07 May Pandemic and delayed MGNREGA payments
Pandemic and delayed MGNREGA payments – Today Current Affairs
The COVID-19 pandemic has wreaked havoc on the global economy in 2020–21 and India is no exception. In the past one and a half years, an uncontrollable rise in the COVID-19 cases has compelled the Government of India (GoI) to resort to a series of curbs and lockdowns as a convenient measure to contain the spread of the virus. The perceptible slowing down of economic activities has pushed the nation into a deep economic crisis, with the year 2020–21 seeing the Indian gross domestic product (GDP) contract by 7.3% (GoI 2021).
Today Current Affairs
The unorganized sector of micro, small and medium enterprises (MSMEs), which absorbs a significant proportion of rural–urban migrants, saw a 46% dip in its business volume in the pandemic years due to which it was compelled to severely cut down on its workforce. Even in 2021, it continues to be in an appalling situation in the midst of a global supply chain crisis. Businesses that had resumed operations after the first wave in 2020 had to shut shop again due to the restrictions forced on the country because of the consequences of the second wave in 2021. There was nothing the
MSMEs could resort to ensuring a continual supply chain as they did not have the financial capability to do that.
Currently, the working MSMEs are performing with one-third capacity, and as per the observation of the experts, the Indian MSME segment will take good time to achieve full recovery to the pre-COVID-19 levels of March 2020. Other urban informal jobs that cater to the employment needs of the semi/unskilled migrants include manufacturing/construction and vendoring. Continual restrictions at a variable extent followed by different states to arrest the spread of the infection have led to the situation of the migrants en masse returning to their native villages during the first wave and a sudden closure of economic activity. A large section of them are yet to resume their city-based works. Due to the large-scale “reverse migration,” their “fallback” employment option emerges to be the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).
With the rate of unemployment touching the 10% mark by the mid-2000s and the glaring rise in rural unemployment, pressure was mounted on the government to implement new measures to bring unemployment and poverty under check. This led the GoI to launch the National Rural Employment Guarantee Scheme (NREGA) in 2006, the largest ever public works programme (PWP) in the world. It mandates “work as a right” and, at the same time, meets the parameter of gender equity through a concrete legal framework. The programme, renamed as “MGNREGS” in 2008, has been legally fortified to conform to the role of providing income insurance to the rural laborers against building of long-term capital assets as the scheme promises guaranteed employment for 100 days in a financial year per eligible household. The Hindu Analysis
Since its inception, it has generated 18–20 crore person-days all over India on an average every year. Scheduled Castes (SCs) and Scheduled Tribes (STs) account for 25% of the total persond-ays. However, despite this success, since years the scheme is facing criticism from several corners. One of the major criticisms is the problem of delayed MGNREGA payment, which is alleged to be limiting its success. Prior to 2010, NREGs wages were paid in cash based on the entries made in the “muster roll” (or attendance sheet) by the implementing agency, namely the gram panchayat. The muster roll, prepared every week, is a record of the number of days worked and wages due to each laborer. After the muster roll was submitted to the block office, funds were transferred to the gram panchayat account. The money was then withdrawn by the implementing agency to make cash payments to the laborers. Under this system of cash payments, the implementing and payment agencies were the same. This made misappropriation of funds easier owing to the presence of corrupt officers at the panchayat level. Against this backdrop, introducing bank payments (or, in some areas, post office payments) was a cloud with a silver lining. But then, the situation improved a little because of the half-hearted implementation of the electronic Fund Management System (eFMS).
Delayed Payments in India : The Hindu Analysis
As per several reports at an all-India level since October 2021, the problem of delayed payment has aggravated. In October 2021, 33% of the MGNREGA workers’ households failed to receive payment for their work. The percentage of pendency was more than 40% in November 2021.
The center’s flagship rural employment scheme ran out of funds by October 2021 and showed a negative net balance of `8,686 crore (Jebaraj 2021). By then, already 21 states had exhausted their allocated funds. Supplementary budget allocations were required to come to the rescue but it could take place only after the next parliamentary session. So by then, the states tried to utilize their funds in whatever capacity possible to tide over the crisis. As a result, November sees a further rise in the burden of pendency. Today Current Affairs
Of the major 19 states, the ones suffering from the severe delay in payments are Arunachal Pradesh, West Bengal, and Tamil Nadu (TN). In Arunachal Pradesh, more than 35% of beneficiaries have not received their due wages for more than two months. It is followed by West Bengal where 26% of participants are waiting to receive the remuneration of their PWP work. For TN, the percentage is 15%. Though in percentage share it may seem small but in absolute numbers it is a sizeable quantity given that there is more than 30% increase in the number of households participating in MGNREGS post the pandemic
Micro-level Study : The Hindu Analysis
West Bengal stands at the second position in terms of wage pendency under the MGNREGA. Wage delay is likely to have a lot of grave ramifications on the livelihood of job cardholders’ households, particularly in view of the pandemic when alternative economic activities have conspicuously declined. To assess them, West Bengal is chosen as the study area. The time frame of the study is between September 2021 and November 2021. Familiarity with culture and language was another major reason to choose the aforementioned state for carrying out this study. The process of selecting the panchayat where the actual survey was conducted is discussed below. The Hindu Analysis
Since in 2021, the average person-days worked per household at an aggregate level was found to be 40 person-days, such a study area was selected wherein the MGNREGS performance would be consistent with the national average. It was difficult to get a rough picture of the national experience pertaining to the problem of delayed payment and its impact on the beneficiaries in these trying times of economic crisis. To shortlist the study area, initial attention was given to picking the district that met the above-mentioned criteria. Among the 23 districts of West Bengal, Bankura emerged to be the one where the participants had received around 40 person-days per household as was observed till September 2021, a figure in compliance with the national average.
