The Ministry of Rural Development is responsible for development and welfare activities in rural areas.  The Ministry has two departments: (i) rural development, and (ii) land resources.

The Department of Rural Development under the Ministry is responsible for implementation of many major schemes in rural areas.  These schemes are targeted at poverty reduction, provision of basic services, employment generation, rural infrastructure and habitation development.  

The Department of Land Resources aims to increase productivity of degraded land through the process of integrated watershed management.   It also aims to develop an integrated land information management system to improve real-time information on land, and to optimise use of land resources.  

This note presents the budgetary allocations to the Ministry of Rural Development, and analyses various issues related to the schemes implemented by the Ministry.

Allocation in Union Budget 2020-21

The Ministry of Rural Development has the fourth highest allocation across Ministries in 2020-21, at Rs 1,22,398 crore.  

In 2020-21, the Department of Rural Development has an allocation of Rs 1,20,147 crore, accounting for 98% of the Ministry’s allocation.  It witnessed a 2% decrease in funds from revised estimates of 2019-20.   In 2019-20, the Department was allocated Rs 1,17,647 crore, which increased by Rs 5,002 crore (4%) in the revised estimates stage for that year.  

On the other hand, the Department of Land Resources has an allocation of Rs 2,251 crore, which is 18.5% more than the revised estimates of 2019-20.  In 2019-20, the Department was allocated Rs 2,227 crore, which decreased by Rs 327 crore (15%) in the revised estimates stage for that year.

Table 1 gives the trend in budgetary allocation towards the Ministry over the past three years.  

Table 1: Budgetary allocation to the Ministry of Rural Development (Rs crore)

Department	Actuals (18-19)	Revised (19-20)	Budgeted (20-21)	% change (RE to BE)
Rural Development	1,11,842	1,22,649	1,20,147	-2.0%
Land Resources	1,864	1,900	2,251	18.5%
Total	1,13,706	1,24,549	1,22,398	-1.7%

Note: BE is budget estimate and RE is revised estimate.

Sources: Demands for Grants 2020-21, Ministry of Rural Development; PRS.

Department of Rural Development

In the past 10 years, the expenditure of the Department of Rural Development has seen an annual growth of 7.2%.   Except in 2011-12 and 2012-13, when the Department reduced its spending, its expenditure increased in all other years up till 2019-20.  In 2020-21 the estimated expenditure is 2% less than the revised estimates for the previous year.  

Figure 1: Expenditure by the Department of Rural Development over the years (Rs crore)

 

Note: Values for 2019-20 and 2020-21 are revised estimates and budget estimates respectively. 

Sources: Union Budgets 2011-12 to 2020-21; PRS.

Major schemes under the Department 

Table 2 represents the budgetary allocation for major schemes under the Department of Rural Development.  

Table 2: Allocation to the Department of Rural Development (Rs crore)

Department	Actuals (2018-19)	Revised (2019-20)	Budgeted (2020-21)	% change (RE to BE)
MGNREGS	61,815	71,002	61,500	-13%
PMAY-G	19,308	18,475	19,500	6%
PMGSY	15,414	14,070	19,500	39%
NSAP	8,418	9,200	9,197	0%
NRLM	5,783	9,024	9,210	2%
Rurban Mission	433	300	600	100%
Others	671	578	640	11%
Total	1,11,842	1,22,649	1,20,147	-2%

 Note: BE is budget estimate and RE is revised estimate. Others include central sector projects like management support to rural development programs, socio-economic and caste census survey and centre’s expenditure.

Sources: Demands for Grants 2020-21, Department of Rural Development, Ministry of Rural Development; PRS.  

• Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), continues to account for more than half of the Department’s budget.  However, the funds allocated to it have decreased by 13% this year.
   
• Funds allocated for the rural roads scheme, Pradhan Mantri Gram Sadak Yojana (PMGSY) has seen an increase of 39% from the revised estimates of 2019-20.

Figure 2: Top expenditure heads in 2020-21, as a percentage of total departmental allocation

Sources: Demands for Grants 2020-21, Department of Rural Development, Ministry of Rural Development; PRS.

Figure 2 shows the composition of expenditure of the Department of Rural Development.  In 2020- 21, 51% of the Department’s expenditure is estimated to be on the MGNREGS.  This is followed by the rural component of Pradhan Mantri Awaas Yojana – Gramin (16.2%), and PMGSY (16.2%).  

Financial allocations comparing outcomes

Mahatma Gandhi National Rural Employment Guarantee Scheme 

The main goal of the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) is to provide guaranteed 100 days of wage employment per financial year to every rural household whose adult members volunteer to do unskilled manual work. [1]  

The Mahatma Gandhi National Rural Employment Guarantee Act specifies a list of works that can be undertaken to generate employment.  These are related to water conservation, land development, construction, and agriculture, among others.  The scheme at present covers all districts of the country with the exception of those that have a 100% urban population. [2]

In 2020-21, it has been allocated Rs 61,500, which is 51% of the Department’s budget. 

