Govt plans to allocate more funds towards MGNREGA, increase wages

With the rural economy badly in a need of a consumption boost, the Centre is planning to allocate more funds towards the rural employment guarantee scheme in a bid to spur demand. 

Sources said the fund allocation towards the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in the 2020-21 Budget could be in excess of Rs 70,000 crore, to ensure that wage labourers have money in their hands. In 2019-20 Budget, the Centre had earmarked Rs 60,000 crore towards the scheme which was marginally lower than the allocation made in 2018-19. 

They also said of the many changes being considered regarding the MGNERA are reverting to the old system of maintaining a 60:40 wage-material ratio at the panchayat level, instead of at the district-level, inclusion of more work under the scheme, and an 8-10 per cent increase in the average wage by linking it to the revamped consumer price index-agriculture labour (CPI­AL).


Currently, the national average wage of an MGNREGA worker is Rs 181.57 per day, which is less than the minimum wage in several states. 

The sources said the proposal to maintain a 60:40 wage to material ratio at the panchayat level, too, is expected to lead to a larger outgo towards wages and not material expenditure.

In 2016, the central government had decided to maintain a 60:40 wage-material ratio for the MGNREGA at the district level, and not at the panchayat level, drawing strong criticism from activists as a move that could lead to less employment-related works. 

The government in a statement then released had argued that the decision to maintain a 60:40 wage-material ratio at the district level would ensure the creation of good quality assets in rural areas.

A PTI report then stated the understanding in the government was that while some panchayats might require intensive labour-oriented work, there were others where asset creation was the priority. Hence, computation of the wage-material ratio at the district level would facilitate both. 


But, the sources said, reverting to the old system will be an attempt to ensure that labour-oriented works get precedence, thereby boosting rural employment scenario. 

More work, including some related to the government’s ambitious Har Ghar Nal Se Jal programme, could be brought under the MGNREGA. 

The Har Ghar Nal Se Jal programme is envisioned to provide safe and adequate drinking water to all rural households by 2024 through individual tap connections.

For agriculture, the sources said, after several rounds of discussions with industry experts, agriculturists and economists, a consensus is building on enhancing the allocation for expediting setting up of 22,000 rural markets under the Gramin Agricultural Programme (GrAM), launched in 2018.

So far, the officials said, the programme is financed through a Rs 2,000­crore dedicated agriculture infrastructure fund created in Nabard. But, it has been found to be inadequate to finance such a large programme. 

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