With Tamil Nadu, Andhra Pradesh and Telangana accounting for 30% of the flagship Mahatma Gandhi National Rural Employment Guarantee Scheme spending so far in FY24, the Centre is concerned that the scheme has been “compromised to supplement” the state budgets for rural works, rather than address seasonal unemployment.
As a result, the Centre will likely remain economical in additional allocation of funds later this week, when it seeks Parliament’s nod for supplementary demand for grants for the scheme (MGNREGS).
Officials fear that the trend of a few high per-capita-income states cornering a larger pie would likely hurt the requirement of backward and low-income states.
“States where poverty and backwardness are more, are getting less under the scheme,” an official said.
Tamil Nadu, which has a share of just 4.07% in the central taxes (divisible pool), accounted for Rs 11,373 crore or 14.83% of the spending of Rs 76,707 crore in the MGNREGS so far in FY24. On the other hand, the country’s most populous state Uttar Pradesh got Rs 8,504 crore or 11.1% in MGNREGS funds while it has a share of 17.93% in inter-se share of tax devolution.
O course, there is a direct link between the tax devolution formula and MGNREGS.
In the tax devolution, income distance or low per capita income has the highest weight (which is 45% under the 15th FC award period). In FY23, per capita income in Tamil Nadu was Rs 2,75,583 while it was Rs 2,19,518 in Andhra Pradesh. The same was Rs 83,565 for UP and Rs 54,111 for Bihar.
MGNREGS aims to provide at least 100 days of guaranteed wage employment in a financial year to every household in rural areas of the country, whose adult members volunteer to do unskilled manual work, mainly during off-seasons.
Rampant misappropriation of funds allocated under the flagship scheme is one of the main triggers for the Centre to make a five-year low provision of Rs 60,000 crore in the FY24 Budget for the jobs programme.
There are over 260 permissible works including earthwork, rural roads and toilets in schools under MGNREGS.
It has been found that some states including Tamil Nadu, Andhra Pradesh and Telangana are using the MGNREGS funds for whatever infrastructure they could build and saving on their own resources on their projects. For example, if such a state is building rural roads, it would use MGNREGS for all the earthwork and topping and the rest of the work would be completed by the state. Similarly, if schools are being built, toilets are under MGNREGS.
“There is nothing wrong in such works, yet there is a manipulation to corner a larger share,” another official said. This malpractice has put pressure on the states which need funds to give work to people during the lean season as the Centre has become tight-fisted after reports of misuse of funds. According to an internal government estimate, one-third of MGNREGS funds suffer various kinds of leakages.
The Centre has so far released Rs 68,445 crore or 98% of the Rs 70,000 crore provided in FY24 (Rs 60,000 crore in the Budget and Rs 10,000 crore from the contingency fund).
As against the availability of Rs 79,586 crore (including some writeback of funds from the previous year) as of December 4 of the current fiscal, the expenditure/releases stood at Rs 76,707 crore or 96% of the available funds for the MGNREGS. Some more funds will be provided later this week through the supplementary demand for grants.