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Flagship scheme MGNREGA: Sustainability of a turnaround

A renewed funding squeeze may undermine MGNREGA’s recent revival, fear civil society activists.

Written by Shalini Nair |
January 14, 2016 1:33:54 am
Villagers engaged in a MGNREGA project in West Bengal. Despite the PM dismissing MGNREGA as a monument of UPA’s failure, July-September and October-December have seen a turnaround.    (Express Photo by: Subham Dutta) Villagers engaged in a MGNREGA project in West Bengal. Despite the PM dismissing MGNREGA as a monument of UPA’s failure, July-September and October-December have seen a turnaround. (Express Photo by: Subham Dutta)

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme which guarantees 100 days of wage employment per year to rural households, may have staged a revival in the last two quarters after showing a declining trend in person-days generation during the first year of the Narendra Modi government.

But the turnaround could well be temporary, given the continuing paucity of funding for the programme that was a flagship of the previous UPA regime. Currently, 12 states have a negative fund balance totaling Rs 1,089 crore that makes it impossible for gram panchayats to take up fresh works under the scheme. The 12 include even drought-hit states like Andhra Pradesh, Uttar Pradesh and Odisha, which have been allowed to increase the number of workdays to 150 per household, but cannot do this without additional fund releases from the Centre. Other negative balance states are Assam, Kerala, Nagaland, Meghalaya, Chhattisgarh, Haryana, Himachal Pradesh, Punjab and Sikkim.

“Apart from these, states such as Bihar, Gujarat, Maharashtra and Manipur face the danger of slipping into a negative balance if additional funds are not made available. Even Rajasthan, which is beset by drought, has run out of money. Chhattisgarh, which has been performing well on MNREGA before, has been squeezed dry last few months due to lack of funds,” said Nikhil Dey of Rajasthan-based Mazdoor Kisan Shakti Sangathan.


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In the current fiscal, merely 4 per cent of the total 3.75 crore MGNREGA-registered households have been provided their entire 100 days work entitlement. The average number of days of employment provided per household for the entire country so far during 2015-16 is 38. Tripura, whose chief minister Manik Sarkar had sat on a dharna at Jantar Mantar in November to protest the ‘non-release’ of MGNREGA funds by the Modi government, has registered the highest average of 78 person-days per household. The second best state, Maharashtra, has provided just 49 person-days of employment even in a drought year.

Officials expect the overall average person-days per household to rise to 50 by the end of March. That would be the highest in four years — though its materialisation is subject to funds being made available.

Despite Prime Minister Narendra Modi dismissing MGNREGA as a monument of UPA’s failure, July-September and October-December have seen a turnaround with the total person-days of employment hitting five-year highs for these quarters. The rural development ministry anticipates about 66 crore person-days of employment in the current quarter, in addition to the already generated 143.25 crore. That will take the total figure for 2015-16 to over 200 crore person-days, as against 166.35 crore in the previous fiscal. Both the rural development minister Chaudhary Birender Singh and Secretary J K Mohapatra has now turned to the finance ministry to seek the additional Rs 5,000 crore that was promised and would be required in these three months.

Jayati Ghosh, professor of Economics at Jawaharlal Nehru University, said that the sheer magnitude of the agrarian crisis, exacerbated by this year’s drought, forced increased release of funds for MGNREGA beginning July. Even BJP-ruled states realised the positive role played by the scheme in stabilising rural incomes. The easing of funds has had a visible impact, with the proportion of delayed payments — beyond 15 days after the closure of muster rolls — going down from 72 per cent in 2014-15 to 56 per cent this fiscal.

“But the renewed funding squeeze will mean that the gram panchayats will not register demand for employment, since if they do so and do not take up works immediately, they will have to provide unemployment benefits. This has serious implications also from a macroeconomic perspective. Even the corporate sector is demanding proper implementation of MGNREGA because without reviving the rural economy, there will no demand,” Ghosh pointed out.

The demand by civil society for timely release of MGNREGA funds was also made in the form of a letter to the finance minister Arun Jaitley on Tuesday. Signed by more than 100 eminent personalities, including social activist Aruna Roy, economist Jean Dreze, actor Girish Karnad, veteran journalist Kuldip Nayar, and historian Romila Thapar, it highlighted the recent improvement in the demand for work due to release of funds. But in the same breath, it added: “As funds have dried up, the crisis of the last few years threatens to be repeated … People will be driven to inhuman conditions of distress and starvation without it.”

Adequate funding has also become an issue with the Rural Development ministry actually deciding to expand the scope of MGNREGA to the creation of individual assets such as wells, farm ponds, vermin-composting and bamboo cultivation, as opposed to simply community-based assets. The ministry also plans to construct two crore individual toilets and four lakh anganwadis through the convergence of MGNREGA with schemes of other ministries.

“The idea of shifting focus on individual assets is that these provide workers, especially small and marginal farmers, with sustainable livelihoods in the long run,” said a ministry official, backing this with a recent study in Jharkhand. It showed that of the one lakh wells constructed in the state under MGNREGA, 95 per cent were being used for irrigation. The study, by the Institute for Human Development, also found that there was a 190 per cent increase in annual net income from agriculture in the command area of the wells thus built.

IIT Delhi-based economist Reetika Khera said that works on creating private assets were allowed even under the UPA for Scheduled Castes & Scheduled Tribes, landless labourers, and small/marginal farmers families. The works included building of wells and sheds for goat, piggery and poultry. “Those who dismiss MGNREGA as digging pits and filling it, must realise that the idea behind creating individual assets is that a sense of ownership will ensure quality. Also, simple things like leveling fields and making bunds will also lead to increased produce for the farmer, apart from generating job-days,” she added.

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