Civil society seconds rural development ministry’s demand for MGNREGA funds

The rural development ministry had recently demanded an additional allocation of Rs 5,000 crore to maintain the momentum of MGNREGA

By Jitendra
Published: Wednesday 06 January 2016
Farmers in Hyderabad district, Telangana Credit:Flickr
Farmers in Hyderabad district, Telangana Credit:Flickr Farmers in Hyderabad district, Telangana Credit:Flickr

Civil society has supported the demand made by the Union Ministry of Rural Development to the Ministry of Finance to provide Rs 5,000 crore for the Mahatma Gandhi National Rural Employment Generation Scheme (MGNREGS).

Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), the United Progressive Alliance’s employment generation flagship scheme, gives a legal guarantee of 100 working days to rural, unskilled adults.

The scheme has registered an increase of 36 per cent and 8 per cent more demand of work in the second and third quarter of the current financial year compared to the previous year. The first quarter did not see an increase in demand because of the previous year’s non-availability of funds and the huge delay in wages.

In the Union Budget of 2015-16, the total allocation to the scheme was Rs 34,699 crore. Union Minister of Finance, Arun Jaitley had promised to provide an additional Rs 5,000 crore if it was required.

Recently, Union Minister of Rural Development, Birender Singh, wrote a letter to Jaitley stating that 95 per cent of funds allocated for the scheme had been used by December 30 last year. He demanded the promised, additional amount of Rs 5,000 crore.

On Wednesday, civil society supported Singh’s demand. “The government should match the shortfall at the earliest. The delay in allocation will further translate into a delay in wage payment which can potentially derail the momentum of demand of work,” said Aruna Roy from the Majdoor Kisan Shakti Sanghthan (MKSS), a Rajasthan based non-profit.

At present, 12 states have already spent their allocated money and are staring at a negative balance of payments in the absence of funds. These include Andhra Pradesh, Assam, Chhattisgarh, Haryana, Himachal Pradesh, Kerala, Meghalaya, Nagaland, Odisha, Punjab, Sikkim and Uttar Pradesh.

“In such a situation, if funds aren’t released, 1.82 crore workers in these 12 states will not get paid at least till April,” says Roy.

Nikhil Dey, another member of MKSS, states that the drought year has made situation worse in rural areas and government must come up in their rescue.

“With less than five per cent of funds left with the Centre, this effectively means long overdue unpaid wages for workers, and the closure of MGNREGA in these states for the next couple of months,” said Nikhil Dey, another member of MKSS.

“The states are also making demands based on approved labour budgets which are far higher than what is available with them. Again, the message will spread that funds have run out. Given the fact that assurances were made that this time around, adequate funds would be made available to meet the demand, this will fundamentally damage the credibility of the employment guarantee act,” he further added.

Less budget

The scheme has been facing a budget crisis since 2012. The previous year’s liability makes allocation lesser every year.

Even this year, 17 per cent of the budget has gone in paying pending liabilities of wage and material payments from the previous financial year. The actual allocation for employment generation in the current year is approximately around Rs. 29,000 crores.

 Budget 2015-2016

Rs. Crore

Budgetary Allocation

Rs. 34,699

Pending Liabilities of wage and material payments

Rs. 5,972

Actual Allocation for employment generation

Rs. 28,727


This fund squeeze to the MGNREGA is not new and has been manifesting itself as a pattern over the last couple of years in both, the UPA II and NDA regime. Ending the year with pending liabilities, which effectively means workers’ wages are unpaid, has been a consistent trend.


Pending Liabilities (Rs. Crore)

% of Allocation spent on Pending Liabilities from previous year


Rs. 5,972



Rs. 6,151



Rs. 3,377


Jayati Ghose, an economist says that if inflation since 2010 is taken into account, the scheme’s budget would have more than 61,000 crore.

“The real-time cut in MGNREGA’s budget since 2009-10 is more than 60 per cent if the inflation would be taken into account,” Ghose said.

“The actual expenditure in MGNREGA in 2010-11 was Rs. 39,377 crore. The rate of inflation as per CPI- RL (Consumer Price Index - Rural Labourers) has been: 9.9 per cent in 2010-11, 8.3 per cent in 2011-12, 10.1 per cent in 2012-13, 11.6 per cent in 2013-14 and 6.7 per cent in 2014-15. Hence, in subsequent years, if the overall expenditure in MGNREGA had been maintained at the same level as in 2010-11 (taking into account inflation on the basis of CPI - RL), the budget outlay for MGNREGA in 2015-16 should have been Rs. 61,445 crore,” she further added.

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