The National Rural Employment Guarantee Scheme (NREGS), which emerged as the safety net for migrants returning to their villages in the wake of the lockdown, did not find a mention in Finance Minister Nirmala Sitharaman’s 110-minute Budget speech.
However, the Finance Minister has allocated Rs 73,000 crore for NREGS in the Union Budget 2021-22. The allocation for the next financial year is 18 per cent higher than the Rs 61,500 crore provided in the budget estimates (BE) of 2020-21, but is 34 per cent lower than the revised estimates (RE) of Rs 1,11,500 for the current financial year.
The current financial year has witnessed an unprecedented demand for unskilled work. Over 7 crore households have availed of NREGS, an all-time high. When the scheme saw higher demand for work after the lockdown, an additional amount of Rs 40,000 crore was provided over the Rs 61,500 crore allocated in the Budget presented on February 1, 2020.
One explanation for the lower allocation for the next financial year is the expectation that the economy will rebound from the Covid-19 shock. The government has estimated Budget numbers assuming a 14.4 per cent nominal growth in the GDP during 2021-22. Higher growth may provide job opportunities in other sectors as well.
NREGS was the most important security net available to crores of unskilled labourers who returned to their villages from the bigger cities following the lockdown. The government provided Rs 40,000 crore to the scheme in addition to the 2020-21 Budget allocation of Rs 61,500 crore, and as of February 1, an all-time high of Rs 89,269 crore had been spent under NREGS in the current fiscal. The scheme has so far generated over 320 crore person-days of employment this financial year, the most since the inception of NREGS in 2006-07.
Another reason for an allocation lower than the revised estimates could be that NREGS is a demand-based programme, and the government can provide money as and when required.
Sitharaman mentioned NREGS once in her last Budget speech. She had made no reference to it in her first Budget speech on July 5, 2019.
Another flagship scheme of the Ministry of Rural Development, Pradhan Mantri Gram Sadak Yojana (PMGSY), has seen a lower allocation in the Budget for 2021-22. PMGSY has been allocated Rs 15,000 crore, less than the Rs 19,500 crore in BE 2020-21. This year’s allocation is, however, a little higher than the Rs 13,706 crore of RE 2020-21.
The Finance Minister has also announced the enhancement of the allocation for the Rural Infrastructure Development Fund from Rs 30,000 crore to Rs 40,000 crore.
The allocation for the Pradhan Mantri Awas Yojana has been kept at Rs 27,500 core in the Budget for 2021-22, which is the same as the allocation in the last Budget. However, it is lower than the revised estimates of Rs 40,500 crore provided for the scheme in the current financial year.