No money left in MGNREGA coffers; 21 States in the red

What is the News?

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme has run out of funds halfway through the financial year. Moreover, supplementary budgetary allocations cannot be allocated for at least another month when the next Parliamentary session begins. 

What is the issue?

During COVID-19 lockdown in 2020, the scheme was given its highest budget allocation. But the 2021-22 budget has not allocated sufficient amounts.

Due to this, the MGNREGA scheme has run out of funds halfway through the financial year.

Already, 21 States are showing a negative net balance with Andhra Pradesh, Tamil Nadu and West Bengal faring the worst.

What is the impact?

Firstly, this will mean that payments for MGNREGA workers as well as material costs will be delayed unless States provide their own funds.

Secondly, activists have said that by delaying wage payments, the Centre is making workers do “forced labour” at a time of economic distress. 

Thirdly, delay in wage payments is a violation of a 2016 judgement of the Supreme Court, which described pending wage payments under MGNREGA as a clear constitutional breach committed by the State and a modern form of begar.

Lastly, when there is no money, State governments tend to stop generating work. As MGNREGA data shows that 13% of households who demanded work under the scheme were not provided work.

Source: This post is based on the article “No money left in MGNREGA coffers; 21 States in the red” published in PIB on 28th October 2021.