Why India should spend more on its rural employment scheme

Prem Lal, 39, has had a horrid time since the national lockdown in 2020. Soon after the announcement in March, like many stranded migrant workers, he made the arduous journey back home. He walked nearly 1,200 km from Pune, where he worked as a painter, to his village in Banda district of Uttar Pradesh’s economically deprived Bundelkhand region. Since then he has found a few weeks of wage employment under the Mahatma Gandhi National Rural Employment Guarantee Scheme, the national rural jobs programme.

“If work was available for the most part of the year under schemes like MGNREGS then I would not venture out to other cities,” said Lal. Like him, Baba Deen, 45, works under MGNREGS in the adjoining district of Panna which falls in the Bundelkhand region of Madhya Pradesh. Demand for work increased “heavily” when people returned home after the lockdown in March “but not all of them were able to find employment”, he said.

Enacted in 2006, the Mahatma Gandhi National Rural Employment Guarantee Act aims to provide at least 100 days of unskilled wage employment to adult members of a rural household and is meant to be a lifeline for the rural poor – nearly 14.7 crore active workers – during times of economic distress and natural calamities.

Even as the number of people seeking work in 2020-’21 increased to 13.3 crore, the highest ever, the government allocated 35% less funds for the programme in 2021-’22 and is unwilling to provide more than 100 days of work. Workers, however, said they continued to face issues such as payment delays and inadequate availability of work.

In this story, IndiaSpend and Khabar Lahariya report from the districts of Banda and Panna to understand how MGNREGS workers are coping with the adverse economic effects of the lockdowns and jobs crisis, and why the government must allocate more funds to support the 9.59 crore households actively seeking work under the rural jobs programme.

High demand for work

Raja (he uses one name), an MGNREGS worker in Banda, whose family survived on roti and salt during the lockdown, has mostly been out of work. The situation was better before the national lockdown in 2020, he said. “The coronavirus is not a concern for me, I just want to work under MGNREGS this year,” said Raja who got “eight to 10 days of work” in July this year.

Unemployment had been a problem even before the first lockdown. In December 2019, about 48% of India’s workforce was self-employed and by August 2020, this number rose to 64%, indicating declining job opportunities, IndiaSpend reported in January.

Sixteen million jobs were added in July, but all the additional jobs were of “poor quality”, noted an August 5 report by the Centre for Monitoring of Indian Economy, a think-tank. Nearly 70% of the jobs were in the agriculture sector, owing to the monsoon sowing season.

In 2020-’21, the demand for work by Mahatma Gandhi National Rural Employment Guarantee Scheme workers increased by 43% to 13.3 crore people compared to 2019-’20, of which 84% were provided with some work. The number of persondays of work provided increased 1.5 times to 390 crore compared to the previous highest 270 crore persondays in 2018-’19, according to government data. Yet, all households, on average, received 52 days of work, as against the promised 100.

Nearly 84% of persondays generated between April 2020 and July 2020 (170 crore persondays) were generated during the same period in 2021, the government told Parliament on August 10, indicating the continued demand for work.

The demand for MGNREGS work in Uttar Pradesh doubled in 2020-’21 to 1.57 crore persons compared to 2019-’20. Apart from UP, Goa and Jharkhand saw a 100% increase or more, as per the data.

Except for Nagaland and Lakshadweep, all states and Union territories showed an increase in demand, including nine which reported an increase larger than the national average of 43%. Madhya Pradesh reported an overall increase of 74%.

In Banda, the demand for work nearly doubled (95%) in 2020-’21 compared to 2019-’20, while in Panna it increased by 54%.

The Centre allocated Rs 61,500 crore for the programme in 2020-’21, before it announced a national lockdown that witnessed a mass exodus of workers from cities to their homes in rural India. It increased the allocation by 81% to Rs 1,11,500 crore in 2020-’21, but subsequently reduced it by 34% to Rs 73,000 crore for 2021-’22.

Researchers say this allocation is insufficient to support the increase in demand and does not even cover 100 workdays for all job cardholders.

“To provide 100 days of work to all job card holding families, we would need Rs 3 lakh crore,” said Reetika Khera, economist and associate professor, Indian Institute of Technology, Delhi. “No government has allocated enough money to do so since the MGNREGA was passed.”

“During lockdown, for a month in April 2020 there was no MGNREGA work and governments did nothing,” said Nikhil Dey, social activist and founder member, Mazdoor Kisan Shakti Sangathan and National Campaign For People’s Right to Information. “But it took off in May and June partly because the government made money available through the economic package.” Despite this, there was an unpaid balance at the end of 2020, he added.

Nearly half the total MGNREGS budget (revised) for 2020-’21 had already been spent in the first four months of this financial year, IndiaSpend reported in September 2020, leaving just half to be spread over the rest of the year.

Although MGNREGS has been an effective safety net during the pandemic, Radhicka Kapoor, economist and senior visiting fellow at the Indian Council for Research on International Economic Relations said, the allocation of funds is inadequate. “Even after the increased allocation made in April 2020, MGNREGS expenditure accounts for 0.47% of the Gross Domestic Product.” This is much lower than the 1.7% recommended, by World Bank economists, for the optimal functioning of the programme, she added.

