Why Government Clarification on NREGA Budget Cut is Not Convincing


If a single aspect of the union budget 2023-24 is to be selected in the context of drawing the maximum criticism, then it is the very low allocation for NREGA. As a response to this widespread criticism, on February 3 the Rural Development Ministry issued a statement (see The Statesman, February 4), saying that there is no need for widely voiced concerns as NREGA allocation being demand-driven, as per emerging needs this allocation can always be increased later in the financial year, as has also happened in the past. This explanation cannot be accepted as a satisfactory explanation due to several reasons.

One problem with this explanation is that the allocation is really too low and hardly anyone had expected this to be so low. The allocation of INR 60,000 crore ( one crore=10 million) can be seen in the context of the the actual expenditure of INR 98,467 crore in 2021-22 and revised estimate of INR 89,400 crore in 2022-23, as well as the inflation since then. Keeping in view conditions of rural distress, such a sharp reduction to INR 60,000 crore is difficult to accept in a program which benefits almost exclusively the weaker sections in villages. According to the NREGA Sangharsh Morcha, which monitors this program, this year the NREGA allocation amounts to the lowest ever percentage of GDP in the history of NREGA. This low allocation must be considered keeping in view also the high pending liabilities as due to the impact of this in effect only INR 50,000 crore will be available for actual expenditure. Keeping in view the number of active households seeking work in recent times, this can provide employment for only about 17 days compared to the legal stipulation of 100 days.

What is the likely budget keeping in view the stipulation of 100 days employment per active (in terms of seeking employment under this rural employment guarantee legislation of NREGA) household? This can be easily calculated on the basis of the available data on households seeking work in recent times, a fair wage rate, the ratio of wage costs to material costs etc. Groups like the NREGA Sangharsh Morcha and PAEG which monitor this program regularly release such estimates. The government can similarly make such an estimate and the original allocation in the budget should be at least about 90 percent of this estimate, while the remaining amount can be provided if needed in the Revised Estimate. However if the government provides less than 50% in the original budget (Budget Estimate or BE), then this is asking for trouble as far as the proper implementation of NREGA is concerned, as a lot of uncertainty remains regarding the availability of adequate funds for the entire year, leading to hesitancy in spending for the greater part of the year.

In the absence of a government estimate of the amount needed for satisfactory implementation of NREGA, in terms of multiplying the number of active job seekers by a fair wage for 100 days and adding material costs as per the known proportion of this and wage costs, we must go by the estimates presented by monitoring groups like PAEG and NREGA Sangharsh Morcha. According to these estimates, the current allocation for 2023-24 amounts to less than 25% of what is needed.

As past experience has shown repeatedly, when the BE is too low compared to the real need, then work demanded is frequently refused or delayed, compensatory payment is not paid and wages are often delayed, all this causing much distress to some of the most vulnerable sections of Indian society.

Hence the criticism of very low allocation for NREGA is fully justified and a campaign for its increase is also fully justified. In fact it is likely that the officials of the Rural Development Ministry themselves also feel that there should have been a much higher allocation for NREGA in the budget  but of course are reluctant to state this openly.

Bharat Dogra is Honorary Convener, Campaign to Save Earth Now. His recent books include India’s Quest for Sustainable Farming and Healthy Food, Man over Machine and A Day in 2071.

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