MGNREGA gets more money; FM Sitharaman will spend this much to provide jobs during monsoon season

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Updated: May 17, 2020 4:59 PM

While wrapping up the press conference of her fifth and final tranche, FM Sitharaman provided the breakup of nearly Rs 21 lakh crore special economic package. Where the value of the fourth and fifth tranche was equal to Rs 48,000 crore, including Rs 40,000 crore additional spending on MGNREGA

MGNREGA, jobsWith a lot of workers migrating back to their villages, the government has made provisions so that they can also join in the scheme from their hometowns, if they want to enrol in MGNREGA

In a major push to generate more job opportunities in rural India, especially during the upcoming monsoon season, Finance Minister Nirmala Sitharaman today announced an additional allocation of Rs 40,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). The government had allocated Rs 61,000 crore for MNREGA in the budget for the current fiscal announced on February 1, 2020.  With a lot of workers migrating back to their villages, the government has made provisions so that they can also join in the scheme from their hometowns, if they want to enrol in MGNREGA, Sitharaman said while rolling out fifth and last tranche of Rs 20 lakh crore special economic package.

This way, the government will ensure that during monsoon season and people who have gone back to villages, will get jobs if they enrol under this scheme. This step will generate nearly 300 crore more person days of work. It will also address the need for work including returning migrants in the monsoon season as well.

This will lead to the creation of a larger number of durable and livelihood assets including water conservation assets, and will boost the rural economy through higher production. MGNREGA was among announcements related to seven steps, namely, health; businesses; decriminalisation of Companies Act; Ease of Doing Business and related matters; PSUs and policies; and state government and resources. The hiking of MGNREGA outlay by additional Rs 40,000 crores, along with raising state’s borrowing limit and major privatisation push among others are “eminently desirable and very positive from the market perspective,” VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

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“While Rs 61,500 crores was allocated in the budget 2020, it might make more sense to compare with the expenditure last year, which was Rs 71,000 crore,” Partha Chatterjee, Professor and Head of the Economics Department, Shiv Nadar University, said. In this year’s budget, there was a reduction of funds allocated to this rural job scheme. “Now, an additional Rs 40,000 crores are allocated, so the total allocation now is 42% higher than what was spent in the last fiscal year,” he added. Given that the rate for a day under MGNREGA was increased from Rs 182 to Rs 202 in an earlier announcement by the government, “this would translate to about 28% increase in person-day that can be supported this year,” Partha Chatterjee further said.

While wrapping up the press conference of her fifth and final tranche, FM Sitharaman provided the breakup of nearly Rs 21 lakh crore special economic package. Where the value of the fourth and fifth tranche was equal to Rs 48,000 crore, including Rs 40,000 crore additional spending on MGNREGA. Earlier, the finance minister had mentioned that 40% to 50% more people have enrolled in MGNREGA this May compared to last year. “With such huge numbers suddenly demanding MNREGA some serious thinking and planning will be required about how we can utilize this to enhance physical and social capital in the country that can give a boost to capacity and living conditions,” Partha Chatterjee said.

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