Rural Development, GOI 2009-10
Highlights
Background: The Mahatma
Gandhi National Rural
Employment Guarantee Act
(formerly the National Rural
Employment Guarantee Act) is
Government of India’s (GOI’s)
flagship rural development
scheme. It accounts for over
50% of the total rural
development budget.
Cost Share and
Implementation: 90% of the
funds come from the centre
and the rest from the states.
Release of funds is based on
state proposals and submission
of a labour budget by the
states (estimating the
anticipated demand for work).
At least 50% of MGNREGA
works are executed by the
Gram Panchayats.
Complete ex penditure data is
publicly available for FY 2008-
09.
Accountability Initiative, Centre for Policy Research, Dharam Marg, Chanakyapuri, New Delhi - 110021
Tel: (011) 2611 5273-76, Fax: 2687 2746, Email: info@accountabilityindia.org
GOI allocation for rural development in FY Rs. 79,387
2010-11 (in crore)
GOI allocation for MGNREGA in FY 2010-11 Rs. 40,100
(in crore)
GOI release for MGNREGA in FY 2008-09* 96%
Unspent amount in FY 2008-09* 25%
Spent on wages in FY 2008-09* 69%
*Complete expenditure data is available up to FY 2008-09, Unspent funds are
calculated from fund availability (centre+state releases+opening balance). GOI
release is calculated from centre receipt not centre sanctioned.
Key Facts and Analysis
 Over 50% of total GOI rural development allocations
went to MGNREGA in FY 2010-11.
 Expenditure capacity fluctuates. 75% of available funds
were spent in FY 2008-09, down from 82% in the
previous year.
 Variation in states’ expenditure performance. Rajasthan
and Andhra Pradesh spent 89% and 83% of funds
available. Tamil Nadu and Maharashtra spent 56% and
57% respectively in FY 2008-09.
 Average wage per person-day increased from Rs. 70 in
FY 2006-07 to Rs. 87 in FY 2008-09.
 Variations in wages paid across states. In FY 2008-09,
average wages paid in Kerala and Haryana were over Rs.
120 while Chhattisgarh and Madhya Pradesh paid Rs.
75 and Rs.77 respectively. Gujarat’s average wage cost
was Rs. 69- much lower than the notified wage rate of
Rs. 100.
 Rajasthan provided the most employment in FY 2008-
09 at 76 days per household. Gujarat provided the least
at 25 days per household.
www.accountabilityindia.org
February 26, 2010
Budget Briefs-Rural Development Sector Vol 2 Issue 3 Accountability Initiative

Trends in Central Government Allocations Over 3-fold increase allocations for

and Expenditures rural development in 5 years
• The current rural development allocations
for FY 2010-11 stand at Rs. 79,387 crore. 45,000 40,100
39,100
40,000 36,750
35,000
Nearly 3-fold increase in allocations for 30,000
rural development in the last 5 years 25,000
20,000
14,220
15,000 11,700 12,870
90,000 10,000
79,387 5,000
80,000 73,431 0
67,191 06 07 08 09 10 11
70,000
0 5- 0 6- 0 7- 0 8- 0 9- 1 0-
20 20 20 20 20 20
60,000

50,000
Source: Union Expenditure Budget, Vol II, Ministry of Rural
40,000 37,389 Development, rural employment various years. Note; Figures in
31,021 crores of rupees.
30,000 27,515

20,000
• FY 2010-11, allocation for MGNREGA
10,000 stand at Rs. 40,100 crore.
0

5-
06
6-
07
0 0
20 20
Source: Union Expenditure Budget, Vol II, Ministry of Rural
Development various years. Note: Figures in crores of rupees.
• Rural development expenditures
constitute a significant portion of GOI
expenditures. The total central
expenditure (plan and non-plan) on rural
development has increased from 2.59
percent in FY 2003-04 to FY 4.55 percent
in 2008-09.
• Rural employment is a key priority. In
2006-07, GOI launched the National Rural
Employment Guarantee Act (later
renamed the Mahatma Gandhi National
Rural Employment Guarantee Act,
MGNREGA) to promote rural
employment. MGNREGA allocations have
increased steadily. In FY 2010-11,
MGNREGA has been allocated over 50
percent of the rural development budget.
7-
08
8-
09
9-
10
0-
11 • MGNREGA is a demand-driven scheme.
0 0 0 1
20 20 20 20 Fund availability is based on proposals
submitted to the centre by the state
governments.
• Unspent funds for the current year are
carried forward to the next year. Total
funds available for expenditure in any
given year are thus made up of total
releases (centre and state) for the year
and unspent monies from previous years.
• 75 percent of the total available funds
were spent in FY 2008-09. This is a 7
percent drop from the previous year,
where states spent 82 percent of the total
funds available.
Trends in Allocations and Expenditures
at the State Level
• MGNREGA was initially implemented in
200 districts in FY 2006-07. GOI
extended the scheme to cover all districts
within India in FY 2008-09.

