MGNREGA, Once A “Living Monument” Of UPA’s Failures, Must Survive And Thrive

“After so many years in power, all you were able to deliver is for a poor man to dig ditches a few days a month,” PM Modi said in Parliament in 2015.

“My political instincts tell me that MNREGA should not be discontinued, because it is a living memorial to your failures. After so many years in power, all you were able to deliver is for a poor man to dig ditches a few days a month.”

Prime Minister Narendra Modi said this in parliament in 2015, mocking the opposition benches, as treasury benches laughed and applauded him.

Prime Minister, through his comment, took a dig at the earlier UPA regime and its flagship policy- The Mahatma Gandhi National Rural Employment Guarantee Act 2005 (MGNREGA).

What is MGNREGA?

MGNREGA is an Indian labour law and social security measure that aims to guarantee the ‘right to work’. This act was passed in 23 August 2005 under the UPA government of Prime Minister Dr. Manmohan Singh.


It aims to enhance livelihood security in rural areas by providing at least 100 days of wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work.

MGNREGA continues

Despite PM’s remark in 2015 calling the scheme “living monument” of UPA’s failure, the Modi government’s Finance Minister Arun Jaitley said that his ministry had decided to increase the Mahatma Gandhi National Rural Employment Guarantee (MGNREGA) fund to Rs 34,699 crore.

The allocation to the scheme further increased in 2016 to Rs 38,500 crore. The government raised the allocation in 2017 by whopping Rs 9,500 crores to Rs 48,000 crores. The allocation to the scheme continued to increase in the following years. For FY2020-21, the total estimated expenditure for the scheme was at Rs 71,000 crore.

Rise in India’s spending on rural employment program.


MGNREGA in lockdown

After Prime Minister Narendra Modi imposed a nationwide lockdown in March 2020 in the wake of the Covid-19 pandemic, the informal sector was dealt a huge blow. Migrant labourers, who worked in metro cities away from their hometowns, were forced to return back to their homes. Out of job because of the pandemic, not all migrants labourers could survive on the free ration distributed by the government. Many of them signed up for the MGNREGA scheme to earn something to feed their families.

The unemployment situation, which was already the worst in 45 years before the pandemic, worsened after the total lockdown. Corporates, media houses, organisations fired their employees to cut down spending as uncertainty loomed over the country.

In some cases, graduates, even MBAs were forced to take up MGNREGA jobs to earn living because of the unemployment.

For the FY2021-22, the government has further increased its allocation to MGNREGA to Rs 73,000 crore. This was substantially lower than the actual expenditure of Rs 1.11 lakh crore in the current fiscal, which included an additional outlay of Rs 40,000 crore given by the government.

The fact about MGNREGA is that it kept the rural economy afloat during the lockdown. District administrators used the scheme to offer employment in lockdown under MGNREGA to many of those migrant workers who had returned from cities. Despite the PM’s disliking towards the scheme, his administration continued to use the scheme and arguably benefited from it during the crisis. MGNREGA, the “living monument” of the UPA’S failures, came to Modi government’s help after its disastrous lockdown decision.

However, a recent report suggested that the government, in the middle of a financial year, has run out of funds to continue the scheme.

No funds for MGNREGA?

According to The Hindu’s report on October 29, the Centre’s flagship rural employment scheme has run out of funds halfway through the financial year, and supplementary budgetary allocations will not come to the rescue for at least another month when the next Parliamentary session begins. According to its own financial statement, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme shows a negative net balance of ₹8,686 crore.


Women working under MGNREGA at worksite in Surguja, Chattisgarh. (Raghav Puri/ The India Forum)


This means that payments for MGNREGA workers as well as material costs will be delayed, unless States dip into their own funds. Activists say the Centre is condemning workers to “forced labour” by delaying wage payments at a time of economic distress. However, the Centre is now accusing many States of “artificially creating demand” for work on the ground.

The centre bad intentionally kept the allocation of MGNREGA at just Rs 73,000 crore despite clear indication that people were enrolling for the scheme in increasing numbers. The centre argued that the nationwide lockdown was over and that supplementary budgetary allocations would be available if money ran out. As on October 29, the total expenditure including payments due had already reached ₹79,810 crore, pushing the scheme into the red. Already, 21 States show a negative net balance, with Andhra Pradesh, Tamil Nadu and West Bengal faring the worst.

Centre clarifies

A day after The Hindu’s report, the Rural Development Ministry on Saturday said the Centre is committed to releasing funds for proper implementation of its flagship MGNREGA scheme.

“The Government of India is committed to release funds for wage and material payments for proper implementation of the scheme, as per provisions of the Act and guidelines applicable for the Central and the State Governments. Whenever additional fund is required, the Ministry of Finance is requested to provide the funds,” said the Ministry, adding that last year, the Finance Ministry had allocated ₹50,000 crore additional funds over and above the initial budget estimate.

“During the current FY, so far more than ₹63,793 crore funds have been released for the implementation of the scheme in the States/UTs. Currently ₹8,921 crore funds are available which can meet the wage liability equal to this current availability,” it said.

MGNREGA, the lifeline of India during pandemic

Out of 1.23-crore migrant workers who returned to their home States in 2020, 67 per cent were from five States — Uttar Pradesh, Bihar, West Bengal, Rajasthan and Odisha. And these States received about ₹62,194.79 crore or 40 per cent of the Central funds under MGNREGS in 2020-21 and 2021-22 (as of August 5, 2021).

According to data, the number of people wanting to work under the scheme increased during the lockdown.


Worker at MNREGA worksite during lockdown.


During 2020-21, a total of 1.89 crore new job cards were issued, while 56.47 lakh job cards had been issued this fiscal till August. During 2020-21, a total of 389 crore person-days were generated which is 47 per cent more than that in 2019-20.

Crucial decision

With remaining Rs 8,921 crore fund, the centre could hardly run the scheme for a month. Though centre plans to make supplementary allocations for the scheme, as mentioned earlier, such supplementary budget allocations can only be approved by the next session of Parliament, which is scheduled to begin in a month’s time. However, with almost five months left for the end of the financial year, the centre needs to make a sufficient allocation to the scheme.

The centre must also realise that 34% reduction in MGNREGA allocation compared to the last year has led towards this mismanagement. When the people enrolling for the scheme are increasing in numbers with many of them being turned down the cards, it becomes necessary that the centre, which has refused to make direct monetary transfers to boost demand, makes honest efforts to keep the scheme running with sufficient supplementary allocation, which can not only sustain the already employed numbers but also helps more families come under MGNREGA’s umbrella to keep rural economy up and running.



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