Budgeted versus actual expenditure: Figure 3 shows the expenditure on the scheme from 2010-11 to 2020-21.  For most of these years, expenditure on the scheme has been more than or around 50% of the Department’s budget. 

Figure 3: Expenditure on MGNREGS over the years (Rs crore)

Note: Values for 2019-20 are revised estimates.

Sources: Union Budgets 2010-11 to 2020-21; PRS.

Table 3 shows the trends in allocation and actual expenditure on MGNREGS over the past nine years.

Table 3: Budgeted versus actual expenditure on MGNREGS (Rs crore)

Year	Budgeted	Actuals	% of Budgeted
2011-12	40,000	29,212	73%
2012-13	33,000	30,273	92%
2013-14	33,000	32,992	100%
2014-15	34,000	32,977	97%
2015-16	34,699	37,341	108%
2016-17	38,500	48,215	125%
2017-18	48,000	55,166	115%
2018-19	55,000	61,815	112%
2019-20	60,000	71,002	118%

 Note: The ‘actuals’ figure for 2019-20 is the revised estimate.

Sources: Union Budgets 2011-12 to 2020-21; PRS.

The budget estimates for the last five years have been similar to the actuals from the previous year.  However, the actual expenditure on the scheme for these years has exceeded the budget estimates.  Note that in 2020-21, the allocation to the scheme saw a 13% decline from the revised estimates of 2019-20.         

Demand for work:  MGNREGS is a demand driven scheme.  From 2013-14 to 2019-20, the average demand from registered households is 41% (in the range of 36% to 43%).  The share of households that were provided employment as compared to the ones demanding employment has reduced from 93% in 2013-14 to 87% in 2019-20. [3]  

Employment Provided:  The scheme guarantees 100 days of employment.   However, from 2012 to 2018, the average number of days of employment has been 45.5 days, with a maximum of 49 days of employment in 2015-16.  As MGNREGS is a demand driven scheme, this could be due to either lower demand for such work (signalling sufficient opportunities to obtain work in the open market) or not providing employment when demanded. 

Table 4: Average days of employment provided per household

Year		Average days of employment provided per household
2012-13		46
2013-14		46
2014-15		40
2015-16		49
2016-17		46
2017-18		46

Sources: MGNREGS MIS Report 2018-19; PRS.

Work Completed:  The scheme also aims to create durable assets to improve rural livelihood through the work done while providing employment.  As indicated in figure 4, the percentage of work completed under the scheme has been falling since the last four years.  In 2019-20 (as of February 2020) percentage of work completed was at 14%.

Figure 4: Percentage of work completed (in %) 

Sources: MGNREGS MIS Report (as on February 8, 2020); PRS.

Delayed payments:  MGNREGS stipulates that wage payments must be made within 15 days of the date of closure of the muster roll.²  Delays in payments are calculated from the 16^th day onwards.  Table 5 shows the percentage of delayed payments out of the total payments over the past six years.  It also indicates the number of days that payments were delayed by.  As shown in the table, the proportion of delayed payments has reduced from 71.6% in 2014-15 to 3.4% in 2019-20.  In 2017-18, delays in payments came down substantially from the previous year.  The Economic Survey 2018-19, stated that the implementation of direct benefit transfers has helped in reducing delays in payments. [4] 

Table 5: Trends in delayed payment of wages under MGNREGS (in %)

Year	% Delayed Payment	Composition of delayed payments(%)
		>90 days	61-90	31-60	15-30
2014-15	71.6%	13.4%	9.8%	22.0%	26.3%
2015-16	63.1%	9.5%	8.1%	19.0%	26.5%
2016-17	56.6%	14.2%	8.4%	15.9%	18.1%
2017-18	15.5%	1.8%	0.9%	3.6%	9.2%
2018-19	10.4%	1.9%	0.7%	2.0%	5.8%
2019-20	3.4%	0.2%	0.2%	0.7%	2.3%

Sources: MGNREGS MIS Report, Delayed Payments (as on February 8, 2020); PRS.

Currently under the MGNREGS, unemployment allowance (if employment is not provided within 15 days of application) is paid from state government funds.¹   The CAG report (2013) on the scheme states that this puts an additional burden on the states. [5]   The CAG suggested that the Ministry of Rural Development should consider partial reimbursement of unemployment allowance.⁵

Indexing of minimum wage rate:  The minimum wage rate under the scheme is fixed by the central government on the basis of the Consumer Price Index-Agricultural Labourers (CPI-AL).  If this not available, the minimum wage rate fixed by the states for agricultural labourers is considered. [6]  The Standing Committee on Rural Development (2019-20) noted that the wage rate under MGNREGS is much less than the minimum wages fixed by states.  It recommended that wages under MGNREGS should be increased and linked to an index which takes inflation into account. [7]

Further, the Committee on Alignment of MGNREGS wages under the Ministry of Rural Development (2017) noted that the type of work done by agricultural labourers and MGNREGS workers is different.  Thus, there should be difference in their minimum wages.  It also noted that the weighting diagram of Consumer Price Index-Rural was more recent and provided for higher expenditure on education and medical care compared to CPI-AL.  It recommended using Consumer Price Index-Rural instead of the existing CPI-AL for revising MGNREGS wages. [8]