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Budget Briefs-Rural Development Sector Vol 2 Issue 3 Accountability Initiative

• Despite being demand-driven, there are • In FY 2008-09, in Rajasthan, the lowest

wide inter-state variations in the ability spending district spent 76 percent of the
to spend funds. funds available while the highest spent 91
percent - a difference of 15 percentage
Wide variation in spending performance
points. In Orissa on the other hand, while
between states
the lowest spending district spent 30
percent of funds available, the highest
Tamil Nadu 56 spent 184 percent of total funds available
Maharashtra 57 - a difference of 154 percentage points.
Jharkhand 57 • Interestingly, some districts like
Uttar Pradesh 78
Sundargarh in Orissa and Bidar in
Karnataka report spending more than the
Andhra Pradesh 83 fund availability.
Rajasthan 89

0% 20% 40% 60% 80% 100% Trends in Break-up of Allocations and

Source: Calculated from MGNREGA, Monthly Progress Reports Expenditures at the State Level
Financial Performance under MGNREGA during the year. Note:
Figures in percentages and pertain to FY 2008-09 up to March • MGNREGA norms mandate a minimum
2009.
60:40 ratio for labour costs (wages)
• In FY 2008-09, Rajasthan and Andhra compared to cost of materials for asset
Pradesh spent 89 and 83 percent of the creation. In FY 2008-09, 69 percent of
total monies available, Maharashtra, the total expenditure on MGNREGA went
Tamil Nadu and Jharkhand spent less than to wages, 27 percent to materials and 4
60 percent. percent towards administrative costs.
• There are wide intra-state variations as • Wide variations exist between states.
well. Of the districts that implemented
MGNREGA in the first phase, some Variation in the wage-material costs ratio
districts are able to spend more than between states
others. These intra-state differences vary
across states.
Jharkhand 54 46
Intra-state differences in spending ability Madhya
66 34
Pradesh
184
200% Bihar 72 28
115
76 91 76
100% 36 41 Gujarat 79 21
30
0% Kerala 92 8
Villupuram
Bidar

Davanagere

Dindigul

Sirohi

Udaipur
Sundargarh

Dhenkanal

Tamil Nadu 100

0% 20% 40% 60% 80% 100%

Labour Material
Orissa Karnataka Tamil Rajasthan
Nadu
Source: Calculated from MGNREGA, Monthly Progress Reports
Financial Performance under MGNREGA during the year. Note:
Figures in percentages and pertain to FY 2008-09 up to March
Source: Calculated from MGNREGA, Monthly Progress Reports 2009. Administration Cost is not included. Wages includes
Financial Performance under MGNREGA during the year. Note:
unskilled and semi-skilled combined.
Figures in percentages and pertain to FY 2008-09 up to March
2009.

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Budget Briefs-Rural Development Sector Vol 2 Issue 3 Accountability Initiative

• In FY 2008-09 Kerala and Gujarat spent
92 and 79 percent on wages respectively.
Jharkhand on the other hand, spent 54
percent on wages.
• Tamil Nadu has the highest wages-
material costs ratio at 100 percent
expenditures on wages.
• Average wage paid per persondays of
employment has increased from Rs. 70 in
FY 2006-07 to Rs. 87 in FY 2008-09.
• However, there are differences across
states.
Some states pay more wages than others
accordance with the Minimum Wages Act
1948 for Agricultural Labourers
pertaining to the different states. These
were the notified wage rates under
MGNREGA since January 2009 and are
similar to previous years. In July 2009,
GOI promised to provide a real wage of
Rs. 100 for all states. Many states are yet
to comply with this new wage rate.
• In some states the average wage cost per
persondays is lower than the states’
notified wage rate. For instance, on
average, Gujarat paid Rs. 69 per
persondays, which is far below its notified
wage rate which stands at Rs. 100.

