‘The 2016-17 budget is pro-village, pro-poor and pro-farmer’, said the Indian prime minister on 29 January 2016 after the budget was presented in the parliament. As the current government under Bharatiya Janta Party (BJP) completes two years, I seek to examine how concerned it is towards the villages, poor and farmers in reality. To get a glimpse, I examine the state of the National Rural Employment Guarantee Act (NREGA), renamed as Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in 2009, a law that came to force in 2006 under a regime that is now in opposition. The Act guarantees a maximum of 100 days of employment, per year, per rural household whose adult members are willing to do unskilled labour.

A demand-based programme, MGNREGA entitles its workers to ‘unemployment wages’ if the government fails to provide work or pay wages within 15 days from the time of work request or work completion. Moving beyond the welfarist approach, this legislation adopts a two-pronged approach that combines employment generation and creation of public assets in villages.

The 2016-17 budget has allocated Rs.380 billion towards MGNREGA, marking an increase of Rs. 38 billion from the last year. The prime minister proclaimed that MGNREGA has received the biggest allocation. Further, the finance minister claimed that if the entire allocation is spent, it will be the highest expenditure by any government towards the generation of rural employment.

 

A reality check, however, paints a different picture. The graph below clearly indicates that Rs.380 billionis not the highest allocation made against this scheme. In 2010-11, an amount of Rs. 401 billion was allocated for the scheme, of which 89 percent was actually spent by the end of the year. In fact, the figure Rs. 380 billion is only close to the average allocation for the scheme since its nation-wide expansion in 2010 until 2015-16 (Rs. 360 billion).

Secondly, the allocation has not been in tandem with either the demands from the states or the rising price inflation. Grassroots organisations that have been closely monitoring the implementation of NREGA released a statement that if inflation is considered as per 2010-11 allocations, Rs. 650 billionmust have be allotted in 2015-16.

Further, in April this year, the Supreme Court of Indiacensured the government for delays in paying wages: unpaid wages during 2015-16 amounted to Rs. 82.61 billion. In addition, the government has a debt of Rs. 36.86 billion against material usage for the same fiscal year as per government records. Thus, the government owes payments totalling to approximately Rs. 120 billion. The irony is that last month the prime minister had rapped the opposition for its inefficient implementation of the scheme in poor and backward districts when it was in power before this government, citing a 2012 report of the Comptroller and Auditor General, the auditor of the government.

If Rs. 120 billion is paid from this year’s budget, there will be only Rs 265 billion left for the year. This would be the lowest allocation ever. As seen above, many states are facing negative fund balance as they had used up their funds by the middle of the year and were not allocated additional funds by the centre. In the 10 drought hit states, MGNREGA has been rendered ineffective with the centre’s new policy of fund squeeze which has resulted in billions of unpaid wages towards the workers. The government fails to understand that as a demand-based program, the MGNREGA budget will be open ended in nature. Labour budgets prepared by the states can provide only a rough demand estimate. This estimate cannot be considered final, and can vary according to many factors, including emergencies like drought.

Attempts to dilute MGNREGA began as soon as the current government came to power in 2014.The Ministry of Rural Development announced a number of changes towards the implementation of NREGA. Axing the existing universal implementation, it proposed to restrict the Act to 200 ‘backward’ districts. In addition, it intended to adjust the material component of the scheme to 49% from the existing 41%. This questioned the basic premises of the legislation itself as it stipulates a 60:40 ratio of labour to material as it largely intended to provide unskilled labour. 28 leading economists of the country, alarmed by the changes, wrote to the prime minister, demanding a reconsideration of the government’s steps. Severe criticism from the opposition and the civil society prevented the government from stepping ahead.

Over-centralization of technology, linking wages with Aadhar (the controversial biometric identification data project), delays in wage payments in addition to corruption constituted to become the characteristics of this scheme since 2009. With the existing Rs. 120 billion debt and further intensification of drought in India, will the current government use MGNREGA to ease the life of its people or ignore their existence by its policy of fund squeeze? The promptness of this government’s response towards the disbursal of delayed wage payments and its handling of MGNREGA in drought affected states will display how concerned BJP is towards its villages and poor in reality.