Covid-19 Economic Package: MNREGA Budget Raised To An All-Time High Of Rs 1 Lakh Crore

The budget for MGNREGA would be raised by Rs 40,000 crore over and above 2020-21 budget allocation of Rs 61,500 crore.

The Indian government has raised the allocation of its flagship rural employment guarantee scheme amid concerns that employment opportunities will decline due to the impact of Covid-19. Significant reverse migration from urban areas back to rural areas is also expected to lead to increased demand for work under the Mahatma Gandhi National Rural Employment Guarantee Scheme.

Announcing the final tranche of a Rs 20 lakh crore economic relief package, the government said the budget for MGNREGA would be raised by Rs 40,000 crore over and above 2020-21 budget allocation of Rs 61,500 crore.

As such the budget for rural employment guarantee has been raised to over Rs 1 lakh crore.

“A lot of workers are going back to their villages and we have made provisions so that they can enroll in MNREGA. This way we will ensure that during the monsoon season, since many workers have gone back to the villages, they will get jobs,” Finance Minister Nirmala Sitharaman said at a press conference on Sunday.

According to data available on the MNREGA website, close to 265.4 crore person days worth of employment was provided under the scheme in 2019-20 compared to nearly 268 crore person days worth of employment in the previous year. Since April this year, over 16.9 crore person days worth of employment has been provided under the scheme.

Given the restrictions imposed during the nationwide lockdown, which began in last week of March this year, employment under the flagship rural jobs guarantee programme fell to a five-year low last month, BloombergQuint reported on April 29. Since then, the government has clarified that work under the rural guarantee scheme can continue under physical distancing guidelines.

The increase in budget and the decision to continue work in the monsoon season is a “good start”, said Reetika Khera, professor at Indian Institute of Management, Ahmedabad.

About Rs 11,000 crore of what was announced in the budget this year will go towards clearing last year’s arrears. Rs 40,000 crore is a good start but the govt should commit to making more available.The announcement regarding keeping works open during the monsoon season is very important. The monsoon is the ‘hungry season’, when people’s food stocks run out. Generally, MGNREGA used to close at that time so it doesn’t compete with the agricultural labour market.
Reetika Khera, Professor, IIM-Ahmedabad

According to a January report from the Accountability Initiative of the Centre for Policy Research, the pending liabilities under MGNREGA have risen steadily from Rs 591 crore in FY15 to Rs 4,193 crore in FY19. Till the end of the third-quarter of FY20, total payments due stood at Rs 6,430 crore, the report said.

"Over the years, the amount of pending liabilities due or expenditure incurred by states over and above their funds available has been increasing. These liabilities have accumulated as a result of delays in payments for both wages and material costs and are to be reimbursed by the government,” it said.

Khera added that the increased allocation must be combined with simplification of MGNREGA to ensure that people get work easily and get paid on time. “This includes keeping one large worksite open in each village, removing the requirement to demand work, and even cash payment of wages,” she said.