PMAY-Rural fund sees big jump in Union budget; NREGS allocation cut

The government has sharply cut the budgetary allocation of the rural job guarantee scheme—Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS)—by 21.66 per cent for financial year 2023-24. In the Union Budget 2023-24, an allocation of Rs 60,000 crore has been made for the MGNREGS, which is 21.66 per cent lower than the Budgetary Estimates of Rs 73,000 crore for 2022-23. The reduction is even sharper (49 per cent) when compared to the Revised Estimates (RE) of Rs 89,400 crore for the year 2022-23. In the financial year 2021-22, an actual expenditure of Rs 98,468 crore was incurred on the MG-NREGS. The NREGS budget allocation for 2023-24 is lowest in the last five fiscals. The budgetary allocation of the NREGS stood at Rs 60,000 crore in 2019-20, 61,500 crore in 2020-21, 73,000 crore in 2021-22 and 2022-23. However, in all these years, the NREGS allocation was increased substantially at the RE (Revised Estimates) stage: Rs 71,002 crore in 2019-20, Rs 1,11,500 crore in 2020-21, Rs 98,000 crore in 2021-22, and Rs 89,400 crore in 2022-23. One of the reasons for the sharp spike in the NREGS budget was a higher demand during the Covid-19 pandemic. However, with the latest cut in allocation, the NREGS budgetary outlay has come down to the pre-pandemic level. The NREGS is a demand-driven scheme and the government can allocate additional amounts required at any time through supplementary demands of grants. However, a lower outlay in the general budget sends signals affecting sentiment on the ground. Presenting the budget, Finance Minister Nirmala Sitharaman mentioned the NREGS only once. “Building on India’s success in afforestation, ‘Mangrove Initiative for Shoreline Habitats & Tangible Incomes’, MISHTI, will be taken up for mangrove plantation along the coastline and on salt pan lands, wherever feasible, through convergence between MGNREGS, CAMPA Fund and other sources ,” she said, announcing the new initiative on mangrove. The reduction in the MG-NREGS allocation is in line with the observations made in the Economic Survey 2022-23 that the Year-on-Year (YoY) decline in monthly demand for MGNREGS work is emanating from normalization of the rural economy due to strong agricultural growth and a swift bounce-back from Covid-19. “The number of people demanding work under MGNREGS was seen to be trending around pre-pandemic levels from July to November 2022. This could be attributed to the normalization of the rural economy due to strong agricultural growth and a swift recovery from Covid-induced slowdown , culminating in better employment opportunities,” noted the survey presented by Sitharaman in Lok Sabha on Tuesday. The survey also said that the significant growth in rural India was the “major shock absorber” during the Covid-19 pandemic when both businesses and consumer demand were impacted. “When majority of the workforce reverse-migrated to rural areas in search of livelihoods, agriculture (3.4 per cent growth in FY20-21) as well as the world’s largest employment scheme MGNREGS supported the domestic economy,” it said. While the NREGS budgetary allocation has come down to the pre-pandemic level, the demand for work under the rural job guarantee is still higher than the pre-pandemic level. The data available on the NREGS portal shows that 5.76 crore rural households have availed the rural job guarantee scheme until February 1, 2023, which is higher as compared to 5.48 crore in 2019-20 during the pre-pandemic times. During the Covid-19 pandemic, the NREGS demand reached an all-time high when 7.55 crore families had availed the rural job guarantee scheme in 2020-21. However, since then the number has come down to 7.26 crore in 2021-22 and 5.76 crore in 2022-23 (till February 1, 2023).

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