Home/ News / India20 trillion stimulus: Govt increases allocation by 40,000 crore for MNREGS

₹20 trillion stimulus: Govt increases allocation by ₹40,000 crore for MNREGS

At ₹1.01 trillion, this is the highest ever allocation in a year for the programme that was started in 2006 by the UPA govt
  • Nearly 24 million job seekers in rural areas have enrolled for work under MGNREGS so far since the lockdown
  • The government had allocated  ₹61,000 crore for MNREGS in the budget for the current fiscal announced on 1 February. (Photo: Mint)Premium
    The government had allocated 61,000 crore for MNREGS in the budget for the current fiscal announced on 1 February. (Photo: Mint)

    The Narendra Modi government on Sunday expanded the social safety net -- the rural jobs scheme – with an extra fund infusion to a total of 1.01 trillion in FY 2020-21 to ensure that the rural poor, including the hundreds of thousands of urban migrant workers who have returned to the villages, get jobs and wages crucial for their survival.

    Finance Minister Nirmala Sitharaman announced that the programme, which was allocated 61,500 crores in the annual budget on 1 February, would get a boost of 40,000 crores more.

    At 1.01 trillion, this is the highest ever initial allocation in a year for the programme that was started in 2006 by the United Progressive Alliance government. The previous highest initial allocation was in the 2019-20 budget when the government had earmarked 68,000 crores for the programme that guarantees 100 days of wage employment in a financial year to a rural household whose adult members volunteer for unskilled manual work.

    Besides putting more cash in the hands of the poor, the expectation was that this would in turn reinvigorate rural demand which would in turn spur domestic consumption.

    The announcement was the first among seven making up the last tranche of relief measures meant to mitigate the impact of the lockdown on farmers, migrants, common people and businesses under the 20 trillion stimulus package announced by Prime Minister Narendra Modi on Tuesday.

    Besides creating 3 billion person days (number of people working per day times number of days worked), the fund injection is aimed at “the creation of a large number of durable and livelihood assets including water conservation assets," Sitharaman said. “It will also address the need for more work including for the migrant workers in the monsoon season as well," she said. In 2019-20 which was considered a normal monsoon year without rural distress, the total person days created was 2.65 billion. On Friday, Sitharaman, said the rural jobs programme had already generated 146.2 million person-days of work till 13 May. “Actually 40-50% more persons have got enrolled compared to last May. We have enrolled all of the migrants coming back. We are making provisions through the rural development ministry to ensure that they get enrolled, they get work, they get the due payments," she added.

    Analysts largely welcomed the new injection of into the Mahatma Gandhi National Employment Guarantee Scheme (MGNREGS) seen a safety net for the jobless in rural India, to stem distress migration and farmer suicides under duress in case of crop failure.

    It comes as hundreds of thousands of migrant workers previously employed in businesses and factories in urban India are making their way back to their villages in the hinterland because of the lockdown – first announced on 25 March for a period of 21 days to arrest the spread of covid-19 which has now been extended twice.

    Welcoming the announcement, former rural development secretary S Vijay Kumar, now with the New Delhi based The Energy and Resources Institute however pointed out that panchayats in some states like Uttar Pradesh and Bihar were ridden with conflicts and lacked the capacity to implement MGNREGS programmes properly – something the central government needed to take note of. Most of the migrants in terms of numbers were returning to these states, he said.

    Reetika Khera, development economist at the Indian Institute of Management, Ahmedabad said the additional allocation of 40thousand crore is a good start, but the government should commit to making more available."

    “The announcement regarding keeping work open during the monsoon is very important. The monsoon is the 'hungry season', when people's food stocks run out. Generally, MGNREGS used to close at that time so that it doesn't compete with the agri labour market," she said. “But all this must be combined with simplification of MGNREGS processes to ensure that people get work easily and paid on time," she said. For example, officials must allow for onsite enrollment of job seekers.

    Sunday’s announcement is in addition to an initial relief package, the Pradhan Mantri Garib Kalyan Yojna (PMGKY), comprising about 1% of GDP announced in March. The Modi government had then announced the hiking of wages under the (MGNREGS) from 182 to 202. From 21 April, the Modi government had allowed some activities under MGNREGS to the taken up despite the lockdown being in place. These were to be undertaken with strict adherence to social distancing norms. The creation of assets like village ponds and horticultural activities were allowed given that this would not need the presence of a large number of people in a small area, officials said.

    The distribution of free food grains was also another component of the PMGKY.

    “The free food and other announcements are first and foremost ways to deal with the humanitarian crisis (of migrants) and then will also help boost aggregate demand which in help deal with the economic crisis," Khera said.

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    Updated: 17 May 2020, 07:25 PM IST
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