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BW Businessworld

On The Horns Of A Dilemma

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The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is turning out to be bitter-sweet: on the one hand, it is a handy tool to provide work to the jobless agricultural labourer; on the other, it is a gorilla on the books of account.

So even as drought relief handouts and diesel and coal subsidies are being doled out, the government’s flagship employment guarantee programme could well turn out to be another accounting spoiler, both for the Centre and the states. The latter could be especially hard pressed.

In the drought-affected states, for example, the 100-day maximum limit for employment under MGNREGA is being removed. States such as Andhra Pradesh (AP) and Rajasthan have already made representations to the rural development ministry that they want to provide 200 days of work this year.

A delegation of MPs from AP led by the state’s rural development minister met Union rural development minister Jairam Ramesh on the issue, confirms Sowmya Kidambi, director, Society for Social Audit, Accountability & Transparency, an independent society set up by the AP government’s rural development department.

Kidambi says that though Ramesh responded positively, he said that “no additionality from  the MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme) budget would be possible.” For the fiscal 2012-2013, the Union government has allocated Rs 33,000 crore towards the MGNREGS, compared to the Rs 40,000 crore allocated in 2011-12.

According to Kidambi, it appears that any additionality will have to be borne by the state governments  out of their calamity relief funds.

This could mean a sizeable 13 per cent increase over the usual expenditure. “In 2011-12, Andhra Pradesh has operated the 200 days entitlement in all drought-hit villages and the additionality has been Rs 518 crore, which is about 13 per cent higher than the usual expenditure on the MGNREGS in the state. If the same is extrapolated to the whole country, there may be a need of Rs 5,000 crore over and above the allocation,” says Kidambi.

When BW asked Ramesh, his answer was that “it was an academic point. Only about 8 per cent of households complete 100 days. The average is around 45 days”, he said.

But the drought could throw those averages out of gear. In Andhra Pradesh, according to Kidambi, the demand for work this season has been unprecedented. More than 600,000 households (out of the 5 million households reported) have used up the 100-day limit in the first three months of the year itself and are ready to migrate in search of work.

“As of now, the average number of days of work per household is crossing 50 (between April and July). Last year (2011-12), it was 68 days for the whole year. This is a clear indication of the adverse effect of drought,” she points out.

It may be possible to absorb a part of this from the unused/unspent budgeted allocation, but it will not be possible to say how much at this juncture, Kidambi says.

Significantly, 85 per cent of the MGNREGS expenditure in AP was on agriculture or land related. The major investments were on bringing fallow lands into cultivation (1 million acres), water harvesting structures such as percolation tanks, horticulture (100,000 acres), and desilting the irrigation tanks. “The effect of these structures will be clearly seen this year, which is a low monsoon year,” says Kidambi.

(This story was published in Businessworld Issue Dated 13-08-2012)