To provide work to migrants returning from cities to villages, the Central government on Sunday provided an additional Rs 40,000 crore to the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) for 2020-21, which will take the scheme’s allocation for the year to Rs 1.015 trillion, of which Rs 11,500 crore has to be spent on clearing pending dues from the previous year.
Excluding the pending dues, spending on the scheme is estimated to be Rs 90,000 crore.
The 2020-21 Union Budget had allocated around Rs 61,500 for the MGNREGS. Of this, according to government estimates, around Rs 23,119 crore, almost 38 per cent, has been released by the Centre to the states in the first 45 days of 2020-21.
Moreover, apart from increasing the Budget, Union Finance Minister Nirmala Sitharaman also said that the MGNREGS works would continue during the monsoon months as well to address the needs of the returning migrants.
The extra fund allocation could also work towards improving work provided under the scheme which has seen a massive slump in April and May partially due to the lockdown and also due to closure of several sites.
Work generated under the MGNREGS fell to a low of 116.5 million persondays in April 2020 as against 273.96 million in the same month last year, a drop of almost 58 per cent.
The additional allocation will enable nearly 300 crore persondays of work in 2020-21, almost 7.04 per cent more than the initial estimate of 280.26 crore persondays of work in 2020-21. This will mean that on average around 25 crore persondays of work can be provided under the scheme depending upon the demand each month.
So far in May 2020 till the 16th, around 53 million persondays of work has been provided under MGNREGA in 2020, while in 2019 around 369.53 million persondays of work was provided during the entire month of May.
The estimated average cost per day per person for the scheme for this year is Rs 296.34, which translates into a revised expenditure of around Rs 89,000 crore.
So far, according to the MGNREGA website, of the Central government released of over Rs 23,000 crore for the scheme to the states over Rs 11,500 crore has been spent by them, while the remaining is still in balance.
“Around Rs 11,500 crore of what was announced in the budget this year will go towards clearing last year's arrears. Rs 40,000 crore extra allocation announced today is a good start, but the Government should commit to making more available,” said Reetika Khera, professor at the Indian Institute of Management, Ahmedabad.
She said the announcement regarding keeping works open during the monsoon is very important as monsoon is the 'hungry season', when people's food stocks run out. MGNREGA works go down during the monsoon season as labour shifts to farming operations.
Khera said the extra fund allocation must be combined with simplification of the MGNREGS to ensure that people get work easily and paid on time.
Rajendran Narayanan, assistant professor at Azim Premji University, Bengaluru, said this was a good start but much more needed to be done.
“This is the first step but much more needs to be done and how the work demand pans out needs to be watched in the next two-three months,” Narayanan told Business Standard.
Meanwhile, CARE Ratings said the Rs 40,000 crore can potentially cover 20 million of migrants who can take 100 days’ employment, provided there are projects.