People's Action for Employment Guarantee Says Rs 2.64 Lakh Crores Needed for NREGA in FY 2023

The Mahatma Gandhi National Rural Employment Guarantee Act (NREGA), which has acted as a crucial shock absorber for the rural poor during the pandemic, should have a minimum budget of Rs 2.64 lakh crores for FY 2022-23, more than double of last year, the People's Action for Employment Guarantee (PAEG) suggested in its pre-budget note.

Rs 2.64 lakh crore, which PAEG calls a conservative estimate, is the minimum amount needed to provide legally guaranteed 100 days of work per household. This estimation is based on only those households that worked in the current financial year. Notably, less than 5% of households employed have completed 100 days of work in the current financial year.

The PAEG noted that the NREGA played a crucial role for the rural poor who were disproportionately hit by the COVID-19 pandemic's fallouts such as loss of livelihoods and food insecurity. 

Amid the pandemic, employment generation in terms of person-days increased by 46% in FY 2020-21, compared to the previous financial year. The person-days generated this financial year till December 2021 have already exceeded FY 2019-20’s total person-days by 10%, the PAEG said in its note. Person days denote the number of people working per day times the number of days worked.

The PAEG and NREGA Sangharsh Morcha had recommended a budget allocation of at least Rs. 1.5 lakh crores for FY 21-22 to "honour the demand-driven nature of the Act." 

However, despite the high demand for employment, the government allocated only Rs. 73,000 crores, of which 26% corresponded to only previous years’ dues. This amount was also 34% less than the revised budget of NREGA in 2020-21. As a result, within the first half of FY 2021-22, NREGA funds had run out. PAEG’s half-yearly tracker showed that several states, including West Bengal and Andhra Pradesh, had a negative balance.

The government had to allocate an additional Rs. 25,000 crore to NREGA in December 2021. "However, official data as of January 24, 2022, shows that only Rs 7,114 cr of that Rs. 25,000 cr has been released," the PAEG said.

"On average, over the past five years, 20% of the budget has gone into

clearing the arrears of previous years. The unpaid dues this year are already at Rs. 12,494 crores. Assuming the expenditure trend so far in this FY continues, we estimate that over Rs. 21,000 crores would be

pending at the end of FY 2021-22," the PAEG said.

Massive delays in disbursing NREGA compensation has also resulted because of the inadequate fund allocation by the government. "This is akin to forced labour," said the PAEG. It further stated citing government data that only 1.69% of payable compensation has been paid this

year. Additionally, the central government took longer than the stipulated seven-day period to process 50.2% of NREGA wages this year.