantee behind the programme. As per the Mahatma Gandhi National Rural Employment Guarantee Act, the government is obliged to provide wage employment to any one seeking work so legally fund cuts cannot be a reason to turn the rural poor away from work under the programme.
In the letter, the rural development minister noted that of the Rs 34,699 crores allocated in 2015-'16, the central government had already released Rs 33,448 crores. Of this states had spent Rs 31,830 crores, or 95% of the amount released.
The minister said that Rs 6,300 crores more were required and sought more funds, referring to Jaitley's budget speech last year in which he had promised that additional funds of Rs 5,000 crore would be provided to the scheme. “Since MNREGA is a demand-driven wage employment programme and funds are required to be released to the states on demand being raised at field level, I request you to provide Rs 5,000 crore over and above the budget provision of Rs 34,699 crore under MNREGA,” he wrote.
Till last year, rural households were getting just 30 to 40 days on an average, a little over one-third of the mandated 100 days of employment under the scheme. This year, Chaudhary said the person-days had picked up.
“During the second and third quarter of this financial year, person-day generation has been 36% and 8% more than the corresponding period in 2014-15,” he noted, adding that the 8% was likely to rise as the data entry was still on.
Chaudhary's letter was the second letter sent by the rural development ministry to the finance ministry over the issue. A week before it, on December 23, JK Mohapatra, the secretary in the ministry of rural development, had written to Ratan P Watal, secretary of the finance ministry's department of expenditure, alerting him to a funds crunch in the programme.
Data from the rural development ministry shows that 12 states have already exhausted their funds for this fiscal year. These include Andhra Pradesh, Odisha, Chhattisgarh, Uttar Pradesh. These states , have 1.82 crore workers currently on muster rolls. “If funds are released immediately, 1.82 crore MNREGA workers will not get paid till April,” said Nikhil Dey, an activist with Mazdoor Kisan Shakti Sangathan. “In 2014-'15, during the first year of the Modi government, funds were not being released as per demand, no works were opened. It had an effect till the first quarter of this year, disrupting workers' wages.”
The MNREGS was introduced in 2006. In 2009-'10, the scheme had an allocation of Rs 39,100 crore. But in 2012-'13, it was slashed to Rs 33,000 crore. Dey pointed out that just adjusting for inflation would require allocating Rs 60,000 crore to the scheme at present, whereas the current budget was much smaller at a little over Rs 34,000 crore. “This is in sharp contrast to the additional resources of over Rs 1 lakh crore that will go to government servants in 2016-'17, including Rs 39,000 crore just in salary increases,” he noted.
Activist Aruna Roy said Prime Minister Narendra Modi's statement in the last parliament last year in which he had criticised MNREGA as a “living monument of Congress's failures” had triggered a grassroots campaign to preserve and expand the programme, while farm distress had led to more demand for work.
Economist Jayati Ghosh said that as India is facing decline in export demand, low investment, and slowing down of urban demand, the MNREGA had the potential to stimulate rural demand, which could lead to higher growth for industry as well.
The finance minister is set to meet civil society groups for a pre-budget consultation on the social sector scheme on January 12.
Earlier, on January 4, the official account of the ministry of finance had quoted the Finance Minister Arun Jaitley as saying there was a need to "re-energize MNREGA".