Finance Minister Arun Jaitley proposes highest-ever allocation for MNREGA, says will help increase rural wages #UnionBudget2015 #THBudget



— Delhi Connect (@DelhiConnect) February 28, 2015

Presenting his second budget, Finance Minister Arun Jaitley pulled an unexpected rabbit out of his hat: he increased outlay to the Mahatma Gandhi National Rural Employment Guarantee Act scheme by Rs 5,700 crore. The Finance Minister claimed that this was the highest ever allocation to the MNREGA since the scheme was introduced by the UPA government in 2005.The initial allocation to the scheme in the Budget was announced at Rs 34,699 crore with a provisional allocation of Rs 5,000 over and above this figure if tax resources permit. Jaitley claimed, in Parliament, that this was likely to be the highest-ever allocation to the program, prompting a quick reaction from Congress leader Mallikarjun Kharge, who interrupted the speech to say he wouldn't be worried by this at all. Previous budgets would suggest however that Jaitley might have been mistaken, with the UPA's 2010-11 budget coming very close to this year's outlay.Calling the scheme a “national priority”, Jaitley said: “Our government is committed to supporting employment through MNREGA. We will ensure that no one who is poor is left without employment.”This comes just a day after Prime Minster Modi attacked the scheme in a forceful speech in Parliament. "My political instincts tell me that MNREGA should not be discontinued," Modi said, mocking the Congress, "because it is a living memorial to your failures. After so many years in power, all you were able to deliver is for a poor man to dig ditches a few days a month."The rural welfare scheme has been under a cloud ever since the Bharatiya Janata Party was voted to power in May of last year. Its right wing economic policy was largely assumed to be against the large public spending that a scheme like the MNREGA entailed. Once in power, the Modi government did carry out minor tweaks to the scheme. It restricted the MNREGA to 200 of the most backward districts and reduced the ratio of wages paid to workers and the cost of material used from 60:40 to 51:49.Budget allocations, though, have belied any anti-welfarism forecasts. In its first budget in 2014, the Modi government maintained the outlays to the MNREGA scheme and this time, it’s gone and hiked them significantly.There might, however, be a twist in the tale yet: the budget is just an outlay, a planned disbursement of money which might or might not match up with actuals. As it so happens, in spite of maintaining outlays for the MNREGA in the 2014 Budget as compared to the previous year, the Modi government had actually carried out a 45% reduction in funds released by the Centre to the states as of September 2014. Unlike the budget which garners a lot of press, the actual spend gets far lesser attention and the cuts there would, therefore, receive less political flak.A clearer picture of Modi’s intent – cutting through the government’s good cop-bad cop act – might emerge as figures for actual MNREGA spending are published for 2014-15.