Analyzing Socio-economic Backgrounds : The Hindu Analysis
Bankura is one of the most backward districts of West Bengal. The economy of Bankura district is characterized by an overwhelming agro-economic base and low urbanization. Agriculture is the primary occupation with the average land size available per cultivator being around 0.41 hectare (ha). Sixty-six percent of the rural population is engaged in various forms of agricultural labour occupation, whereas 32% of the rural workforce derives its livelihood from self-employment in farming (Census 2011).
Coming to the socio-economic background of the participant and non-participant households, Bankura is a Hindu-dominated district and the same is reflected in the study area (Table 7). The beneficiaries were a combination of households coming from SCs and Other Backward Classes (OBCs) who took part in MGNREGS activities. The sample shows that SC families’ participation (83%) largely superseding that of OBCs’ (17%).
MGNREGS and Indebtedness : The Hindu Analysis
One of the most abhorrent ramifications of MGNREGA wage payment delay was rising indebtedness in the job cardholders’ households. Practically, among large sections of the labour households, indebtedness was the most common feature as they resorted to multiple borrowings to combat shortage in consumption expenditure and economic emergencies during the pandemic. Now, delay in the payment under MGNREGA added to the agony.
Table 8 shows that around `10,000 to `11,000 was the average borrowing of the surveyed households (including both MGNREGS participant and non-participant households), which they had resorted to owing to economic and medical reasons at different points of 2021. However, due to delay in payment of MGNREGA wages, the participants had to go for an additional 27% borrowing. The preferable source of borrowing was private moneylenders because they were easily accessible. Besides that, private moneylenders often do not ask for any collateral as mortgage unlike banks. As a result, even after demanding a high percent interest rate per annum, the respondents opted for them. For the MGNREGS works carried out in September, wages were credited in the beneficiaries’ account in mid-November. The outstanding loan as in November 2021 before the arrival of MGNREGA payment stood at 6% more than the basic. This is the interest amount payable on the principle charged by the private lenders. Though the beneficiaries did engage in different forms of casual works during October and November both in farm and non-farm sector, the money went for smoothening household consumption and no surplus could be generated that can be leveraged on to settle even a minimal portion of the rising debt. With credit of the MGNREGA wages in a lump sum volume, around 50% of the cumulative remuneration was said to be utilized by the participants to service off 14% of the outstanding loan in lieu to alleviate the debt pressure. But even then, 14% comes to be the extra financial burden caused as a consequence of MGNREGA deferred payment per household when the net payable credit of participant households was calculated. When compared with the net outstanding loan of MGNREGA non-participants (as in November 2021), the onus of the participants is calculated to be a significant 23% more indicating a graver situation of the MGNREGA beneficiaries relative to their counterpart colleagues.
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In the troubling times of the pandemic which has triggered an economic shock, the most prominent negative repercussion was the threat to the livelihoods of the people working in the private sector. However, the first victims of job lay-offs were the people working in the unorganized urban economy, which saw a 46% dip in their business volume in 2020 (Jacob 2021). These employees usually hailed from rural roots who migrated in search of better income opportunities. On the close-down of several MSMEs in 2020, they were compelled to return to their villages. In 2021 as well, the MSMEs continued to suffer due to the global supply chain crisis as a result of which large sections of the migrants had failed to resume their urban-based informal works (Dewan et al 2021). In the rural hinterland, the MGNREGS was expected to come to the rescue and provide employment relief but the actual picture seems very different. Not only did the union labour budget sanctioned for MGNREGS was curtailed by 23% in 2021, many states were observed to be suffering from conspicuous delay in the MGNREGA payment since September–October 2021, because they had exhausted their share of the allocated budget under the MGNREGA and supplementary budget could be decided upon only in the next Parliament session.
Taking note of this serious predicament, a primary survey was conducted in West Bengal, which stands second in terms of the severity of delay in MGNREGS payment. Fieldwork was done in Babarda panchayat of Bankura district where the MGNREGS performance was in compliance of the national average. The selection was purposive in order to get a rough picture of the national experience pertaining to the problem of delayed payment and its implications on the beneficiaries in this period of economic crisis. The microanalysis shows that the participants were actually at a loss working in the said income assurance programme. They sacrificed agricultural work that was taking place during September in order to work in MGNREGA. However, the MGNREGS failed to reach on time and a conspicuous deferment forced them to go for additional borrowing, which augmented their burden of debt. The incapability of the union government to estimate a proper budget despite high demand for work under such social protection programmes given limited availability of other forms of employment owing to ongoing fear pandemic can be held responsible for such fallout.
In view of the rising rural poverty, the union government should emphasize on reverting back to the “bottom-up approach” in estimating the budget. This involves instructing the individual states to prepare a financial estimate on the basis of the prevailing demand pattern for the PWP at the ground level. This would help the center to keep that sum aside and promptly release the same on the submission of master rolls. Given the current plight, this is the appropriate step if the programme has to really meet its goal of alleviating destitution in this testing time.