The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) is in for an overhaul under the new government to make state governments active stakeholders in it, said sources. Plugging leakages and ensuring that deserving states get their due share are also on the agenda, sources said.
Currently, richer states are getting a disproportionate share in the scheme, whereas the financially stressed and backward ones are lagging in enjoying the full benefits.
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Despite being a centrally-sponsored scheme, where state governments usually share 40% of the cost, the central government bears the full cost in the case of MGNREGS.
The Centre’s expenditure in the scheme stood at Rs 89,008 crore in FY24 compared to Rs 88,290 crore in the previous fiscal. The expenditure reached a record Rs 1,09,810 crore during the Covid-hit FY21.
While the details regarding the restructuring of the scheme will be finalised once a new government takes charge in June, officials said the major issue is the quality of asset creation, where no responsibility of ownership vests with the state governments. “If not 40%, the state governments should share around 20% of the cost. This would make them a stakeholder in the scheme and they will take responsibility and ownership of the assets created,” officials said.
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Another issue that the Centre wants to examine is that several state governments misuse the scheme to supplement their budgets for rural works rather than catering to seasonal unemployment. States with higher per capita income are the biggest beneficiaries of the scheme. The five southern states—Tamil Nadu, Andhra Pradesh, Karnataka, Kerala and Telangana—accounted for over 35% of the expenditure in the scheme in FY24.
It has been found that some southern states are using the MGNREGS funds to build infrastructure projects, while saving their own resources. For example, some of these states use the funds for part-building rural roads. Similarly, if schools are being built by them, the toilets in them are built using MGNREGS funds. “States using Centre’s money for building their own projects defeats the purpose of the scheme, which is to cater to unemployment during the lean period,” officials said.
Such malpractice puts pressure on the states that need funds to provide employment to people during the off-season, as the corpus gets used up faster. As per an internal government estimate, one-third of MGNREGS funds suffer from various kind of leakages.
The labour cost in many states, including Tamil Nadu, is around Rs 1,000 per day and yet it is hard to find labourers.
Officials said that in many states where labour is expensive, a new trend has emerged—that of getting MGNREGS work done through machines and paying a share of the MGNREGS money to workers who lend their identity to be used in the scheme.
“Such practices make the scheme look like its purpose is only distribution of the budget allocation instead of making the scheme a demand-driven work for unemployed people,” officials said.
The Centre would have to take some corrective measures to clamp down on such misuse by the better-off states compared with low-income states like Bihar, officials added.
MGNREGS aims to provide at least 100 days of guaranteed wage employment in a financial year to every household in rural areas of the country, whose adult members volunteer to do unskilled manual work, mainly during off-seasons.
