96% of annual allocation exhausted.

The Centre is on the verge of running out of funds for the crucial Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme.

More than 96% of the allocated money has already been spent or is needed to pay pending dues, with less than ₹2,500 crore left to sustain the scheme for the next two months.

Fifteen States are already in the red. According to the scheme’s financial statement as on January 26, Rajasthan has the highest negative net balance of ₹620 crore, followed by ₹323 crore in Uttar Pradesh.

In fact, the situation on the ground may be worse as States do not always enter pending payments into the information system. “January, February and March are months with little agricultural activity, when rural workers desperately need employment. However, the scheme is running out of money, and will enter next year with pending liabilities,” said Rakshita Swamy of the People’s Action for Employment Guarantee movement.

A number of economists have recommended that putting money into the hands of rural consumers via MGNREGA is key to kickstarting the economy. However, this year’s budget allocation was ₹60,000 crore, lower than the amount spent in the previous year.

Also Read What is the lowdown on MGNREGA funding?

In Rajasthan, for example, workers wages have not been paid since the end of the October. Last week, Chief Minister Ashok Gehlot wrote to Prime Minister Narendra Modi, demanding that the Centre immediately release pending dues of ₹1,950 crore.

“There is an outstanding liability of ₹848 crore for payment of wages and ₹1102 crore for materials,” Mr Gehlot said in the letter, a copy of which has been seen by The Hindu.

“Rajasthan has been able to generate Fund Transfer Orders for payment of wages within 15 days for 99.57% of workers and within 8 days for 90.31% of workers, which is an unprecedented achievement.” But wages have not been paid to workers since October 11, 2019 as the Centre has not released funds. This is contrary to the spirit of the Act and violates the principle of rights-based implementation of the MGNREGA scheme.”

After the letter was sent, the Centre released about ₹200 crore and cleared dues until the end of October, said a senior Rajasthan official who did not wish to be named.

“There is a high demand for work this year as the rural economy is in distress and informal employment has also collapsed. Our original labour budget was for 23 crore person-days, but that was revised to 30 crore person days and we will definitely exceed that by the end of the year,” said the official.

“Apart from pending dues which the CM has mentioned, we will need another ₹600 to 700 crore,” he added.

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Other States still have funds remaining, but activists say this is only because they are actively suppressing demand and turning workers away. In Karnataka, where many districts have been declared drought-hit, people are eligible for 150 days of work. However, they are not even able to get work for 100 days, says Abhay Kumar, State coordinator of the Grameen Coolie Karmikara Sangathan (GCKS), a registered union for rural workers.

“Wages have not been paid since October. When there are huge pending dues, the State government does not want to be liable to pay interest for delayed wages, so they suppress demand. Workers are being turned away from panchayat offices saying there is no available work, or they are being discouraged from demanding work by being told there will be a four month delay in wage payment,” said Mr. Kumar.

He is also a member of the Central Employment Guarantee Council, a forum that has not met in two years despite it being mandatory to hold a meeting every six months. The GCKS is planning to file a Public Interest Litigation petition in the State High Court, demanding immediate payment of wages, as well as compensation for delays beyond the minimal interest.

This year’s budget allocation for the scheme was only ₹60,000 crore, lower than the amount spent in the previous year.

“January, February and March are months with little agricultural activity, when rural workers desperately need employment and MGNREGA sees huge demand. However, the scheme is already running out of money, and will enter next year with pending liabilities yet again,” said Rakshita Swamy of the People’s Action for Employment Guarantee movement, expressing the hope that Finance Minister Nirmala Sitharaman will announce a more generous allocation for the scheme in the upcoming Budget.

A number of economists have recommended that putting money into the hands of rural consumers via MGNREGA is key to kickstarting the economy.