Inadequate work availability

On average, households received 52 days of work in 2020, about half the 100-day guarantee of the demand-driven programme.

Due to the pandemic-induced job losses and declined incomes, poverty has increased. Lal in Banda said he worked 15 days in 2020 under MGNREGS but has not been paid. “In Pune [as a painter], I was able to earn up to Rs 20,000 in some months,” he said. “Since I have returned home, I have barely earned anything and monthly expenses go up to Rs 8,000.”

In 2021, Baba Deen in Panna worked 23 days under MGNREGS. A lack of regular income means workers are constantly in debt. Almost every labourer in the village has taken some loan of Rs 10,000 to Rs 20,000, he said, adding that sometimes he goes out of the city to find 10 days to 15 days of regular work.

MGNREGS has a provision for an additional 50 days of wage employment during drought and natural calamities. Considering the scale of unemployment, MGNREGS activists had demanded that the government provide additional days of work and funds to support the increased demand for work.

The government must increase the number of days to “at least 200 days per year so as to effectively cater to the growing job demands”, recommended an August report of the Lok Sabha standing committee on labour. It must “contemplate” an increase in budgetary allocation, immediate payments for work done, and make health insurance mandatory for all MGNREGS workers, the report said.

But the Centre has remained reluctant to increase the days of wage employment. In July, it told Parliament that “state[s] can provide additional man-days of work over and above of 100 days from its own resources”. An additional 50 days of wage employment is provided in the notified drought-affected areas or natural calamity areas on the recommendation of the Ministry of Agriculture and Farmers Welfare, the government said, and added that there is “no plan to increase days of work” under MGNREGS.

“Households are likely to near the completion of 100 days of work sooner during distress times. At least till the effects of Covid-19 are over, this entitlement should be increased,” said Kapoor of the Indian Council for Research on International Economic Relations.

About 7,00,000 families had already completed 100 days of work in under five months into the financial year, as of August 20, as per government data. “Most workers do not get 100 days of work, and this was the case even before the pandemic,” said Raja.

An additional increase of workdays must be supported with adequate fund allocation, and the government must consider 2020 and 2021 as disaster [years] and extend the number of workdays, Dey said. “As soon as you stop paying, workers stop coming to work. Only if there is timely payment can the programme be demand driven.”

‘Provided work on demand’

In Banda, Mewalal Verma, a Gram Rozgar Sahayak or employment guarantee assistant with the panchayat, in Raja’s village Motihari, said the panchayat administration does its best to provide MGNREGS work immediately when permanent residents of the village ask for it. But, he said, there was “no demand for MGNREGA work at least in our gram panchayat from migrant workers who returned home during the lockdown”.

His reasoning: “Till last year [2020], the daily average wage rate was Rs 201 and they earn much more than that in cities and other states, so why would a worker want to slog for two hundred rupees in the village?”

While the Motihari panchayat claimed that there was no demand for work from returning migrant workers, in Panna, there was a slight increase in the demand for work, “but not much”, said the panchayat secretary of Bahadurganj village, Santram Yadav. “We issued the return migrants job cards and provided them work,” he said.

Wage delay

Lal has a debt of Rs 1.5 lakh. He also has to pay nearly Rs 4,500 a month for the treatment of his wife. “People are a bit apprehensive of taking up MGNREGS this year in our village because last year we were not paid the full amount for the work done,” he said.

Inadequate wage increase and wage delays have made workers reluctant to take up work. To access wages, workers face numerous delays and hurdles, as we reported in December 2020 based on a three-state survey.

“If we raise the issue of payment with the panchayat, we are told it will arrive and the matter is closed,” said Raja, adding that payment delays have long been a MGNREGS reality, since before the pandemic.

The MGNREGS wages of at least 17 of the 21 states are lower than the state minimum wage for agriculture, and the shortfall is in the range of 2-33%, according to an October 2020 analysis by researchers Ankita Aggarwal and Vipul Kumar Paikra.

In the ongoing economic slowdown, MGNREGS wages must be increased and at least brought up to states’ respective minimum wage for agriculture, so as to spur spending by poor households, Kapoor said.

The average increase in wages was 4% in 2021-’22 compared to the 11% hike in 2020-’21, FactChecker reported in March. In comparison, the dearness allowance for central government employees and pensioners, meant to offset inflation, was increased by 11% in July.

Lack of funds and the government’s changing Covid-19 strategy are two factors impacting the jobs programme, said Dey. “Workers should get an unemployment allowance at home at 25% of the MGNREGS wage rate if they do not get work in the first month and then 50%, assuming that 100 days work guarantee remains protected.”

The government should change regulations on permissible work that can be undertaken in MGNREGS to accommodate pandemic restrictions, Dey further suggested. This will allow workers to work at or close to home and mitigate problems of the pandemic, he added.

Like millions of workers, Raja asks for adequate persondays and timely payments under MGNREGS. “I am not in a position to migrate to another state for work, I have to raise my family here itself,” he said.

This article first appeared on IndiaSpend, a data-driven and public-interest journalism non-profit.