A day after Prime Minister Narendra Modi said the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was a “living monument” of the Congress-led UPA government’s failures, Finance Minister Arun Jaitley gave a marginal hike to the scheme’s allocation from Rs 34,000 crore to Rs 34,699 crore, while promising to enhance the allocation by another Rs 5,000 crore if there is tax buoyancy.
The scheme, which promises hundred days of employment every year to each rural household, has been in the midst of controversy since the NDA took over, with activists and opposition parties accusing the government of trying to dilute the scheme and squeeze its funds.
“In spite of the consequential reduced fiscal space for the Centre, the government has decided to continue supporting important national priorities such as agriculture, education, health, MGNREGA, and rural infrastructure, including roads,” Jaitley said in his speech, adding that the government was “committed to supporting employment through MGNREGA”.
“We will focus on improving the quality and effectiveness of activities under MGNREGA,” he added.
The Finance Minister was careful to mention that this was an “initial allocation”, and said that if the government does manage to garner additional resources during the year from tax buoyancy, the allocation will be enhanced by another Rs 5,000 crore, taking it to Rs 39,699 crore.
While Jaitley claimed this would make it the highest-ever budgetary allocation for MGNREGA, the scheme had an allocation of Rs 40,100 crore in fiscal year 2010-11 — its highest so far.
However, given the scheme is demand driven, and the government is legally obliged to provide work to anybody seeking employment under it, any limit on allocation is technically redundant.
In 2014-15, the scheme’s allocation was slashed in the revised estimates to around Rs 31,000 crore from Rs 34,000 crore. In 2009-10, the scheme had an allocation of Rs 39,100 crore, which remained high till 2012-13, when it was slashed to Rs 33,000 crore and has since remained around the same. The scheme was introduced in February 2006.
The scheme’s performance in 2014-15 has been dismal, with less than 3 per cent households completing the promised 100 days of employment, over 70 per cent of the wages being delayed and households being provided employment for just over one-third of the mandated 100 days.
The overall budget for the Rural Development Ministry in 2015-16 has, however, been slashed significantly by around Rs 10,000 crore as against the 2014-15 Budget Estimates.