Economic Survey Reveals Surprising Insights on MGNREGA Fund Usage in India
The Economic Survey 2023-24, released by the finance ministry, highlights that the demand for employment under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) is not a true indicator of rural distress. Contrary to popular belief, data from FY23 shows that states with the highest rural unemployment rates did not necessarily utilize the most MGNREGS funds.
The MGNREGA, enacted in 2005, aims to enhance livelihood security for rural households by providing at least 100 days of guaranteed wage employment each financial year to every household whose adult members volunteer for unskilled manual work. However, the survey suggests that demand for MGNREGS work is influenced by other factors.
For instance, in FY24, Tamil Nadu, which has less than 1 percent of the country’s poor population, accounted for nearly 15 percent of all MGNREGS funds released. Similarly, Kerala, with only 0.1 percent of the poor population, used almost 4 percent of the nation’s MGNREGS funds. These two states together generated 51 crore person-days of employment.
In contrast, Bihar and Uttar Pradesh (UP), which together account for about 45 percent of the poor population, only utilized 17 percent of MGNREGA funds, generating 53 crore person-days of employment. The survey emphasizes that the demand for MGNREGS is not an accurate measure of rural distress but is predominantly linked to the state’s institutional capacity and variations in minimum wages.
States such as Haryana, Kerala, Tamil Nadu, and Karnataka have relatively high notified wage rates under MGNREGA compared to their per capita incomes. This significantly impacts state-wise MGNREGS fund usage, as the wage component is fully borne by the Central Government. Moreover, the survey highlights that the effective implementation and institutional capacity of states play a crucial role in determining MGNREGS fund usage. States with better administrative mechanisms and higher notified wage rates tend to utilize more funds, regardless of their actual levels of rural distress or unemployment.
Doubts Revealed
Economic Survey -: An Economic Survey is a report that gives an overview of a country’s economic performance over the past year. It helps the government and people understand how the economy is doing.
MGNREGA -: MGNREGA stands for Mahatma Gandhi National Rural Employment Guarantee Act. It is a program in India that guarantees 100 days of work each year to rural households to help them earn money.
MGNREGS -: MGNREGS stands for Mahatma Gandhi National Rural Employment Guarantee Scheme. It is the actual program that provides jobs to people in rural areas under the MGNREGA law.
Rural distress -: Rural distress means problems faced by people living in villages, like not having enough jobs or money. It can make life very hard for them.
State capacity -: State capacity refers to how well a state government can manage and use resources, like money and people, to run programs and help its citizens.
Wage rates -: Wage rates are the amount of money people get paid for their work. Higher wage rates mean people earn more money for the same amount of work.
Tamil Nadu -: Tamil Nadu is a state in the southern part of India. It is known for its rich culture and history.
Kerala -: Kerala is a state in the southwestern part of India. It is famous for its beautiful landscapes and high literacy rates.
Bihar -: Bihar is a state in the eastern part of India. It has a high population and faces many economic challenges.
Uttar Pradesh -: Uttar Pradesh is a state in northern India. It is the most populous state in the country and has many historical sites.
