Relieve Rural Distress, Release MGNREGA funds, FM told

Published on: January 12, 2016

Over 65 Citizens including academics urge the Modi government to release budgetary commitments as per law

Image Courtesy: Indranil Bhoumik/Mint
 

  • Release Funds earmarked in Central Budget for MGNREGA
  • 95 per cent of current year’s budgetary releases for MGNREGA exhausted
  • MGNREGA workers in at least 12 States are at work with no funds available with the State Governments to pay their wages
  • Threat of Illegal and Inordinate delays in payment of wages; Worse, implementing agencies in the country will not even register demand for Rural Work
  • Demand based framework of the legislation appears not to be backed by Central government
  • FM Arun Jaitley’s 2015 Budget Speech allocated only Rs 34,699 crore (of which Rs 6426 crore was required simply to meet the pending obligations of the previous year)
  • FM Jaitley promised another Rs. 5,000 crore, should there be tax buoyancy; tax buoyancy has been acknowledged by Government
  • An Act like MGNREGA passed unanimously by Parliament must be unconditionally financed by Government and not depend upon ad hoc decisions of the Finance Ministry
 
What is MGNREGA ?
  • MGNREGA was unanimously passed by Parliament in 2005, providing a demand based legal guarantee for any rural family seeking up to 100 days of work
  • In the decade since it has provided employment to over 10 crore families and continues to be a lifeline for lakhs of families, particularly in times of distress.
  • The 2016 drought has brought home the usefulness of the programme in providing immediate relief to rural citizens as well as providing some injection of demand in depressed rural markets.
  • The Ministry of Rural Development notifying additional days of employment under the MGNREGA to 150 in six drought-affected states is an indication of this  
 
These demands were made in an Open Letter to Finance Minister Arun Jaitley today. The signatories are Aruna Roy, Jean Dreze, Jayati Ghosh, Nikhil Dey among others
The text of the letter:
 
Dear Mr Jaitley,         

This is a submission to be handed over to you at the pre-budget consultation on the social sector on January 12, 2016, sent through invited members of citizen groups.

While the continuing trend of meagre and slashed budget allocations for the entire social sector is a reason for alarm, we write to you today regarding an immediate and urgent concern regarding the budgetary allocations and disbursement of funds for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) for the current financial year. We feel that if this issue is not addressed conclusively, the discussions of the pre-budget consultation for the upcoming budget would be rendered symbolic, and inspire little confidenceas an actionable consultation.

As you know the MGNREGA was unanimously passed by Parliament, providing a demand based legal guarantee for any rural family seeking up to 100 days of work. In the ten years since then, it has provided employment to over 10 crore families and continues to be a lifeline for lakhs of families, particularly in times of distress. The drought this year has again revealed the usefulness of the programme in providing immediate relief to rural citizens as well as providing some injection of demand in depressed rural markets. The notification of additional employment days to 150 in six drought-affected states by the Ministry of Rural Development is an indication of this.  

Timely release of funds this year so far, has led to some improvement in the demand for work generated over last year, and in making timely wage payments. However, as funds have dried up, the crisis of the last few years threatens to be repeated. As the Minister of Rural Development communicated to you on December 31, 2015, Ninety-five % of the current releases from the Finance Ministry have been exhausted. States have been making repeated requests to the Ministry based on their approved labour budget. Further, workers in at least 12 States are at work with no funds available with the State to pay their wages. This will inevitably lead to illegal and inordinate delays in payment of wages. It will also mean that most implementing agencies in the country will not even register demand.

This pattern of fund shortage is undermining the credibility of the legal framework. It has passed a chilling message down the administration that the demand based framework of the programme is not backed by the Government of the day. Another fund crisis at this point would not only multiply rural distress but also deal another crippling blow to the law and the programme.

We would also like to point out that simply maintaining the allocation in 2010-11 at Rs. 40,100 crore, taking into account inflation, would imply a budget in 2015-16 of Rs. 61,445 crore.In terms of percentage of GDP, the MGNREGA budget allocation has fallen from 0.59% in 2009-10 to 0.25% in 2014-15.In your budget speech for 2015-16 you allocated only Rs 34,699 crore (of which Rs 6426 crore was required simply to meet the pending obligations of the previous year) with a promise for another Rs. 5,000 crore, should there be tax buoyancy. While the Government itself has acknowledged increased tax buoyancy this year, we would like to underscore that the MGNREG Act passed unanimously by Parliament legally mandates unconditional availability of funds to honour demand for work and therefore the amounts provided cannot be based on decisions of the Finance Ministry.

We have two submissions: Given the immediate crisis and the requirement of the remaining three months of the FY 2015-16, we request the additional Rs. 5,000 crores to be made available to the Ministry of Rural Development immediately. Secondly, subsequent budget estimations and allocations to the programme must be brought in line with inflation;be measured and maintained as a percentage of share of GDP and fundamentally operate through a ‘demand pull’ system as required by the law.

Budgetary allocations for social sector programmes, when compared with allocations to other sectors in India, are a matter of national shame. This is in turn reflected in our pathetic indicators on health, education and women’s participation in the workforce. Claims of shortage of funds ring even more hollow when one considers the continual hike in allocations for elected representatives, and to public servants through the Seventh Pay Commissions.It is intriguing that the central government that denies resources for fulfil the basic needs of the majority of the population can easily find over Rs 1,00,000 crore additional resources from 2016-17 onwards to meet the recommendations of the 7th Pay Commission that benefit employees and retirees who are less than 1 per cent of the population.

This is why we reiterate our overwhelming concern about the release of adequate funds for MGNREGA this year. The law requires it. The States are demanding it. The Ministry of Rural Development is making repeated demands for it. Implementing agencies are in desperate need of it. People will be driven to inhuman conditions of distress and starvation without it. There can be no legitimate justification for not making the releases to meet these demands and further increasing the amount as per demand.           

It is left to be seen how the Finance Ministry will respond.