What has actually happened is a steady shrinking of the outlay after the Covid period boost to under half this amount. On average, the government provided only about 48 days of work per household in the five years preceding the Covid years (2015-16 to 2019-20).
Despite the Niti Aayog report of 2020 on the impact of MNREGS on household income and poverty alleviation stating that the scheme is a “powerful instrument for inclusive growth in rural India”, the number of days of work provided remains barely half the promised 100 days. Any increase in the number of days would require substantial enhancement in allocation. For instance, providing even 60 days of work would require about Rs 1.1 lakh crore while providing work for 80 days would require roughly Rs 1.5 lakh crore.
In 2020-21, the Covid year, the spending on MNREGS soared to touch Rs 1.1 lakh crore, the highest annual spend on the scheme. The very next year, this fell to Rs 98,000 crore according to the revised budget figures. The allocation in 2022-23 is Rs 89,400, with the addition of the supplementary grant of Rs 16,400 crore to the original budgetary allocation of Rs 73,000 crore.
How do we reach the Rs 1.8 lakh crore figure? In the past five years, the annual average increase in wages is 5.1%. Assuming this remains true for the coming year, the average wage of Rs 217.7 per person per day in the current year would rise to Rs 229 in the coming financial year. Assuming the number of households provided work remains the same, the wage bill alone would be about Rs 1.3 lakh crore. With the addition of material and administration cost at the same ratio as this year, the total cost for the central government would be over Rs 1.8 lakh crore.
How much would need to be allocated to maintain the average of 48 days per household for the coming year? Similar calculations show the number would have to be a little over Rs 87,500 crore. However, allocations have to also take into account pending wage bills from the previous year. The pending bill in January 2022 was Rs 3,358 crore, according to government. Assuming similar pendency, MNREGS spending would have to be more than what has been allocated in 2022-23.