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LATEST NEWS UPDATES | MNREGA funds allocation: Honouring the work-on-demand guarantee -Ashwini Kulkarni

MNREGA funds allocation: Honouring the work-on-demand guarantee -Ashwini Kulkarni

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published Published on Dec 15, 2021   modified Modified on Dec 17, 2021

-IdeasforIndia.com

The Centre has sought an additional Rs. 25,000 crore as funding for MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act). Based on simple calculations using official data, Ashwini Kulkarni contends that the actual fund requirement is in fact much higher. As the pandemic continues to adversely impact rural livelihoods, the government should allocate sufficient funds to MNREGA, in order to honour the work-on-demand guarantee.

For over a month, national and local media have been covering the issue of a fund shortage in MNREGA (Mahatma Gandhi National Rural Employment Guarantee Act). There are a host of pending payments pertaining to MNREGA work as the states do not have adequate funds for this purpose. To deal with the fund shortage, the central government allocated an additional Rs. 10,000 crore to the budgeted amount for MNREGA. Recent reports have also indicated that an additional Rs. 25,000 crore is being sought by the Centre as part of the supplementary budget. 

In this post, I contend that the amount of additional funds demanded are ad hoc, and simple arithmetic based on official numbers from the MNREGA website shows that the minimum additional funds required in FY2021-22 is in fact far greater.

MNREGA expenditures: Estimating fund requirement 
The total MNREGA expenditure as on 3 December 2021 is Rs. 78,057.78 crore and the Centre has released Rs. 69,799.35 crore till date. Hence, the expenditure so far, has already surpassed the allocations made in the 2021-22 Union Budget. 

Considering the expenditure so far, what could the requirements be for the remaining financial year? I provide some estimates below. I look at the potential funds needed based on three indicators, number of households who are likely to seek MNREGA work in the coming months, average number of person-days per household, and the possibility of higher person-days being demanded in the last four months of FY2021-22. 

The average person-days generated per household, that has participated in MNREGA work in the last four years (FY2017-18 to FY2020-21), has been in the range of 46 to 52 person-days per year, and across the four years, the average person-days per household is 48 days per year.  In FY2021-22, Rs. 6.25 crore households have clocked an average of 40 days of MNREGA work, each. If these same households were to reach the calculated annual average of 48 days, an additional Rs. 10,450 crore would be required in wage payments itself, with an average of Rs. 209 paid in wages per day per person. 

However, the number of households participating in MNREGA work would likely increase in coming months. In the last four years, the highest number of participating households in a single year was 7.55 crore. Considering the difference between this maximum and the households that have participated in MNREGA so far in FY2021-22 (1.3 crore households), and the estimates above, the additional amount required in wage payments would be Rs. 13,041 crore.

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IdeasforIndia.com, 15 December, 2021, https://www.ideasforindia.in/topics/poverty-inequality/mnrega-funds-allocation-honouring-the-work-on-demand-guarantee.html


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