A straight comparison of this year’s allocation of Rs 60,000 crore with the current year’s revised outlay of Rs 89,400 crore shows a fall of 33%. However, when allocations since 2008-09, when the scheme was rolled out nationally, are adjusted to inflation (2011-12 prices) using the same ratio used to calculate real GDP, the reduction is even sharper (35%).
In real terms the highest jump in allocation was not surprisingly in 2020-21, the Covid year. There has been a steady reduction in allocation since then for three consecutive years bringing this year’s budget outlay to just 44% of the allocation in the Covid year. This is the biggest cut since the expansion of the scheme in April 2008 to cover all rural areas.
A report by the Parliamentary Standing Committee on the functioning of MNREGS submitted in the Lok Sabha in August last year stated that the data “clearly shows the increasing Budgetary Allocation for successive Financial Years eliciting an increase in demand for work”.
According to the MNREGS website, the average number of days of employment provided per household so far in 2022-23 is about 43. The average in the five years before Covid was roughly 48 days of work per household though the aim of the scheme is “enhancing the livelihood security of the people in rural areas by guaranteeing 100 days of wage employment in a financial year to a rural household whose adult members volunteer to do unskilled manual work.”
The current allocation of Rs 60,0000 crore would provide work for an average of only 32 days per household if we were to assume the same number of households (5.8 cr) are provided work as in 2022-23 at a wage rate of Rs 229 per person per day (5.1% increase over last year’s wage in line with the average increase in previous years) and same ratio of wages, material and administrative cost as last year.
Conversely, if work was provided for an average 48 days, then about 2 crore fewer households would get work. Either way, with just the current allocation, the number of households or average number of days would be the lowest ever. However, since 2015-16, the government has regularly augmented the budgeted allocation through supplementary budgets.
Reacting to the reduction in the MNREGS budget in 2021-22 to Rs 73,000 crore after the total expenditure on the scheme during Covid of Rs 1,11,171 crore, the Parliamentary Standing committee, while recognising that demand had gone up during the pandemic, had stated that “budgetary allocation of a scheme of such enormous magnitude should be done in a more pragmatic manner so that there is no dearth of funds in mid-year and flow of funds for payment of wages, material share, etc. is maintained seamlessly”.