New Delhi: Investing in social sector programmes such as the rural job guarantee scheme will benefit the hinterland, which is another “engine" that will pull the Indian economy towards higher growth, finance minister Arun Jaitley said on Tuesday.

The minister, who was chief guest at a function to commemorate the 10th anniversary of the Mahatma Gandhi Rural Employment Guarantee Scheme (MGNREGS) in New Delhi, also allayed fears that resources allocated for development programmes like the rural jobs scheme would be cut.

“The world over, there is a slowdown in the economy... The economies in general are shrinking. In this context, it is only India which is growing at 7% or more... to take this forward, we need to see which are the areas that can contribute more," Jaitley said. “The private sector is not being able to contribute much (to economic growth today). Two years of poor rains have resulted in low farm productivity and had an impact on rural incomes. And in conditions like this, the government comes forward (and invests in social programmes). While we may not be able to control global oil prices, increasing the capacity of rural areas, this is something that we have control over. We have the capacity to improve the situation in rural areas so that we can add another engine to pull forward our economic growth."

The comments come almost a year after Prime Minister Narendra Modi described the MGNREGS—launched by the Congress-led United Progressive Alliance (UPA) government—as a “living monument" of the failure of successive Congress governments to tackle poverty.

Launched in 2006, the rural employment programme has been a key source of livelihood for millions of rural households. It guarantees up to 100 days of unskilled work in a year to one member of every rural household and is credited with raising rural household incomes. According to the government, 3.1 trillion has been spent on the scheme in the past decade.

With the National Democratic Alliance (NDA) elected to office in 2014, worries were expressed that the jobs scheme would be restricted to a few districts of the country or be wound up entirely. There were also fears that funding to the programme could be cut—something Jaitley tried to dispel in his speech.

The Modi government boosted spending on the MGNREGS to a record high, the minister noted, adding that it would be for the first time in years that the programme would be given resources over and above the budgeted amount.

In the past, many social sector schemes recorded lower spending because of cuts in their allocations after resources had been earmarked to fund them in the annual budget.

“This government has not followed the practice of just making higher provisions and later cutting it. I think this would be the first year when the 34,000-35,000 crore which was allocated has not only been spent fully, but also some more resources could be given to MGNREGS," Jaitley said.

Increasing public spending in areas such as rural electrification, education, health and irrigation will help develop the rural economy, the minister said, adding, “The amount of funds we can put in these sectors, it would not only help improve the sector but also boost the economic growth of the country. This is the responsibility which we are undertaking through MGNREGS."

Social activists Aruna Roy and Nikhil Dey, who head the Rajasthan-based voluntary People’s Action for Employment Guarantee group, in a press statement questioned Jaitley’s remarks on making adequate resources available for MGNREGS.

“If budgetary allocations in UPA II and the NDA had only kept pace with real expenditure levels from 2010, the whole programme would have had a real opportunity to expand in scope, reach, and effect. The actual expenditure in MGNREGA in 2010-11 was 39,377 crore....In subsequent years, if the overall expenditure in MGNREGA had been maintained at the same level as in 2010-11 (taking into account inflation on the basis of Consumer Price Index - Rural Labour), the budget outlay for MGNREGA in 2015-16 should have been 61,445 Crore," Roy and Dey said.

In his comments, rural development minister Chaudhury Birender Singh noted that the rural employment scheme had been transformed by linking it with other schemes like the Clean India Mission as well as agriculture.

But he noted that payment of wages on time still remained a problem. According to the provisions of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), money to workers for the job done had to be disbursed within 15 days but this was happening in only 44% of the cases.

In the year 2015-16 so far, the jobs scheme has provided employment to members of 80 million families and the aim was to reach 110 million families in the coming year, Singh said.

Congress vice-president Rahul Gandhi visited Bandlapalli village in Anantpur district of Andhra Pradesh on Tuesday, where the UPA government had first launched the MGNREGA.

Addressing a rally, Gandhi said: “For the first time, crores of people got money in the pockets. Those who were never thought about were given the guarantee to get work. Today I met a lot of families who got work under MGNREGA and they said they haven’t seen a scheme better than MGNREGA. They said, its the first time their families had money for educating our children while some other said their children could go out to work for the first time."

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