Reflections on Union Budget: On Rural and Urban Employment Rejuvenation

Union Budget 2022–23 seems to have been a major disappointment in terms of its allocations to employment generation schemes. Despite demands for various quarters, the Union Government has not announced an urban jobs guarantee programme.

• As a part of our recommendations, we have suggested that the Government should consider the implementation of a wealth tax on the super rich — to finance the increased welfare expenditures during the pandemic including for employment guarantee programmes. No such proposal was announced for this fiscal year.
• Furthermore, we have recommended that allocations for MGNREGA be increased to both increase the number of minimum-guaranteed person days of work, and also to meet the increase in job card holders. However, the allocations for MGNREGA dropped to Rs. 73,000 crores for the upcoming fiscal year compared to the revised estimate of Rs. 98,000 crores for the current fiscal. The actuals for 2020–21 was nearly Rs, 1,10,000 crores. For the budget 2021–22, it was estimated that MGNREGA would be needing Rs. 73,000 crores, but the same was revised to Rs. 98,000 crores due the surge in demand for rural jobs. It is surprising that the government hadn’t considered this possibility.
• Despite being a demand-driven programme, the lack of funds led to discontinuation of the scheme in several states by the end of 2021. To avoid the same in the upcoming fiscal year, the government should have increased the allocations.
• It was estimated by the Peoples Action for Employment Guarantee (PAEG)¹, that the Union Budget should allocate Rs. 2.64 lakh crores to provide the guaranteed minimum work for 100 days to all those who registered in 2021–22, without considering any change in the number of registered households at an average wage rate equal to Rs. 269 per day.
• Furthermore, PAEG claims that of the Rs. 73,000 crores allocated for the upcoming fiscal year, a significant portion, to the tune of around Rs. 21,000 crores, will have to be spent towards clearing the pending payments, which would then leave only Rs. 52,000 crores for next year’s expenditure. It is estimated that this would only be sufficient to provide for a little more than 21 days of work per registered household at an average wage rate of Rs. 269 per day for the 6.75 crore households who were registered in 2021–22.
• Overall, there has not been any noteworthy announcement pertaining to employment generation schemes in this year’s Union Budget. It is to be seen how these allocations will have an impact on the employment rates and living standards for the upcoming fiscal year.

1. An advocacy and research group consisting of activists and academicians. https://twitter.com/paeg_india

Sai Chandan Kotu is a Budget Research Fellow at CivicDataLab.