Increased outlay may not cover NREGS dues as work demand grows unabated

A significant amount of dues under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is expected to be accounted for next fiscal year as demand for work continues unabated under the scheme in rural areas.

This is despite a hefty jump in the revised projection of spending to Rs 1.11 trillion for 2020-21.

Experts say this means from next year’s budget allocation of Rs 73,000 crore for the MGNREGA, 15-20 per cent could go in clearing the pending dues as has been the practice in the past as well.

“In the last five years, on average, 20 per cent of the Budget has been used to settle the pending liabilities of previous years. If we expect the same thing in the coming fiscal year, then essentially around Rs 60,000 crore will be left to generate employment,” a statement from People’s Action for Employment Guarantee (PAEG) said some time ago.

“This year the pending wages will be much higher than in previous years, which will further add burden to the rural population. Since most of the rural households have exhausted their savings, a delay in getting wages will have its own consequences, which could compel them to take loans provided at usurious rates,” M S Raunaq, secretary, PAEG, told Business Standard.

This fiscal year also, of the amount allotted, around Rs 13,760 crore was spent on clearing the pending dues of the previous year.

Therefore, despite an almost 81.3 per cent jump in the revised estimates for the MGNREGA in 2020-21 over the budget estimates, due to demand for extra work in rural areas, funds available for spending on the scheme this year were around Rs 98,000 crore. Of this, a significant portion, around Rs 94,000 crore (around 96 per cent), was spent till February 19, the scheme’s website showed, as work demand continues to remain significantly higher than in 2019-20. Though much lower than in the peak months of May, June, and July, demand remains robust.

In January 2021, around 26.28 million households sought work under the scheme — 39.12 per cent more than in the same period last year.

Based on the approved labour budget of 3,543 million persondays and average cost per person per day of Rs 283.19, expenditure on the scheme is estimated to be around Rs 1.003 trillion so far.

With more than a month and a half to go in the fiscal year, the data showed in December 2020 and January 2021, less than 80 per cent of households which demanded work under the MGNREGA got it. It was over 85 per cent since April 2020.