Govt pegs NREGS persondays work generation at 227.6 crore

The government has pegged its labour budget or persondays work to be generated under the rural employment guarantee scheme at 227.6 crore for 2022-23, lowest since 2018-19, anticipating a significant dip in demand for work under the Mahatma Gandhi National Rural Employment Guarantee Act on the back of higher capex allocation with focus on the labour intensive sectors.

The labour budget for 2021-22 stood at 337.76 crore, in 2020-21 at 385.67 crore, in 2019-20 at 277.63 crore and in 2018-19 at 256.56 crore.

A senior government official told ET that the estimates for 2022-23 have been made on the basis of economic recovery seen in the last few quarters. "Since the economic growth projections for the current year are robust, we expect more and more workers to move back to industrial towns for work, thus reducing the demand for work under MGNREGA," the official said.

The budgetary allocation for the scheme in the current fiscal has been retained at ₹73,000 crore, same as BE of 2021-22. Revised estimates for the last fiscal stood at ₹98,000 crore, though actual spending on the scheme shot up to ₹1,06,548.18 crore.

Betting big on capex-led growth, finance minister Nirmala Sitharaman raised the capital expenditure for 2022-23 by 35% to ₹7.5 lakh crore.

"Capital investment also helps in creating employment opportunities, inducing enhanced demand for manufactured inputs from large industries and MSMEs, services from professionals," Sitharaman had said in her budget speech.

Experts say assumptions under MGNREGS seems to be banking on recovery in labour market.

"The government thinks the labour market will be near normal in the short term and will get better in coming months with improvement in demand following higher allocation to MSMEs," labour economist KR Shyam Sundar said.

Sundar said even the labour supply is expected to increase and regular migration from rural to urban India resume as the savings of the workers must have dwindled due to two years of pandemic.

However, he observed that unless the data showed some kind of plateauing of monthly unemployment levels below 6% mark, there was no scope for optimism for the government. "If urban unemployment remains at over 7%, there will continue to be pressure on Mgnrega," he cautioned.

The labour ministry's quarterly employment survey for urban India shows quarter-on-quarter improvement in formal sector employment generation in the country. As per the latest data, India's formal sector employment jumped by 0.4 million in the October-December quarter of 2021 with the total number of workers employed across nine sectors at 31.4 million compared to 31 million in July-September quarter and 30.8 million in the April-June quarter of 2021.