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Where does the money spent by Maharashtra on NREGS go?

Friday, 18 November 2011 - 8:00am IST | Place: Mumbai | Agency: dna

The lower than planned spending is explained as demand-deficit for work, which may not be the case; it could be the lethargic, insensitive machinery to which the poor are always so far away.

Poor spending on NREGS by Maharashtra - only Rs351 crore out of Rs668 crore - can be seen in two ways. One, apathy towards the poor and carelessness, and two, less money spent means less money stolen. All employment schemes are seen as doles, work is faked, ghosts are paid and the bucks swallowed by the establishment - politicians to petty bureaucrats - with the poor guy in the boondocks left high and dry.

The lower than planned spending is explained as demand-deficit for work, which may not be the case; it could be the lethargic, insensitive machinery to which the poor are always so far away. What is not widely known is the frightening fraud where Maharashtra collects vast sums from you and me on the pretext of spending it on the Employment Guarantee Scheme - the precursor to NREGS - but funnels it away to other things. Now the two schemes run in tandem.

This is collected through ways from professional tax on job-holders to cess on sales tax. The government is supposed, under the Maharashtra State Tax on Professions, Trades, Callings and Employments Act, 1975 to match it with a grant to build a corpus for EGS in an escrow-like account to insulate it from a risk of paucity of funds in distress years. But such a fund does not exist. Had it existed, thousands of crores of rupees would be in it and collections have been higher than the EGS outgoes bar in a few years.

In 2006, I had reckoned on the basis of official statistics that Rs7,900 crore was unspent over the year as of March 2005, the year when NREGS came to be. NREGS took the pressure off Maharashtra to the extent of 100 days of jobs on demand, which implies that while it continued to collect levies and taxes for EGS, it was spending much less than it otherwise would have. Now DNA's investigations point to under-spending for NREGS as well.

Where does this money go if it is not in the EGS Fund and why wasn't such a fund ever set up? Patently, a profligate government constantly working with deficit budgets, approximately Rs1,000 crore per annum quietly garnered is a money manager's delight, no questions asked in or outside the legislature. People have forgotten that the extraordinarily well-conceived jobs-on-demand scheme by a Gandhian, VS Page in the 1970s has a huge impost on the people but it has been consistently misused. Additionally, for a few years the government had not even contributed to the fund as prescribed and told the Bombay high court that the Rs3,144 crore owed on this account till 2011 could be made good only in 10 instalments - that is, despite mulcting the citizens, it was still running low on cash. There have not been any amendment to the EGS Act, which halts the taxes and levies under false pretexts, and legitimising the absence of a stipulated fund. It appears to be a continuing government-run scam.

Given the trend of past collections, the accumulation could be around Rs21,000 crore to Rs22,000 crore by now. Because the lower spending on EGS due to NREGS took the pressure off the EGS, it is possibly accumulating faster. When asked to account for this, the answer would be the money is unspent but not easy to locate; I had been told this every time I asked this question. But it has actually been spent on every conceivable cause from funding payments to rich farmers for the excess sugarcane on their farms because cooperative sugar factories which are fiefs of politicians could not crush them.

Under the EGS Act, any diversion of funds is specifically prohibited. It only allows some of it to be lent on occasion - but for not more than two years - and has to be recovered. Just spending it on anything it pleases amounts to its illegal diversion, even squandering it away. If such vast sums were no longer required, the honest thing would have been to repeal the Act or some of its provisions but no one in the political or bureaucratic circles has even considered it.  Looks like it would continue, unless, PIL filed with the Bombay high court forces the government hand.

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