Savera
The Modi government continues to invent more and more devious tactics to sabotage or erode the rural jobs guarantee scheme (MGNREGA). Last week, the Indian Express reported that the Finance Ministry has ordered the Rural Development Ministry to limit spending under this scheme to 60% of the annual budgetary allocation in the first half of the financial year. Till now there was no such cap on spending because the scheme is supposed to be demand driven and putting a spending cap for a time period would hamper this.
But there is more to this. The initial months of the financial year (beginning in April) see a much higher spending under the scheme because of two reasons. One is that the months of April, May and June are summer months with agricultural activity at its lowest across the country. Poor labouring families are in need of income to sustain them through this lean period. Hence, demand for MGNREGA work increases in these months.
Take the example of last financial year, 2024-25. The total number of households that got work under MGNREGA in the whole year were 21.35 crore. Out of these, about 6.54 crore worked in the first quarter itself, that is, during April, May and June. In other words, about 31 percent of the whole year’s work was done in the first three months itself. In subsequent quarters, the share of work was: 20 percent (July-September); 24 percent (October to December) and 25 percent (January to March). Clearly, there is a reasonable need for more spending in the first quarter. [These and subsequent figures are taken from the official website https://nrega.nic.in/MGNREGA_new/Nrega_home.aspx]
However, it is the second reason that has agitated the neoliberal mandarins of Finance Ministry. This is the fact that in most years, there is a carryover of dues pending from the previous year. These dues need to be cleared in the initial months of the new financial year after fresh grants are received from the Centre. The Finance Ministry, and presumably the PMO, which guides its vision, must have thought that by putting a cap on spending in the first half of the year, the axe will have to fall on this carrying over tendency. In practice this would mean curtailing work each year so that there is no carry over of pending payments into the next year.
Carry-Over of Dues to Next Year
Here is the trend of carry over for the past few years (negative indicates payments due, positive indicates surplus): +Rs.5614 crore (2020-21); -Rs.1910 crore (2021-22); +Rs.1794 crore (2022-23); -Rs.8760 crore (2023-24); and -Rs.33,539 crore (2024-25). A word of explanation is perhaps needed for why some years show a surplus. 2020-21 was the first year of Covid and the government allocated about Rs.1.1 lakh crore for MGNREGA. Work given also peaked at nearly 11.2 crore persons as the brutal lockdowns and collapse of economy forced millions to return to villages and seek work in the Scheme. Due to high allocation, some amount was left over as surplus, not a very happy situation considering the desperate need for work – but that’s how these schemes work. The surplus in 2022-23 is readily explainable by the fact that West Bengal was denied funding for the scheme on the grounds that there was bungling of funds by the TMC-led State government. Although allocation itself was reduced but still some surplus emerged. (See below for more about the W. Bengal imbroglio where, between rampant corruption under the TMC-led state government and the punitive withholding of funds by the Modi government, lakhs of needy families are being denied the relief available through this Scheme.)
But what is noteworthy is this: the dues carryover is steadily rising. In 2023-24, Rs.8760 crore was left pending as dues at the end of the year while pending dues spiked up to Rs.33,539 crore in 2024-25. These amounts are then met and disposed off in the next financial year, eating up the allocation for that year. Notably, bulk of the dues carried over to next year are for materials. The governments move to cap spending in the first six months is a devious way of preventing this. What it effectively means is that States will simply cut down on work availability to reduce spending and prevent carryover of dues.
Is Demand for Work Really Falling?
Over the years, the Modi government has whittled away at the Scheme which is a lifeline for rural people. With continuing crisis of jobs, ever expanding young workforce, and agriculture work already beyond saturation levels, families are forced towards the MGNREGA even though the wages are meagre and the work sheer drudgery. After the spike in work during the Covid years, there appears to have been a decline. In 2020-21, 11.2 crore persons worked under the scheme, followed by 10.6 crore in 2021-22. After these two main pandemic years, the Modi government started squeezing funds leading to decline in work. Thus, 2022-23 saw 8.7 crore persons working, 2023-24 had 8.3 crore, and 2024-25 saw a further dip to 7.9 crore. It must be remembered that this data is for actual number of persons worked. Demand (recorded as applications for work) is always more – in the last two years, for instance, nearly 1 crore persons were refused work each year.
But these figures for decline – often highlighted by Government apologists as a measure of declining demand – are misleading. The dip in number of workers in MGNREGA can substantively be explained by the dropping out of West Bengal from the scene. In 2021-22, the last year when W.Bengal was part of the scheme, over 1.1 crore persons from the state worked in the scheme, making up nearly 10 percent of the number of workers countrywide. Then the axe fell and no funds were given to Bengal in 2022-23. The result was a steep decline in number of persons working in the scheme in the state – it came down to just 16.3 lakh. In the next year (2023-24) the number fell further to a mere 9415.
So the declining MGNREGA work numbers are not due to falling demand for work, rather it is due to W. Bengal not getting any funds and hence the omission of its work numbers from the total. Meanwhile, the Government is happy, not only for saving about Rs.7.6 crore but also because it is declaring this so called decline in MGNREGA demand as an indication of improved job situation!
In fact, the dip in MGNREGA spending by the Centre continues – from the highs of Covid years to Rs.88,290 crore in 2022-23, Rs.88,217 in 2023-24 and Rs.85,641 in 2024-25. Combined with all the other measures to exclude vulnerable and needy people from getting the benefit of the Scheme – like the Aadhaar Based Payment System, other digital/electronic procedures – the Modi government stubbornly persists in hollowing out the Scheme, even though it has spectacularly failed to create new jobs as promised.