Will extra funds for rural housing, drinking water create enough jobs?

While cutting down the allocation for MGNREGA in the budget of FY24, the Centre has raised it for Pradhan Mantri Awas Yojana-Grameen, and Jal Jeevan Mission

The annual allocation for the Centre’s flagship rural jobs scheme Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has been drastically cut this year, while the funds for rural housing and rural drinking water schemes have been hiked substantially. This has triggered a wave of reactions from both advocates of the former to those who feel that extra spending on rural homes and drinking water will create durable assets and generate employment.

The official explanation comprises two points. First, that being a demand-driven scheme, MGNREGS has been and will be funded adequately as and when the demand emerges.

The second is that higher spending on rural housing and drinking water schemes will absorb some of the rural labour, which otherwise would have been part of MGNREGA, as the catchment area for both is almost identical.

Issues surrounding the first reason have been addressed at length by several commentators and policymakers in the last fortnight but the question that begs an answer is whether cutting MGNREGS spending and allocating more for rural houses and drinking water provide an answer to chronic job demand in rural areas.

The Cut

MGNREGA budget for FY24 has been lowered by almost 18 per cent over the Budget Estimate of FY23 (the drop is almost 33 per cent compared to the RE of FY23).

This as per civil society will lead to (a) massive delays in wage payments, (b)suppression of work demand, and (c) lack of quality assets getting created. NREGA is a demand-driven law and the demand for work must be satisfied.

"Instead of adequately funding the programme, the Union government has repeatedly resorted to needless technical tinkering", a statement by the People’s Action for Employment Guarantee (PAEG)  and MGNREGA Sangharsh Morcha said.

The association said that considering the estimated pending liabilities of this current year, only Rs 50,600 crores will be remaining for expenditure in FY24.

Consequently, only 16.64 days of work per active household can be generated for FY23-24. If we consider all 160 million registered households, the days will further decrease to just 10 days.

Additionally, the allocation for FY 2023-24 as a percentage of the gross domestic product (GDP) is around 0.198 per cent, which is the lowest ever in the history of MGNREGA.

“This unjust allocation by the Modi government is an assault on the rights of rural workers and is a step towards killing the programme”, the PAEG and MGNREGA Sangharash Morcha said.

The hike

While cutting down the allocation for MGNREGA in the budget of FY24, the Centre has raised it for two other rural-centric programmes. These are Pradhan Mantri Awas Yojana-Grameen (PMAY-G), which is the rural housing scheme and Jal Jeevan Mission (JJM), the rural drinking water programme.

The budget of the former has been raised to Rs 55,000 crore in BE of FY24, which is an increase of over 12 per cent from the RE of FY23. But, a huge 175 per cent jump from the Budget Estimates of FY23, which was a mere Rs 20,000 crore.

The extra funds have been allocated with the aim to complete the targeted 29.5 million houses by March 2024. Of them till December 15, 25 million houses have been sanctioned and 21.1 million houses have been already constructed.

The Jal Jeevan Mission was allocated Rs 70,000 crore in BE of FY24, which is a massive 27 per cent jump over the RE of Rs 55,000 crore.

Convergence

One argument is that a significant portion of the work done through MGNREGS or assets created under the programme is through convergence with schemes such as rural housing or drinking water and any budget increase in the former will automatically lead to more work under MGNREGS.

In the rural housing programme, the beneficiaries are entitled for availing 90 persondays of work under MGNREGS for building rural houses.

Wages of these are to be paid over and above the unit-level entitlement under the rural housing scheme. But such a convergence is only allowed when houses are vulnerable sections as individual assets.

According to some estimates, in FY22 of the total works executed under the scheme around 38 per cent were taken through convergence with different schemes. In this, the share of work done in individual land was the highest at 57 per cent, followed by rural infrastructure such as Anganwadis and then came rural sanitation at 27 per cent.

The Economy Survey tabled in Parliament last month showed that the share of work done on individual land through MGNREGA has increased from 16 per cent of the total completed works in FY15 to almost 73 per cent in FY22.

“These works include creating household assets such as animal sheds, farm ponds, dug wells, horticulture plantations, vermicomposting pits etc., in which the beneficiary gets both labour and material costs as per standard rates,” the survey said.

Empirically, within a short span of 2-3 years, these assets have been observed to have a significant positive impact on agricultural productivity, production-related expenditure, and income per household, along with a negative association with migration and fall in indebtedness, especially from non-institutional sources.

“This (rising share of MGNREGS works in individual land) has long-term implications for aiding income diversification and infusing resilience into rural livelihoods,” the survey said.

But, critics said as much of the work done under rural housing or rural drinking water schemes is executed through contractors this goes against the very grain of MGNREGS and also the philosophy of the scheme.

"Generally it’s not a very good idea to converge these schemes with MGNREGA: PMAY, Anganwadi construction, toilet construction since these run through mostly by contractor-driven processes and it is almost impossible to maintain MGNREGA processes in these schemes, so generally one would find people working without their names in muster rolls etc.... Again the idea is to create additional employment other than rural works, converging reduces that scope," Debmalya Nandi, of MGNREGA Sangharsh Morcha said.

Rural Employment and Fund Allocation for Rural Housing and Drinking Water Progs

Professor Vikas Rawal from the Jawaharlal Nehru University’s Centre for Economic Studies and Planning said that rural jobs growth would be vastly impacted due to the reduction in MGNREGA allocation and to say that higher allocation for rural housing and rural drinking water programmes will compensate for the same is a misnomer.

Also, because overall spending in rural areas has been lowered it will have an impact on job creation.

“In the case of rural housing and rural drinking water schemes large sums of money are spent to benefit a few people, but in programmes like MGNREGA small sums of money are spent to benefit a large number of people,” Rawal said.

He said also this fiscal the focus has been on creating rural houses while next year it might be something else.

“You can’t underfund MGNREGA for meeting the demands for these schemes,” Rawal said.

"The idea of NREGA is to provide 100 days of additional employment for every Household i.e.in addition to other rural works where the workforce engages generally. Also, NREGA, by the act is demand-driven and guaranteed employment for all the households, would the Government guarantee employment for each hhs through other rural works, how will they do it when the control is with contractors and they can mobilize workers at will from anywhere?  It will not ensure that all rural households can earn employment through these works," Nandi of MGNREGA Sangharsh Morcha said.

He said it seems that the government wants to move away from the idea of the right to work and employment guarantee for each adult in the country by diluting MGNREGA.

"These kinds of comments (that funds for rural housing will create demand for rural work thus minimizing the need for MGNREGA work) only show that rural employment is not on Government’s priority," Nandi added.

"The only way to ensure guaranteed employment is through a demand-based mechanism from a citizen's rights perspective. Will at the end of the year, govt provide a household-wise employment creation data for all the gram panchayats in the country? These assumptions based on ridiculous arguments by the government show their lack of commitment towards the issue of employment and the apathy towards the rural poor," he said.