Bihar has little money to pay workers under MGNREGS

Blames Centre for non-release of funds

By Alok Gupta
Published: Tuesday 15 April 2014


Bihar has very little money to pay people under the Central welfare scheme that guarantees 100 days of employment to the rural poor in a year.

Central government’s reluctance to release funds under its Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) is said to be the main reason for the crisis.
Nitish Mishra, Bihar’s rural development minister, told Down To Earth that the Union government is to be blamed for ignoring Bihar. “States like Andhra Pradesh have been allocated massive funds but Bihar’s share in MGNREGS has been curtailed,” he said.

Mihir Kumar Singh, MGNREGS commissioner in Bihar, said the Central government had promised Rs 585 crore to the state under MGNREGS. “Till date, the state has received only Rs 175 crore, which is highly insufficient to provide the guaranteed 100 days of employment to labourers,” he said.

Bihar had recently plugged fund leaks in the scheme and initiated major steps to upgrade the implementation of the scheme. The state’s efforts to undertake social audit for the scheme was appreciated by the Union ministry of rural development.

“We were also awarded for the social audit initiative. Funds are being denied at a time when the scheme was running full steam in the state,” Mishra added.

Following the non-release of funds, the state rural development department has arranged Rs 150 crore from its own resources to keep the scheme going. Official estimates say that the funds will barely last three months.

Senior officials said the Central government has been severely slashing MGNREGS funds the past two fiscal years. In the fiscal year 2012-13, a nation-wide fund of Rs 33,000 crore were released, which was nearly Rs 7,000 crore less than what was released in 2011-12 when a total of 40,000 crore was released.

The rural development department is already getting flak from panchayat sevaks who are implementing the scheme at the grassroots level.

State risks having to pay unemployment dole

Senior officials pointed out that Bihar has negligible industrialisation and depends heavily on Central funds for implementing the scheme. The state contributes 10 per cent to the wage bills for paying wages of labourers under MGNREGS.

The state MGNREGS commissioner said the Central government’s inability to provide funds is not only making the scheme weak but has also led to complications. The employment scheme has a provision that if the state government is not able to provide 100 days employment to an applicant, then it has to pay unemployment dole.

“This unemployment dole is to be provided by the state government,” he added. But the state has no money to foot the massive bills if applicants demand unemployment dole.

Bihar rural development department has written a series of letters to the union rural development department apprising them of the situation.

Change in funding pattern

K K Tripathy, director for MNREGS with the Union rural development ministry, pointed out that funding pattern of the scheme has been changed from the current fiscal year. The funds are routed to the state treasury now. Also, earlier funds were allocated upfront for utilisation for the subsequent six months. This has been changed.

From the current fiscal year, funds are being given on the basis of job demand. Union rural development ministry has allocated funds for current month of April after deducting the liabilities of previous fiscal year till March 2014. “We have allocated Rs 202.41 crore to Bihar for the month of April,” Tripathy said.

He added that the full budget of MGNREGS has not been passed. It would be passed soon, he said. Tripathy said Bihar has enough funds for the current month. He said the new financial management system may be creating problems for Bihar rural development department.

Senior officials sounded exasperated by Tripathty’s explanation and said that MNREGS wages are not transferred to labourers immediately after the completion of the work.

“There are procedural delays like measurement of work after completion and transferring funds to the accounts of MNREGS in their bank account and post office,” they said.

In Bihar, penetration of banks in rural areas is extremely poor. It leads to delay in payment and liability bills increase. If the backlog of payments of last fiscal year is deducted, then the state will face crisis of funds, officials said.

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