Budget bonanza may not save the day for rural job scheme

Arun Jaitley has been vocal about the ₹9,500-crore increase in budgetary allocation for rural employment guarantee programme MNREGS, but the Finance Minister’s efforts may not translate into more jobs this year.

Around 220 crore person-days (the product of labour and days of work) will be created this fiscal, as against last year’s 235 crore person-days. This, despite Budget 2017-18 apportioning ₹48,000 crore, the highest-ever outlay for the Central scheme.

The Mahatma Gandhi National Rural Employment Guarantee Scheme was MGNREGS was introduced in 2005 and the number of person days peaked at 283 crore in 2009-10.

Ever since, the scheme has hit roadblocks. During the last fiscal of the previous UPA government, the person days had fallen to 220 crore, and the Modi government, too, has been struggling to improve job creation under the scheme.

Interestingly, the fall has been in both the number of households covered under the scheme, as well as the average days of employment for a household.

“In the initial months of the BJP government there was tremendous uncertainty about the future of the programme itself,” says Sonalde Desai, senior fellow at the National Council for Applied Economic Research (NCAER). Since the scheme was the flagship of the Congress-led UPA government, it was initially ignored by the BJP-led NDA.

During the first fiscal of the Narendra Modi regime (2014-15), the number of person-days created dropped by 25 per cent over the previous year to 166 crore, the lowest-ever since the scheme was introduced in all the country’s districts.

Over the past two years, the programme has stagnated due to various reasons. Panchayat Samitis that sanction projects do not meet for months and non-availability of labour in some seasons is another reason. When agricultural activity is at its peak, rural workers are sucked in to farming-related work. Many farmers and farm labourers take up MGNREGS work during the lean season.

“One cannot rule out the possibility of rationing of work at the ground level, where, despite a legal obligation to provide work, the States cut back on job allocation due to limited resources,” says Avani Kapur, Fellow at the Centre for Policy Research. Direct rationing affects about 29 per cent of all rural households, said a 2015 NCAER report titled ‘MGNREGA – A Catalyst for Rural Transformation’.

Rationing of jobs is typically done by the issue of lesser job cards and making available lesser days of work than the mandated 100 days for a worker. Rationing of jobs is higher among the poorest, and in the northern and central States.

Delayed wage payments also act as a big deterrent for people. While 50 per cent of jobs were paid within the stipulated 15 days in 2013-14, it fell to an abysmal 27 per cent a year later. Thereafter, the figure has been improving — with a figure of 37 per cent for FY16 and 46 per cent for the current fiscal. However, it is yet to regain the 50 per cent mark.

At least ₹60,000 crore of Budget money is likely to go towards MGNREGS-related payments this fiscal. While ₹48,000 crore would directly go for job creation, at least another ₹12,000 crore would go for paying the arrears of States, says a report of the Centre for Policy Research. States typically pay workers in advance, in anticipation of payments from the Centre.

Wages have not gone much in recent years – it moved up by 5 per cent in 2016-17 and by 7 per cent the year before. While the Centre notifies the States about the minimum wages to be paid, States pay higher amounts as wages. In the current fiscal, the average daily wage rate has been ₹161.

On matters of social inclusion, it’s been a mixed bag for the Modi government. The percentage of jobs created for members of the Scheduled Castes and Scheduled Tribes has remained constant at about 40 per cent, but it has done better in creating jobs for women.

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