Home / Economy / The worrying cutbacks in rural jobs guarantee outlay, in charts

If the Centre holds its ground on allocations to the rural employment guarantee scheme, this important measure of last resort will end up offering about one-third fewer person-days of work in 2022-23, show Mint calculations. Further, given that existing allocations are unable to fully service current demand for work, a persistence in high demand will inevitably translate into cutbacks for the 316 million registered worker-beneficiaries.

The prospect of this happening was voiced on 8 February by a permanent Parliamentary panel on rural development and Panchayati Raj. In a report to the Lok Sabha, the panel criticized the lower allocation for 2022-23 to the Mahatma Gandhi National Rural Employment Guarantee scheme (MGNREGS), which guarantees 100 days of wage labour to every rural household per year. It highlighted that actual expenditure has consistently exceeded budgeted amounts.

For 2021-22, the Centre expects to spend 98,000 crore on MGNREGS, 34% more than the budgeted 73,000 crore. Yet, for 2022-23, it has set the targeted spend again at 73,000 crore, which is roughly equivalent to the pre-pandemic spend.

A total outlay of 73,000 crore will generate 2.21 billion person-days of employment, assuming 71.5% goes towards wages (average for the last three years) and a wage rate of 236.5 (average of the notified wage rate across states). That’s about 29% less than the 3.1 billion person-days provided in 2021-22, which still has about 50 days to run. That’s also 17% less than the 2019-20 (pre-pandemic) figure. Calibrating the scheme’s workings to an allocation of 73,000 crore could translate into fewer persons being employed, or fewer days of employment, or both.

Demand gap

The reduced allocation is despite monthly demand for MGNREGS remaining significantly higher than the pre-pandemic period. In 2019-20, an average of 18.8 million households sought work per month under MGNREGS, with a high of 24.8 million in May 2019. In 2020-21, as lockdowns ensued and economic activity contracted, the monthly average shot up to 27.6 million, with a high of 44.8 million in June 2020.

In 2021-22, this number has abated, but is far from pre-pandemic levels. The monthly average till January 2022 was 25.4 million households—35% higher than 2020-21 and only 8% below 2022-23 levels. This is real topline demand. Further, of the households that seek work each month, not everyone gets work. In the past 34 months, the share of households receiving work has varied between 77% and 89%. During the pandemic, the figure was at the lower end of this band, but has since picked up.

Promise not kept

Yet, even this is not a picture of true MGNREGS demand, or how the scheme is servicing its mandate. The MGNREGS Act mandates making available at least 100 days of wage employment to each household in a year. The figures in the previous section, of how many households worked each month, do not tell us how many days they worked for that month. The ministry of rural development releases this data on an annual basis, and it shows a large distance to 100 days.

Over the last two years, and this is likely the case this year too, less than 10% of employed households received 100 or more days of employment. In each of these years, 36-41% of households averaged below 30 days. Among larger states, only Kerala (29%), Chhattisgarh (20%) and Andhra Pradesh (18%), Rajasthan (16%) and Telangana (11%) met the 100-day requirement for more than 10% of employed households in 2020-21.

States of stress

Either households don’t want MGNREGS work up to 100 days in a year, or the government is unable to deliver it. Given the gap between work demanded and provided, it is likely the latter. This remains a challenge. In 2020-21, demand for MGNREGS spiked across nearly all states. The increase was especially significant in large labour-exporting states such as Uttar Pradesh (increase of 105%) and West Bengal (114%). Migrants who had returned to their villages from across the country turned to MGNREGS in droves.

While the quantum of increase has since reduced, 27 states still recorded a higher MGNREGS demand in 2021-22 than in 2019-20. In fact, for five states, including Gujarat and Karnataka, demand for MGNREGS employment is greater in 2021-22 than 2020-21, indicating there is still widespread rural distress in these states. While two good monsoons have helped absorb surplus labour in rural areas, deficient rainfall could increase demand for MGNREGS—and further test the 73,000 crore allocation.

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