The continuing demand for work under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme may compel the government to allocate more funds. The government is legally bound to provide the minimum mandated days of work to those seeking employment.
The number of households that benefitted from the scheme climbed to 60.8 million as of October 20, against 53.3 million in FY20. The scheme has helped 87 million workers so far, higher than 76.1million individuals in the previous financial year.
The total expenditure on the scheme is set to surpass the entire amount spent on MGNREGA last year. The government has already spent Rs 64,565 crore so far compared with Rs 66,863 crore in all of last year.
Experts said the considerable spike in demand for work and the near-exhaustion of resources under the scheme indicate two types of labour market failure.
“It partly reflects the failure of the urban labour market to catch up with pre-Covid-19 levels yet and the persistent lack of jobs in the nonfarm sector in rural India,” labour expert KR Shyam Sundar said.
While demand for work has been falling after peaking in June, there are apprehensions the year-on-year higher demand for work under the scheme may put pressure on the government to further enhance allocation to MGNREGS.
Demand for work under the scheme continues to be higher than in the same months last year. “NREGS is a demand-driven scheme. The government will have no option but to pump in more money into the scheme if the urban labour market doesn’t pick up in a big way,” a government official said.
The government had allocated Rs 61,500 crore to the rural employment guarantee scheme in Budget 2020-21. Following the outbreak of the pandemic, the government topped it up by Rs 40,000 crore, taking the total allocation to over Rs 1 lakh crore, the highest so far.