Govt trims budget for MGNREGS as PMAY, Jal Jeevan get more funds, says CEA

Nageswaran said that the two schemes are expected to provide employment to the same set of rural workers

Higher allocation towards PM Aawas Yojana and Jal Jeevan Mission led to a decline in the budget for rural job scheme MGNREGS for the next fiscal, Chief Economic Advisor V Anantha Nageswaran said on Monday.

Allaying fears of loss of income for rural workers, Nageswaran said that the two schemes, PM Aawas Yojana (PMAY) and Jal Jeevan Mission (JJM), are expected to provide employment to the same set of rural workers.

The CEA also said due to measures taken by the government, money in the hands of beneficiaries has doubled.

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"One of the reasons why allocation for MGNREGS was lowered is because there is a much larger substantive increase in allocation in particularly PMAY (rural) and Jal Jeevan Yojana.

"... so the expectation is that the rural workers would be able to find jobs in these projects," he said at 5-Institute Budget Seminar 2023.

The allocation for the Mahatma Gandhi National Rural Employment Scheme has been cut by almost one-third by finance minister Nirmala Sitharaman. The rural job scheme has been allocated Rs 60,000 crore for 2023-24, almost 32 per cent lower than revised estimates for the last fiscal.

He further said, "If they (rural workers) don't get absorbed (in PMAY or Jal Jeevan Mission) then since MGNREGS is a demand-driven programme, we can accommodate them through higher allocation in MGNREGS."

Explaining further the thinking behind allocating fewer funds for MGNREGS, Nageswaran said as India's economic growth is expected to be around 10.5-11 per cent next fiscal year in nominal terms, that will also see some of the rural workers migrating back to urban areas and finding jobs.

"So, both these factors put together have led us to expect that in the coming financial year, demand for MGNREGS will be lower," he said.

Sitharaman had announced an increase in the Budget outlay for the Pradhan Mantri Aawas Yojana (PMAY), allocating Rs 79,590 crore for the scheme.

However, Budget documents show the hike is primarily in the rural component of the plan.

In the Budget presented on February 1, the government earmarked Rs 25,103 crore for the urban component of the scheme, while Rs 54,487 has been allocated for the rural component, making it a total of Rs 79,590 crore.

In the last fiscal, Rs 20,000 crore was allocated for the urban component of PMAY, while the revised estimate for the expenditure was Rs 28,708 crore.

The Centre’s marquee Jal Jeevan Mission has been allocated Rs 69,684 crore, up from the Rs 54,808 crore the department is expected to spend in the current financial year.

Also, speaking at the event, NCAER director general Poonam Gupta said the 2023-24 Union Budget focused on domestic consumption as the main engine of growth, followed by public investment as the second.

NIPFP director R Kavita Rao said that the increase in capital expenditure announced in the Budget was a positive move but it remains to be seen if increase in capex really leads to an increase in employment.

ICRIER director and chief executive Deepak Mishra said the 2023-24 Budget is likely to be best remembered for giving everyone something to feel good about, without resorting to reckless and populist policies.