Extra NREGS funding may not be enough if work demand stays robust: Experts

Expenditure on the scheme has been around Rs 77,634 crore till October end

As demand for work under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) stays robust this financial year despite a visible pickup in economic activities, signifying a worrying trend in the rural job market, the central government is planning to pump in more funds into the scheme to keep it functional for the rest of 2023-24.
 

Till the end of October, according to the data collated from the MGNREGA website, expenditure on the scheme has been around Rs 77,634 crore while funds of around Rs 68,014 crore are available, reflecting a shortfall of around Rs 9,619.53 crore.
 

The Centre had allocated around Rs 60,000 crore for the scheme in the FY24 Budget Estimates (BE). To make up for the deficit, reports said an allocation of Rs 10,000 crore was made recently while another Rs 18,000-20,000 crore could come later.
 

However, whether this additional infusion would be sufficient to take care of the demand for the next five months or, just like in previous years, some portion of expenditure would be carried forward to the next financial year remains to be seen.

 

This is also because the first tranche of Rs 10,000 crore will be exhausted to wipe off the existing deficit.
 

A conservative estimate shows the money required to provide at least 50 days of employment to all active households this financial year is more than Rs 1.56 trillion at current wage rates and expenditure per person.
 

The data sourced from the website shows till the end of October, around 2,069 million person days of work has been generated as against 1,884 million during the same period last financial year, showing an increase of 9.8 per cent.
 

Till the end of FY23, around 2,957 million person days of work was generated under the scheme.
 

Now, assuming the same trend holds for the remaining five months of 2023-24, around 1,178.4 million person days of work could be generated between now and March.
 

The average cost per person per day in FY24 is Rs 321.
 

This means to meet the projected person days of work (1,178.4 million multiplied by 321), around Rs 37,826.6 crore will be required. The additional money expected to be allocated is Rs 28,000-30,000 crore. With Rs 10,000 crore already used to wipe off the deficit,  the balance will be available to meet fresh demand.
 

The number of person days of work that can be generated with this balance is around 579 million as against the estimated 1,178.4 million person days. Just around six days of average employment can be provided per household nationally.
 

So far, in the first seven months of FY24, average employment provided per household nationally, according to the website, is around 40.63 days.
 

This means around 46 days of average employment could be provided per household with the allocated funds and additional infusion.
 

The MGNREGA gives legal rights to a minimum of 100 days of average employment.
 

“The central government consistently asserts that the MGNREGA operates on a demand-driven model with ample funds. However, the reality is different. Whenever the funds are depleted, activities stop. It’s crucial for the government to ensure a sufficient and continuous flow of funds to fulfil the true spirit of the MGNREGA as a legal guarantee,” Chakradhar Buddha, senior researcher at LibTech India, told Business Standard.
 

LibTech India is a group of social scientists, activists, engineers, and data scientists who have been working on various aspects of the MGNREGA across several states.