Chhattisgarh
75 Coverage
75
89 • In FY 2006-07, over Rs. 9,000 crore was
Bihar
92 spent on MGNREGA and 90 crore
125 persondays of work was generated. In FY-
Kerala
123 2008-09, Rs. 27,251 crore was spent on
92 MGNREGA and 216 crore persondays
Jharkhand
94 were generated.
141
Haryana • The total employment generated per
120
household varies across states.
Madhya 91
Pradesh 77
Some states provide more employment
100
Gujarat 69
than others

0 50 100 150
Gujarat 25
Notified wage rate as on Jan 2009

Average wage cost per person day Bihar 26

Andhra
Pradesh 48
Source: Calculated from MGNREGA Monthly Progress Reports,
Implementat ion Status and ht tp://nrega.nic.in/ Jharkhand 48
Min_wages_new.pdf. Note: Figures are in rupees per personday
and pertain to FY 2008-09 up to March 2009. Uttar Pradesh 52

• In FY 2008-09, the average wage costs per Rajasthan 76

persondays for Kerala and Haryana were 0 20 40 60 80 100
Rs. 123 and Rs. 120 respectively.
persondays per rural household

• However, Chhattisgarh and Madhya

Source: Calculated from MGNREGA, Monthly Progress Reports,
Pradesh reported expenditures of Rs. 75 Implementation Status. Note: Figures in persondays per rural
and Rs. 77 respectively. household and pertain to FY 2008-09 up to March 2009.

• Minimum wage rates are fixed in

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Budget Briefs-Rural Development Sector Vol 2 Issue 3 Accountability Initiative

• In FY 2008-09, Rajasthan provided on • Chhattisgarh, West Bengal and Uttar

average, 76 days of employment per Pradesh completed over 50 percent of
rural household. Uttar Pradesh MGNREGA works in FY 2008-09.
provided 52 days while Jharkhand
provided 48 days of employment per • However, despite being a high
rural household. spending state, Andhra Pradesh
completed only 31 percent of its
• Gujarat and Bihar on the other hand, MGNREGA works.
were only able to provide 25 and 26
days of employment respectively in FY • Similarly, though Orissa spent 64
2008-09. percent of its funds, it completed only
7 percent of MGNREGA works in FY
• There are significant differences in 2008-09.
ability of states to complete the works
started under MGNREGA.
Differences in % of MGNREGA work
completed

Orissa 7

Andhra 31
Pradesh
33
Tamil Nadu

Chhattisgarh 53

Uttar Pradesh 61

0% 20% 40% 60% 80% 100%

% of work completed

Source: Calculated from MGNREGA, Monthly Progress Reports, Work

Status. Note: Figures in percentages and pertain to the year 2008-
09, up to March 2009.

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 Budget Briefs-Rural Development Sector Vol 2 Issue 3 Accountability Initiative

This section offers some practical leads to accessing further and detailed
information on the union government’s rural development sector budget. However,
reader patience and persistence is advised as a lot of this information tends to be
dense and hidden amongst reams of data.

Data Sources Useful Tips

Union Budget, Expenditure Vol.2 This volume provides total ministry-wise and department-
www.indiabudget.nic.in wise allocations as well as disaggregated data according
to sectors and schemes from 1998-99 onwards. The data
has both revised and budgeted estimates and should be
calculated according to the Major-Head and Sub Major-
Head. For rural employment the head is 2505.
Economic Survey Chapter 10, gives sectoral central expenditure plan and
http://indiabudget.nic.in/es2008-09/esmain.htm non-plan, including expenditure on rural development. The
figures for 2008-09 are revised estimates.

MGNREGA, Monthly Progress Reports, Financial State-wise and year wise details on opening balance,
Performance under MGNREGA during the year releases (centre and state), fund availability and
http://nrega.nic.in/netnrega/mpr_ht/stMPR_fin.aspx cumulative expenditure on wages, materials and
Accessed on January 28, 2010 administration.

MGNREGA, Monthly Progress Reports
Implementation Status Reports
http://nrega.nic.in/netnrega/mpr_ht/nregampr.aspx
Accessed on January 28, 2010
State-wise and year wise details on cumulative
number of job cards issued, persondays in lakhs,
number of households demanded and received
employment, funds available, central release and total
expenditure.

MGNREGA, MIS Reports, Work Status State-wise information on types of works undertaken
http://nrega.nic.in/Netnrega/MPR_ht/wrk_detail_ne under MGNREGA and details on the status of
w.aspx?page1=S . undergoing works.
Accessed on January 20, 2010

Prepared by Avani Kapur, akapur@accountabilityindia.org & Sruti Bandyopadhyay, sbandyopadhyay@accountabilityindia.org

Advisory Support Dr. Anit Mukherjee, Fellow, National Institute of Public Finance and Policy, anit@nipfp.org.in

Budget Briefs is an attempt to undertake basic analysis on social sector budget data including trends in
allocation and expenditure patterns and collate and make accessible budget data sources. Information
from this document may be reproduced or redistributed for non-commercial purposes in part or in full
with due acknowledgement to Accountability Initiative (“AI”). The opinions expressed are those of the
author(s). More informat ion on Budget Briefs can be found at http://accountabilityind ia.org/
know_budget.php?menu=4
February 26, 2010 -6-