How the NDA II Government has Starved NREGA of Funds, Two Years Running


India’s first, and path-breaking rural works scheme (the National Rural Employment Guarantee Act, NREGA) was, in the first instance a part of NDA II, read Narendra Modi’s pet ‘to be reviled’ Congress scheme. Now,, this scheme is currently being starved of Central government funds.

As a result, despite three years –in some parts, four –of consecutive drought –the poorest of the poor are not getting state assistance when they need it most.

However, due to the sharp scrutiny from the Supreme Court, that has now pulled up the Centre for not releasing adequate funds, on time, as mandated to do under the law, the Centre is being made accountable.

Under the Act, passed in 2005 and which became effective in 2006, the government provides a guarantee of up to 100 days of wage employment in rural areas to any household whose members are willing to do manual work. Started in 2006, it draws from the Maharashtra Employment Guarantee Act of 1977, which was enacted after policymakers found that providing wage employment was the most effective and quick way of providing relief to people facing drought.

The Right to Food Campaign has been campaigning consistently on this issue. Following this, the Swaraj Abhiyan filed a petition on the issue in the Supreme Court. The Swaraj Abhiyan conducted an intense survey of Bundelkhand district in October 2015 and thereafter filed a petition asking for judicial directives for government schemes to be implemented forthwith to stem the acute distress prevalent in rural India. The petition was heard on January 4 and 22, 2016 and again in February 2016. A copy of the petition and written arguments were covered by Sabranginida. The public interest litigation can be read here,

On April 6, 2016, last week, a bench comprising Justice MB Lokur and Justice NV Ramana directed the Centre to release funds immediately, and “not after one year”. It told the Centre: “If you are not releasing funds, no one will like to work.” On April 7, while continuing its hearing, the judges said the provision of employment opportunities in rural projects had been turned into a “chicken and egg situation” by both the central and state governments. While the Centre said that there was not enough demand for work in the states, the states, in turn, said that the Centre had not allotted enough funds for them to effectively run the programme. The next hearing on the petition will be on April 12.

"Relief has to be given immediately and not after one year. Temperature is soaring at 45 degree celsius, there is no drinking water, nothing is there. You have to do some thing and provide relief on time," the bench said. It said as per government's own figures, average workdays is 48 days, while the statute says it should be 100 days.

"The argument holds substance that since you (Centre) are not releasing the funds, states are not willing to allocate works to people under MGNREGA and hence the average workdays will fall," the bench also comprising Justice N V Ramana said."We should realize that there is problem. Nine states and now Rajasthan have declared drought. It is difficult to believe that there is no drought in Bundelkhand and Marathwada," the bench said.

The Truth Lies in the Figures
In his latest, 2016-17 budget speech, union finance minister Arun Jaitley allotted Rs 38,500 crore to the rural employment scheme. While doing so, he claimed  “If the total amount is spent, it will be [the] highest budget spend on MGNREGA.” Jaitley added that the scheme would focus on creating 5 lakh farm ponds and wells, and 10 lakh compost pits for the production of manure.

Why then is there still a shortage of funds?

Largely due to the false claims of the Central government. While announcing an allocation of Rs 38,500 crore for MGNREGA for 2016-17, the Finance Minister claimed that “if it is spent, will be the highest ever expenditure on MGNREA”. But twice in the past the expenditure on the programme has exceeded the allocation for 2016-17; Rs 39,377 crore in 2010-11 and Rs 38,552 crore in 2013-14.  In fact, the highest-ever outlay since the scheme was first implemented in 2006 was Rs 40,100 crore, in 2010-11.

Pending Programme Payments
Through the past financial year, 58 per cent of the total wages were simply not paid by the Centre. This failure to contribute to a robust rural works programme by the Modi Regime has caused acute distress in nine Indian states badly affected by drought and totally affected 24 states.

2015-2016, the last financial year came to an end with 24 Indian states facing a total of Rs 12,483 crore worth of pending payments in the National Rural Employment Guarantee Act (NREGA). The pending payments amount to over a quarter of the total expenditure incurred on the programme in these states in 2015-16.

The main reason for this lies with the Centre. Pending payments have mounted due to insufficient transfer of funds from the central government to these states. The shortage of funds in these states – which include all the nine states reeling under drought – has led to millions of workers facing tremendous economic hardships due to long delays in wage payments.

Even as per official calculations – which are a gross underestimation – 58 per cent of the total wages were not paid on time in 2015-16. Even when the workers do get paid, they will not get the compensation which is to be paid in cases of delays in wages, mandatory under the law.

Centre Makes a Mockery  of Its Own Decision to Increase Work Guarantee to 150 days
The insufficiency of funds also makes a mockery of the central government’s decision to increase the guarantee of work to 150 days a household in 2015-16 in the drought-affected states. Again as per official records, only 7 per cent of the total rural households registered in NREGA in the drought affected states got work for more than 100 days.

Apart from starving the programme of funds, the government is also not fulfilling its promises and making false claims. The Finance Ministry released only Rs 2,000 crore of the additional Rs 5,000 crore it agreed to spend on NREGA if the expenditure on the programme exceeded the allocated budget of Rs 34,699 crore in 2015-16.

2015-16 was the second year in a row in which the NDA government capped expenditure on NREGA.

By the end of 2014-15 also, nine states were left with pending wages worth Rs 1,203 crore which were made only after these states received funds for 2015-16. The same will happen this year as well; a whopping 30 per cent of the allocation for 2016-17 will be spent just in clearing pending payments from last year.

With no commitment of providing additional resources if the expenditure on the programme exceeds Rs 38,500 crore in 2016-7, the under-funding of NREGA is likely to continue this year as well. These facts expose the hollowness of the central government’s claim of delivering a “pro-poor” budget for 2016-17.

Centre’s Allocation Ignores Inflation
The NREGA is also being undermined by the stagnation of its wages, which are revised by the central government every year. State-wide increase in NREGA wages for 2016-17 range between 0 to 11 per cent, compared with last year’s wages (it is interesting to note that the wage increase of all the eight North Eastern states is less than 4 per cent).

In many states, the NREGA wage is even lower than the minimum agricultural wage, thus failing to provide adequate economic security to rural households. For example, the NREGA wage rate of Jharkhand is Rs 45 less than its minimum agricultural wage.

The central government has provided no justification for the nominal and differential rates of increase across the country. As payment of wages are now linked with the quantum of work done by them, many workers are paid even less than the paltry NREGA wages; either due to their inability to do the stipulated amount of work or due to errors in the measurement of work done by them.

The NDA government is killing a programme whose decade-long achievements were recently hailed as a cause for “national pride and celebration” by the Union Minister of Rural Development.

By failing to ensure timely work and payment and other entitlements to rural workers (such as unemployment allowance in case of non-availability of work, compensation for delayed wages, worksite facilities and timely redress of grievances), the central government is legally violating the employment guarantee act. It is contributing to the suffering of rural workers and forcing them to either migrate in distress or engage in exploitative employment.

In this context, the Right to Food Campaign has also demanded the following:

  • Immediate payment of all pending NREGA payments.
  • Compensation for delayed payments to be paid automatically along with wages.
  • As stated in the Ministry of Rural Development’s Master Circular on NREGA, the 1st tranche of funds (half of the total person days agreed to in the labour budget) should be released in the month of April.
  • A separate allocation to be made for the additional 50 days of employment per household approved for drought-affected states.
  • Increase in the NREGA wage rate to a minimum of Rs 250, indexing the wage rate to inflation and transparency in wage revisions
  • Time-bound punishment to all persons violating any entitlement of the employment guarantee act through institutionalization of social audits and other grievance redress mechanisms.



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