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~11,500 crore spent on clearing previous dues; FY21 Budget provided for ~61,500 crore

To give work to migrants returning from cities to villages, the central government on Sunday provided an additional ~40,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) for 2020-21.

This will take the scheme’s allocation for the year to ~1.015 trillion, of which ~11,500 crore has to be spent on clearing dues from the previous year.

Excluding the pending dues, spending on the scheme is estimated to be ~90,000 crore.

The 2020-21 Union Budget had allocated around ~61,500 for the MGNREGS. Of this, according to government estimates, around ~23,119 crore, almost 38 per cent, has been released by the Centre to the states.

Union Finance Minister Nirmala Sitharaman also said work under the MGNREGS would continue during the monsoon months to address the needs of the returning migrants.

Extra allocation could improve work under the scheme, which has seen a massive slump in April and May partially due to the lockdown and also owing to the closure of several sites.

Work generated under the MGNREGS fell to a low of 116.5 million persondays in against 273.96 million in the same month last year, a drop of almost 58 per cent.

Additional allocation will create nearly 3,000 million persondays of work in 2020-21, almost 7.04 per cent more than the initial estimate of 2,802.6 million.

This means, on average, around 250 million persondays can be provided under the scheme, depending upon demand.

So far around 53 million persondays of work has been provided under the MGNREGS in 2020, while it was around 369.53 million persondays in May last year.

The estimated average cost per day per person for the scheme for this year is ~296.34, which translates into a revised expenditure of around ~89,000 crore.

So far, according to the MGNREGS website, of the Central government release of more than ~23,000 crore to the states, over ~11,500 crore has been spent by them. The rest is in balance.

“Around ~11,500 crore of what was announced in the Budget this year will go towards clearing last year’s arrears. The extra allocation of ~40,000 crore, announced today (Sunday), 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 was important because it was the “hungry season”, when people’s food stocks ran out.

Work under the MGNREGS goes down during the monsoon as labour shifts to farming operations.

Khera said extra fund allocation must be combined with simplifying the scheme to ensure people got work easily and were paid on time.

Rajendran Narayanan, assistant professor at Azim Premji University, Bengaluru, said this was a good start but more needed to be done.

Meanwhile, CARE Ratings said the ~40,000 crore could cover 20 million migrants, who can take 100 days’ employment if there were projects.