Work demand slowing, yet: Rural jobs scheme needs extra outlay to run smoothly through FY23

The Mahatma Gandhi National Rural Employment Guarantee Scheme (MG-NREGS) could face a funding crisis and be disrupted if the government doesn’t increase allocations for the popular program from budgeted levels soon. As much as 72% of the Rs 73,000 crore budget allocation for the program has already been spent, latest data from the Ministry of Rural Development showed.

While additional allocations under the program in backlogs have been common in recent years, sources said the Department of Rural Development has yet to estimate the amount it may need to request in backlogs for spending for the current fiscal year.

“We are unable to estimate how much additional money would be required to meet demand for the current fiscal year,” a ministry official said.

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In the last two years, 80-85% of the funds allocated in the budget for MG-NREGS were used within the first six months of the year. An additional allocation is then made in the ninth or tenth month of the year if program implementation slows down.

Total expenditure under the program is currently Rs 52,394 crore, according to the MG-NREGS dashboard. In each of the last two fiscal years hit by the pandemic, total expenditure under MG-NREGS exceeded Rs. 1 trillion, standing at Rs. 1.06 trillion and Rs. 1.12 trillion respectively. In 2018-19 and 2019-20, MG-NREGS spending was in the range of Rs.68,000-69,000.

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Of course, household labor demand has also slowed from its June 2022 peak of 31.8 million to 16 million in August. The September number could be even lower based on the trend so far.

According to MG-NREGS, a total of 1.6 billion person working days have been generated in the current financial year compared to 3.6 billion in the whole of last year.

MG-NREGS is a needs-based program to improve rural household livelihoods by providing at least one hundred days of guaranteed wage employment to every household whose adult members volunteer to do service work each fiscal year.

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However, contrary to the mandate, a household has so far received only 33.58 working days in the current fiscal year, compared to 50.07 days in the last fiscal year. Interestingly, only 47.8 million households have worked so far in the current fiscal year, compared to 72.6 million households for all of last fiscal year.

The number of people who worked under the program, at 65.7 million, was also down from last fiscal year’s 106.2 million.

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