Low budgetary allocation crippling MGNREGS, says Parliamentary panel

Though additional funds are often allotted later as the scheme is demand driven, pruning the budget at the very outset has a cascading impact on timely release of wages and other aspects, the panel said

Budgetary allocation to the Mahatma Gandhi National Rural Employment Guarantee Scheme should be based on the expenditure pattern of the previous years, said the Parliamentary Standing Committee on Rural Development, headed by DMK MP K. Kanimozhi. | Photo Credit: The Hindu

A reduced budget at the outset of the financial year for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) has a “cascading effect on various important aspects” of the programme and a telling impact on its progress, the Parliamentary Standing Committee on Rural Development said in its report tabled on Thursday. 

The budgetary allocation should instead be based on the expenditure pattern of the previous years, said the committee, which is headed by Dravida Munnetra Kazhagam Lok Sabha MP K. Kanimozhi.

‘Cascading effect’

The committee pointed out that the budgetary allocation for the scheme has been well below the demand made by the Rural Development Ministry each year. While conceding the Ministry’s argument that it is a demand driven programme and the budget is replenished accordingly, the committee said, “The pruning of funds at Budget Estimate (BE) stage itself does have a cascading effect on various important aspects such as timely release of wages, release of material share etc. which have a telling impact on the progress of the Scheme. The Committee feels that for smooth implementation of MGNREGA at ground level, shortage of funds is a big obstacle which does not augur well for the performance of the scheme.”

In the Union Budget for 2024-25, an allocation of ₹86,000 crore has been made, which is at par with the revised estimate for the programme in the ongoing financial year 2023-24. But actual expenditures till February 1 have already reached ₹88,000 crore and are set to go up further, with several weeks remaining before the close of the financial year. 

Late wage payment

The committee pointed out several other shortcomings in its 100-page report on the implementation of the programme, including the necessity to increase wages, which are currently well below market rates.

The committee also flagged the delay in dispensing the wages, which is supposed to be compensated by a delay allowance as prescribed by the governing Act. MGNREGA beneficiaries are entitled to receive compensation for any delay, at the rate of 0.05% of the unpaid wages per day of delay beyond the sixteenth day after the closure of the muster roll. The committee found that, during 2022-23, the approved delay allowance amount was ₹93 lakh; however, only ₹59 lakh was paid. During the ongoing financial year 2023-24, the committee found that, till November 21, ₹24 lakh had been approved, but so far, only ₹2.5 lakh has been paid.

“These figures themselves indicate the concerns raised by the MGNREGA beneficiaries who not only suffer from the delay in the payment of wages but are also bereft of their statutory solace in terms of payment of delay compensation,” the committee said.