Rural job scheme: Cash-strapped states cut materials spend to boost relief to poor

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Published: July 18, 2020 6:15 AM

In normal times, of every Rs 10 spent under MG-NREGS, Rs 6-7 goes to the workers as wages and the balance Rs 3-4 is used for purchase of building materials.

In normal times, of every Rs 10 spent under MG-NREGS, Rs 6-7 goes to the workers as wages and the balance Rs 3-4 is used for purchase of building materials.

As the Centre fast-tracked release of funds under the rural jobs scheme to provide timely income support to the people in villages, including migrant workers who have returned from cities in large numbers, many cash-strapped state governments have used the funds to employ the beneficiaries in works involving lesser use of materials, according to data gathered by FE.

In normal times, of every Rs 10 spent under MG-NREGS, Rs 6-7 goes to the workers as wages and the balance Rs 3-4 is used for purchase of building materials. However, the wage-materials ratio has turned out to be skewed much more towards the wages side in the current fiscal; in a number of states, the ratio has become 8:2 or higher and some states like Assam and Haryana have used 95% or more of the scheme’s funds for payment of wages.

An obvious fallout of the states’ strategy is that the MG-NREGS work carried out during the pandemic period may not have created much durable assets, but according to observers, since the expediency demanded use of the funds for wage payments, the states cannot be faulted for adopting the line. The higher share of spending on wages also shows the poor health of the state finances; under the rules, they have to bear a third of the expenditure on material and skilled labour, while the Centre bears the entire cost of wages for the unskilled labour under the MG-NREGS.

In labour-supplier states such as Bihar, Chhattisgarh and Uttar Pradesh, wages have constituted 57.28%, 79.47% and 67.71%, respectively, of the total spending under the popular scheme so far this year. In Telengana, the percentage stood at 88% now. However, in Kerala, which is a labour-absorbing state, wages constitute just 58% of the total amount spent.

“It seems that most of the works created under MG-NREGS have been of non-asset creating variety. The scheme has been liberally used by the state governments as an alternative to direct benefit transfer (DBT) to provide a kind of social security to the rural poor,” said labour economist and XLRI professor KR Shyam Sundar. “The higher the spend on MG-NREGS, the lesser will be reverse migration. It means urban employment is shrinking. It is also an indicator of the slackening of the urban labour market,” he added.

Total expenditure under MG-NREGS by states as on July 17 this fiscal stood at `39,229 crore while the Centre has released `40,068 crore under the scheme. Around 194 crore person days have been created so far against the budget target of 280.76 crore for the entire last fiscal.

To ensure that crores of migrant labourers who have reached their villages from urban centres find enough job opportunities in the rural areas, the government has allocated an additional Rs 40,000 crore under the MGNREGS for the current fiscal, over and above the initial budget outlay of Rs 61,500 crore for 2020-21.

Announcing this increased outlay, finance minister Nirmala Sitharaman had said that with the infusion, nearly 300 crore person days of jobs can be generated in 2020-21, helping creation of a larger number of durable and livelihood assets.

Further, the government also launched a Rs 50,000-crore rural-centric Garib Kalyan Rojgar Abhiyaan that focuses on boosting livelihood opportunities for returnee migrant workers. The scheme will be run by the funds allocated for 25 existing schemes and catalyse rural infrastructure development and asset creation in 116 districts, including in 25 backward ones, spread across six states. The mission-mode 125-day project is designed to involve the labour of over 67 lakh returnee migrants.

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