NREGA Budget for 2021-22 Insufficient to Meet Work Demand, Say Advocacy Group

The Union Budget of 2021-22 has acknowledged the challenge of reviving growth but largely failed to address the challenge of increasing inequality and declining welfare during the pandemic, the People's Action for Employment Guarantee (PAEG) said in a detailed statement on Wednesday.

The People's Action for Employment Guarantee (PAEG) is a group of activists, academics and members of peoples' organisations that came together in 2004 to advocate for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).

In its statement, PAEG said that in the context of the economic havoc caused by the pandemic, the Union Budget of 2021-22 was expected to continue and increase support for MGNREGA, continue increased food subsidies at least for another year, launch a comprehensive round of cash transfers, and introduce a new urban employment guarantee programme. “Any or all of these would have had two important effects – directly, they would have helped in compensating those who have lost several months of work and earnings, and indirectly, they would have increased demand in an inclusive way. However, these expectations were not fulfilled,” PAEG said.

The statement further said that before the onset of the pandemic itself, a minimal allocation of Rs 1 lakh crore for MGNREGA was needed to mitigate the unemployment and agrarian distress. The scheme along with a large coverage by the National Food Security Act (NFSA) made sure that rural India was able to absorb the shock of the lockdown better than urban India. Thus, it was expected that the MGNREGA will get a crucial fillip from the budget, PAEG said.

“The initial budget estimate for MGNREGA in 2020-21 was Rs 61,500 crores. As part of the stimulus package during the lockdown, the Finance Minister announced an additional allocation of Rs 40,000 crores. While this was a welcome step, it was inadequate. Given the massive dearth of employment opportunities, the labour budget of MGNREGA underwent many revisions in the last few months. It now stands at 349 crore persondays (PD) out of which 321 crore PD have already been generated leaving just 6% of the labour budget to last till the end of FY 2020-21,” the statement said and also cited surveys to show that the additional allocation of Rs 40,000 crores has been insufficient to meet the increased work demand.

The PAEG calculated that for the financial year 2021-22, although Rs 73,000 crore allocation for MGNREGA seems greater than the original allocation of Rs.61,500 crore for 2020-21, it is actually 34.5% lower than the revised estimate of Rs 1,11,500 crore.

In another calculation, fixing the average cost per day per person at Rs 278 (official cost from FY 2020-21), PAEG concluded that the current budget allocation could only generate 262 crore PD of work, which is 15 crore PD lower than the approved labour budget of 2019-20. Additionally, the group expressed concerns over working conditions and wages as the job market shrinks in cities along with a surplus of labour hitting the market. “This was what prompted experts to call for an Urban Employment Guarantee scheme, which has found no mention in the budget despite its success in Kerala, Himachal Pradesh and Odisha,” PAEG said.

The PAEG further said it was unclear how the Centre allocated the budget and the basis for allocation amounts. The group, thus, demanded the Centre to put the state-wise proposed labour budget on the public domain. It said that the central government has to acknowledge the plans made by the Gram Sabhas and allocate budget accordingly as per law, but it appeared that they are bypassing this process.

To mitigate the current crisis, the group put forward a four-point demand as follows:

1.The government must allocate 150 days to each person during the pandemic, as per section 4.2.3 of the Annual Master Circular 2020-21.

2.The NREGA wage rate is Rs. 85 below the agricultural minimum wage rate. This must be rectified, bringing the cost per personday to Rs. 350.

3.The central government should increase the allocation to at-least 1.75 Lakh Crore towards NREGA for 2021-22.

4.Additionally, it should be kept in mind that the ideal budget would allocate 1% to the scheme, which happened in the year 2006. This year’s budget is drastically lagging behind on this ideal.