MGNREGS funds fast drying up as demand surges amid Covid

60% of increased allocation exhausted in five months

Funds allocated for the Mahatma Gandhi National Rural Employment Generation Scheme (MGNREGS) are fast drying up even as the project continues to attract a sizeable chunk of the rural workforce.

Almost 63 per cent of the increased allocation of around ~1.01 trillion has been spent in the first five months of 2020-21.

With more than six months to go for the fiscal year to close, experts said if 100 days’ of employment per year, as mandated by law, was to be provided, this expanded allocation too might be insufficient and exhausted by December or January.

The MGNREGA (Mahatma Gandhi National Rural Employment Generation Act) website shows that as of September 8, about ~63,511.95 crore has been spent on the scheme while the amount available (which includes the states’ share) is around ~63,176.43 crore, leaving a shortfall of about ~335.52 crore.

In some big states such as Chhattisgarh, the negative balance (the difference between the funds available and expenditure) is almost ~3,200 crore, according to the website, while in states such as Bihar it is around ~224.24 crore. In Odisha, the balance of ~70 crore is due to be paid.

Though the negative balance changes quickly as funds are cleared almost daily, the trend does point towards a slowdown in release.

The Central government in its 2020-21 Budget had allocated around ~61,500 crore for the scheme. This was almost 13.3 per cent lower than the revised estimate of 2019-20.

However, with demand for MGNREGS works surging during the lockdown as migrant labourers returned to their villages, the Central government enhanced the allocation by ~40,000 crore.

This made the 2020-21 allocation the highest ever in the scheme’s history. Of this, around ~16,000 crore pertained to the previous year’s liabilities, leaving around ~86,000 crore for fresh expenditure this year.

“The Centre should immediately release the enhanced allocation of ~40,000 crore, or else the payment will start getting delayed,” said Rajendran Narayanan, assistant professor at the Azim Premji University, Bengaluru. He said if at least 100 days’ employment was to be provided, more funds would be required.

So far, around 58 million households have worked under the scheme in just the first five months, while the average full-year number in the last five years is 52-53 million. This is seen against the fact that civil society activists are saying around 15.5 million people who have demanded work haven’t got any.

So far, on average around 34 days of work has been provided in the first five months, while it has been 48-50 days in the past few years.

Meanwhile, the data shows that work demand under the scheme has shown a steady decline since July as casual labourers got engaged in farming activities, where wages are higher and also migrants returned to their workplaces in cities after the lockdown was lifted. In August, around 22 million households demanded work under the scheme. This was 44 per cent less than in July but 56 per cent more than in the same period last year (August 2019). This was the highest such demand in many years.