Insufficient Allocation for MGNREGA Workers In Budget 2019: PAEG

Indian Observer Post Bureau

New Delhi, Feb 03, 2019: Peoples' Action for Employment Guarantee (PAEG), an umbrella organization of several social organizations, fighting for the cause of MGNREGA workers, has criticized Prime Minister Narendra Modi led NDA Government for allocating insufficient budget and has demanded higher allocation saying, “Any budget less than Rs. 88,000 crore will be insufficient to meet even projected demand for work and the timely payment of wages.”      

Here is the full text of the statement issued by Peoples' Action for Employment Guarantee (PAEG):

As news on the budget allocation for MGNREGA in the Interim Budget came in, the programme that marked 13 years of its implementation on 2^nd February 2019, faces yet another monetary drought with liabilities for wage and material payments mounting every day. 

MGNREGA is a demand driven law, which means that placing any funding restrictions on the law is entirely illegal.The initial allocation of FY 18-19 of Rs. 55,000 crores was exhausted well before January 2019, and owing to mounting pressure and criticism from MGNREGA workers, citizen campaigns and Members of Parliament, an additional Rs 6,084 crores was allocated to honor legal commitments to the programme.

However it is unclear whether this amount has been released to states yet. In this context, the Finance Minister’s announcement of an allocation of Rs 60,000 crore to MGNREGA for 2019-20, yet again demonstrates a lack of intent and commitment to implement the MGNREGA in letter and spirit.

Any budget less than Rs. 88,000 crore will be insufficient to meet even projected demand for work and the timely payment of wages.     

 

Unpaid dues to workers has already added up to Rs 7568 crores and this amount is only going to increase by the close of the financial year. This means that even before the start of the new financial year in April, the program is effectively left with a budget of Rs 52,000. The true picture of funding for MGNREGA is therefore deliberately masked in the high pitched budget announcements made in Parliament.

The vicious cycle of pending liabilities and the mounting fund crunch can only be broken if the budget allocation for MGNREGA is substantially increased. As per sample independent studies, the actual wages paid on time in 2017-18 is likely to be around 32% instead of the figure of 85% presented by the Government of India.

Further increasing costs, both for wages and material need to be taken into account. MGNREGA wage rates need to be brought in line with State Minimum Wages in line with constitutional committments, and as various MoRD committees have repeatedly recommended. At the very least, wages should be indexed to inflation as per the Consumer Price Index of Rural Labour (CPI-R). 

Details

Since 2014, many civil society groups have consistently pointed out the pernicious manner in which funds are being squeezed for MGNREGA and the damaging domino effect it has on the program overall as follows:

1. Restrictions on projected and approved – Even though the Act is unequivocal about the fact that Gram Sabhas will determine the quantum and kind of works to be taken up in a given year, this has been relentlessly abused by different state and Central Government. The projected persondays that emerge from such bottom up planning are examined at the Central Government level and are being  reduced to an illegal concept called ‘approved labour budget’- contrary to the spirit of the Act.
2. Delays in Wage Payments: It has been consistently pointed out that the Ministry of Rural Development is not recording or displaying delays that occur at its level, or that of the payment agencies (which it is responsible for). Two independent studies^[1], using government’s own data have shown that for the first two quarters of FY 18, rather than the figure of 85% wages paid on time, the actual ratio is likely to be closer to 32%, if central government and payment agencies delays are accounted for. The situation usually worsens in the last two quarters of each year as the meager allocated funds get exhausted by then.

Table 2: Percentage of transactions when workers got wages within the stipulated 15 days

1. No accountability or payment of compensation for delays: Since the full extent of delay is not being calculated, the full amount of compensation due to workers is also not calculated. The accountability of the Central Government and Payment Agencies has not been fixed despite repeatedly pointing it out. Even for the limited amount of compensation that is currently getting attributed only to various State Governments, owing to the Centre’s false definition of what constitutes as ‘delay’, at the rate of 0.05% per day of delay, amounting to a total of 1898 crores (since December 2013), less than 4% has actually been paid to workers. This glaring lacuna was agitated beforethe Supreme Court in a recent PIL (Swaraj Abhiyan vs UOI and others) where the judgement categoricallystated: “The wages due to the worker in terms of Stage 2 above must be transferred immediately andthe payment made to the worker forthwith failing which the prescribed compensation would have tobe paid. The Central Government cannot shy away from its responsibility or taking advantage of a person whohas been placed in the unfortunate situation of having to seek employment under the Act and then not beingpaid wages for the unskilled manual labour within the statutorily prescribed time. The State Governments andUnion Territory Administrations may be at fault, but that does not absolve the Central Government of its duty”.The judgement dated 18th May, 2018 has still not been implemented.

1. Pending Liabilities: The last seven FYs have ended with consistently high pending liabilities, or backlogs of payments. Therefore, any true representation of the adequate budget will account for these.

Table 3: Pending Liabilities, source: R 7.1.2. Outlays and Outcomes

* not including supplementary grants, if any

** as of date, figure likely to increase over next two months

1. Wage Rates: Any budget must also take into account the need to increase wage rates, due to inflation and the Ministry of Rural Development’s own previous recommendations of indexing wage rates to State minimum wages. Any wage rate below the State minimum wage is a flagrant violation of Article 23 of the constitution and is tantamount to ‘forced labour’ according to a 1983 Supreme Court Order.

Based on a realistic assumption of an increase in India’s tax to GDP ratio in the coming year, it is definitely conceivable to have at least 1% of the GDP reserved for MGNREGA funds. In FY 18-19, the allocation was a lowly 0.26% of the GDP. MGNREGA workers have had to bear the brunt of shrinking funds, which must be corrected.  Further, the mandate to ensure work conditions by providing crèches, water, basic medicines and shade is also specified in the MGNREGA and these amongst other critical provisions must be not be forgotten.

Therefore, an adequate budget for FY 19-20 would have accounted for:

1. Pending liabilities for FY 18-19 which already amount to Rs 7,568 crores.
2. Projected Person days of State Governments, which at the rate of the previous FY will amount to 282 cr person days * average cost per day Rs. 261 = Rs. 73000 crores approximately
3. Inflation and indexation of wage costs, which amounts to 10% approximately

Therefore, any budget less than Rs. 88,000 crore will be insufficient to meet even projected demand for work and the timely payment of wages. 

High levels of unemployment and declining farm incomes have led to a situation of acute rural distress across the country, which needs the urgent attention of parties across the political spectrum.

MGNREGA is one of the strongest tried and tested measures that can be used to address some of these critical issues. It has played an important role in protecting the lives, livelihoods and wages of rural workers, and been a vital support to vulnerable communities, including thosefacing distress due to natural disasters and calamities.MGNREGA workers are a significant section of the rural population facing agrarian distress. A well-resourced and implemented MGNREGA can be a powerful measure among a basket of measures for alleviating rural and agrarian distress.

Photo Courtesy – The Hindu / Pacs India / Rajasthan Patrika

^[1]http://azimpremjiuniversity.edu.in/SitePages/pdf/PaymentDelayAnalysisWorkingPaper-2018.pdf