BJP to tweak MGNREGS: Will this make it more productive?

Moneycontrol Bureau

As part of its stated move towards making the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) more productive, the central government is likely to tweak the wage-to-material ratio from 60:40 to 51:49.

This was learned by some Right to Information activists after they filed a query regarding the same, according to a report in the Times of India .

The move, however, can turn out to be politically-sensitive as it would reduce funds available for wages under MGNREGS, which provides minimum 100 days of employment to crores of jobless rural individuals who are employed as unskilled laborers for various construction works.

The brainchild of the erstwhile Congress government, the Rs 33,000-crore scheme (as per FY14) had been criticized by the BJP as being ineffective and wasteful and had said it would, after coming to power, look to make the scheme more productive by making it more asset-oriented.

According to RTI documents obtained by the activists, rural development minister had over-ruled objections from senior ministry officials and prevailed upon them to reduce the wages component. No such announcement, however, has formally come through.

Activists, though, are up in arms against the proposal and say the reduction in wages would lead to a 40 percent fall in jobs and affect five crore rural households.

Interestingly, other media reports have pointed out that even under the current 60:40 ratio, many states have been unable to utilize the components part of the funds.

For instance, Madhya Pradesh has exhausted only 25 percent of the funds made available to it on materials this financial year, according to a report in The Hindu .

Gadkari would thus have to ensure that if the ratio is tweaked, states are egged on to utilize the extra funds made available for assets.

There has also been speculation that the centre may look to tweak the scheme to focus it more on backward areas. This, say some activists, may inhibit the promise of the scheme's universal employment.

Such a move may also backfire as some states such as Tamil Nadu, which are economically better off, have reported higher productivity levels in the MGNREGS than other backward states such as Chattisgarh.

Another interesting aspect that may come out of a result to tweak the material-to-wages ratio is that the scheme has to offer employment to anyone who demands one.

As a result, if wages as a percentage are reduced from the overall outlay, it may require increasing the total allocation to the scheme itself.