Moneycontrol Bureau
The Union government’s expenditure on its rural employment guarantee scheme could touch a record high in the current financial year largely owing to the cash crunch caused by demonetisation, which pushed migrant labourers to return home, according to a report in Mint.
The Narendra Modi government has in the past been accused of giving the Mahatma Gandhi National Rural Employment Guarantee Scheme – a flagship scheme of the previous United Progressive Alliance government – the short shrift. But now the programme could see its highest outlay since its inception in 2006, as spending is expected to touch Rs 58,000 crore.
MGNREGS data analysed by Mint shows that there has been a major uptick in demand for work such as Bihar, where workers returned home after factories in Punjab could not afford to pay them. In Maharashtra, drought has led to an increase in demand for work. However, in many places, agriculture has been boosted by good monsoon, which means there should have been less demand.
The purpose of MGNREGS is to guarantee 100 days of employment a year to one member of every rural household, especially between two main crop seasons.
In Bihar, Rajasthan and Maharashtra, the total number of people who demanded and got work under the MGNREGS in 2016-17 in the months of November and December shows a jump over 2013-14, which was a normal monsoon year. For Bihar, it also shows an increase over 2015-16, which was a drought year.
The government’s decision on November 8 to withdraw Rs 500 and Rs 1,000 notes with immediate effect resulted in about 86 percent of currency in circulation being discounted as legal tender. It put a strain on all sectors of the economy, including small and medium businesses.Analysts say the spike in demand for work in the months of November and December captures the impact of demonetisation.
According to data on the rural development ministry website, total spending under MGNREGS till January 2017 is slightly more than Rs 52,000 crore.
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