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Thursday, Sep 29, 2022

Government must plug gaps in MGNREGA — its failure will hurt rural incomes, which can turn into a drag on economy

The continued high demand for MGNREGA jobs is a reflection of this weakness. If not addressed, weak rural demand will become a significant drag on India’s overall growth story.

Ground-level activists and researchers have often argued that the budgetary allocations towards MGNREGA are routinely inadequate.

Since 2005, when the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was introduced by the UPA government, it has become one of the most important pillars of every government’s social protection strategy. The Act requires the government to provide 100 days of “guaranteed” employment — read unskilled manual labour — in a year to any rural household (or family) at minimum wages. However, ground-level activists and researchers have often argued that the budgetary allocations towards MGNREGA are routinely inadequate. Last week, two organisations — People’s Action for Employment Guarantee (or PAEG) and LibTech India — came up with several similar findings about MGNREGA’s implementation in the first half of the current financial year.

One, thanks to the MGNREGA budget being cut by 34 per cent in the current financial year, official data shows that 90 per cent of the annual allocation has already been exhausted. According to PAEG’s analysis, as of September-end, the leftover funds can cover at most 13 days of employment per household until the financial year ends in March. What had made matters worse is the fact that over Rs 17,000 crore of the total allocation of Rs 73,000 crore had to be used to clear the dues from the previous financial year. Further, after studying a representative sample of 18 lakh invoices across 10 states, researchers have found that 71 per cent of the payments were delayed beyond the mandated seven-day period at the central government level; 44 per cent exceeded 15 days. Since inadequate allocations and the resultant inability to clear the dues each year is a recurring issue every year, researchers argue that this suppresses genuine demand from workers, who are often discouraged to seek work as a result. Another key finding pertains to a March 2021 circular by the central government that required states to present separate caste-based bills for labour wages. This practice has not only made work more cumbersome for all officials throughout the chain but also resulted in caste-based delays. Non-SC, non-ST workers, who account for around 87 per cent of all workers, were facing much longer payment delays.

The government has reportedly rolled back the circular seeking separate caste-based payment orders. However, the questions about inadequate budgetary allocations and the resultant delays and suppression of genuine demand remain unanswered. While there is growing evidence that the formal economy is fast recovering from the ravages of the pandemic, the same cannot be said about India’s informal economy. The continued high demand for MGNREGA jobs is a reflection of this weakness. If not addressed, weak rural demand will become a significant drag on India’s overall growth story.

This editorial first appeared in the print edition on November 4, 2021 under the title ‘A job to be done’.

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First published on: 04-11-2021 at 04:21:51 am
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