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Changes to MGNREGS may cut into wages

Union Minister of Rural Development Nitin Gadkari has proposed that the MGNREGS be restricted to only tribal and poor areas and the permissible labour to material ratio of expenses be changed from the current 60:40 to 51:49.

While the first proposal is being opposed by political parties, who think it will dilute the scheme’s universal employment guarantee, there has been less discussion on the second proposal even though its rationale is not matched by evidence.

Ministry data shows that in 2013-14, States spent 26.6 per cent of MGNREGS funds on material. In 2012-13, this was 27.7 per cent, much lower than the current permissible limit of 40%. In changes proposed to the MGNREGS, Mr. Gadkari has proposed that the permissible labour to material ratio of expenses be changed from the current 60:40 to 51:49. Even as the current upper limit in expenditure is not being met, the government wants to increase this from 40 to 49 per cent. The change will increase the presence of contractors in the job scheme and squeeze the funds available for wages.

“There was no prior consultation on the labour-material ratio changes and the Minister’s announcement came as a surprise to us. There is no real reason [for the change] when the States are not even spending 40 per cent [on material] right now,” said an official at the Ministry requesting anonymity.

Madhya Pradesh Chief Minister Shivraj Singh Chouhan wrote to Mr. Gadkari in July that the labour-material ratio in the scheme be changed from 60:40 to 50:50. But data shows that in Madhya Pradesh, only 25 per cent of Rs 2,030 crore MGNREGS funds in this financial year have been spent on material so far.

With UPA-II government tightening spending in its last years, MGNREGS allocation was reduced from Rs. 40,100 crore in 2010-11 to Rs 33,000 crore in 2013-14.

“Increasing material ratio will add Rs. 8,000 crore in expenses. This means under the current allocation, we will have that much less to spend on wages,” said a senior official.

‘Only in tribal parts’

Mr. Gadkari has also proposed to restrict MGNREGS to the poorer parts of the country. While the Minister made the proposal – which will require amending the Act – last week, the Ministry, since July, has been focusing on implementing the scheme in 2,500 backward blocks under its Intensive Participatory Planning Exercise. These blocks have been identified based on percentage of population below poverty line (BPL), as per the Planning commission estimates of 2013, and a backwardness index prepared by the Planning Commission using the 2011 Census data that uses five parameters – percentage of households primarily dependent on agriculture, female literacy rate, households without access to electricity, households without access to drinking water and sanitation within the premises and households without access to banking facilities.

Going by these parameters, in Tamil Nadu, one of the best performing States in the MGNREGS currently, only 98 of 385 blocks can be identified as backward, while in Chhattisgarh, 105 of total the 145 block fall into this category.

“This will end the universal spirit of the MGNREGS,” said Shankar Singh, an activist with Mazdoor Kisan Shakti Sangathan, Rajasthan.


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Printable version | Sep 17, 2021 10:29:49 PM | https://www.thehindu.com/news/national/changes-to-mgnregs-may-cut-into-wages/article6432716.ece

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