HomeEnglish NewsTop News StoriesThe Economics And Politics of The MGNREGA Budget Cut Explained

The Economics And Politics of The MGNREGA Budget Cut Explained

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Congress leader Sonia Gandhi has slammed the Narendra Modi government for slashing the budget of the UPA-era Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme but the government is citing “sound economics” like alternate employment programmes available in villages and a perceptible drop in MGNREGA demand now to the pre-Covid levels to justify the cut.

Compared to Rs 73,000 crore allotted to the scheme in last year’s budget, only Rs 60,000 crore has been allocated for MGNREGA in this budget. “Rural labourers will have less work, as funding for MGNREGA has been reduced by a third, bringing it below 2018-19 levels,” Sonia Gandhi wrote in an article, slamming the government. Actual expenditure on MGNREGA in the year 2018-19 was Rs 61,815 crore.

Senior government officials, however, cited another set of figures to say MGNREGA demand had peaked during the Covid pandemic in 2020 and 2021 but was now returning to pre-Covid levels, explaining the slash in the budget. As per these figures, the highest-ever 38,908 lakh person-days of employment was generated in 2020-21 and the figure was 36,332 lakh person-days in 2021-22.

But in the present financial year, till February 2, this number has dropped to 24,729 lakh person-days. This is comparable to the pre-pandemic era of 2019-20 when 26,533 lakh person-days were generated. In that financial year, the budget had earmarked Rs 60,000 crore for the scheme, the same as in this year’s budget. MGNREGA, as per the rules, is a demand-driven wage-employment scheme.


Government officials are also citing much-higher allocations in this budget under two other key rural schemes — the PM Awas Yojana and Jal Jeevan Mission — to claim that workers will have ample employment opportunities available in their villages. “The expectation is that rural workers will be able to find jobs in PM Awas Yojana and Jal Jeevan Mission and hence there will be lower demand for MGNREGA work,” chief economic adviser V Anantha Nageswaran said on Tuesday.

In a reply in Parliament on Wednesday, the rural development ministry said MGNREGA provides livelihood security “that is fall back option for livelihood for the rural households when no better employment opportunity is available”.

Under the PM Awas Yojana, Rs 79,950 crore has been allocated in this budget, up 66% from the last budget. The PMAY-G beneficiaries are also provided with the support of unskilled wage employment for the construction of their houses in convergence with the MGNREGA.

Rs 70,000 crore has been allocated for Jal Jeevan Mission, up from Rs 60,000 crore in the last budget. Both PM Awas Yojana and Jal Jeevan Mission have a 2024 completion deadline and will see hectic work in villages.

The politics

There is, however, politics over the MGNREGA budget cut with the Congress alleging that the Modi government is promoting its own schemes while giving the UPA-era programme the cold shoulder. The government though told Parliament on Wednesday that “Central government is committed to making funds available to MGNREGA keeping in view the demand for work on the ground”.

A look at past figures strengthens the Centre’s claim. Like, while Rs 73,000 crore was budgeted for MGNREGA in 2021-22, the actual expenditure was Rs 98,468 crore. Similarly in 2020-21, while the budgeted expenditure was Rs 61,500 crore, the actual expenditure was way higher at Rs 1,11,170 crore. “Even in the upcoming FY, more will be spent on MGNREGA if the demand arises,” an official said.

During the current financial year so far, an amount of Rs 72,813 crore has been released for wage, material, and administrative components under the MGNREGA scheme. There are 15.15 crore active workers under the scheme.

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