Difference in states minimum wage:  If CPI-AL is not available, the minimum wage rate fixed by the states for agricultural labourers is considered.   Every state has its defined Schedule of Rates for defining work output and calculating wages, thus the wage can be different for every state.  The Committee on Alignment of MGNREGS (2017) observed that this variation is unsustainable for a programme where wage component is fully funded by the centre.  It recommended convergence on Schedule of Rates across states to avoid variation.⁸  

Pradhan Mantri Awaas Yojana- Gramin

Pradhan Mantri Awaas Yojana- Gramin (PMAY-G) got the second highest allocation in the Department’s budget this year.  The funds allocated to the scheme (Rs 19,500 crore) comprise 16.2% of the Department’s finances.

In the past eleven years, the expenditure on the scheme has seen an annual growth of 8%. 

Figure 5: Expenditure on PMAY-G over the years (Rs crore)

Note: Value for 2019-20 is the revised estimates.

Sources: Union Budgets 2009-10 to 2020-21; PRS.

Table 6 shows the trends in allocation and actual estimates of expenditure on rural housing scheme (previously Indira Awaas Yojana and now PMAY-G) over the past 10 years.  

Table 6: Budgeted versus actual expenditure on rural housing scheme (Rs crore)

Year	Budgeted	Actuals	% of Budgeted
2010-11	8,996	10,337	115%
2011-12	8,996	9,872	110%
2012-13	9,966	7,868	79%
2013-14	13,666	12,981	95%
2014-15	16,000	11,106	69%
2015-16	10,025	10,116	101%
2016-17	15,000	16,071	107%
2017-18	23,000	22,572	98%
2018-19	21,000	19,308	92%
2019-20	19,000	18,475	97%

Note: The ‘actuals’ figure for 2019-20 is the revised estimate.  Note that the numbers for years to 2010-11 to 2014-15 are the allocations towards Indira Awaas Yojana.

Sources: Union Budgets 2010-11 to 2020-21; PRS.

Target construction of houses:  Figure 6 shows the number of houses completed compared to the target construction in the last eight years.  The construction rate has been lower than the target from 2012 to 2017.  In 2017-18 and 2018-19, the completion rate saw a high increase.  However, as of November 2019, the completion rate for 2019-20 was at 3%.

Figure 6: Construction performance of Pradhan Mantri Awaas Yojana (no. of houses in lakhs)

Note: Data for 2019-20 is as of November 23, 2019.

Sources: Report on Demand for Grants, Standing Committee on Rural Development, Ministry of Rural Development 2017-18, 2019-20; PRS.

In the budget speech of 2019-20, it was highlighted that under PMAY-G, 1.95 crore houses are proposed to be provided to eligible beneficiaries by 2021-22.  As per the implementation of budget announcements, against the target of 60 lakh houses set for 2019-20, 1.82 lakh houses were completed, as of November 22, 2019. ^[9]

The Standing Committee on Rural Development (2019-20) noted that there are sanctioned beneficiaries whose houses are incomplete or the construction is yet to start.  It noted that this is a major obstacle in the achievement of target of housing for all by 2022.  It recommended fast completion of houses targeted under the scheme.⁷

Increase in financial assistance under PMAY-G:  Under PMAY-G, financial assistance of Rs 1,20,000 in plain areas and Rs 1,30,000 in hilly areas is provided to rural BPL households for construction of a dwelling unit.  The Standing Committee on Rural Development (2019-20) noted that the financial assistance provided is not proportionate with the rising inflationary cost of the construction, material and other aspects of house building.  It recommended the Ministry to review the assistance provided by them.⁷

Pradhan Mantri Gram Sadak Yojana

Pradhan Mantri Gram Sadak Yojana (PMGSY) seeks to provide all-weather road connectivity to all eligible unconnected habitations, existing in the core network in rural areas of the country.  The scheme has been allocated Rs 19,500 crore in 2020-21, accounting for 16.2% of the Department’s budget.

As Figure 7 indicates, over the past years, the expenditure on the scheme had been increasing until 2015-16.  However, it has been decreasing since then.  

Figure 7: Expenditure on PMGSY over the years (Rs crore)

Note: Value for 2019-20 is the revised estimates.

Sources: Union Budgets 2012-13 to 2020-21; PRS.  

Inconsistency in budgetary allocation: Table 7 shows the trends in allocation and actual estimates of expenditure on PMGSY.  In most years, there has been significant underutilisation of funds.  In 2018-19, the expenditure on the scheme was 81% of its allocation.  A similar trend can be seen in 2019-20.

Table 7: Budgeted versus actual expenditure on Pradhan Mantri Gram Sadak Yojana (Rs crore)

Year	Budgeted	Actuals	% of Budgeted
2012-13	24,000	8,387	35%
2013-14	21,700	13,095	60%
2014-15	14,391	14,188	99%
2015-16	14,291	18,290	128%
2016-17	19,000	17,923	94%
2017-18	19,000	16,862	89%
2018-19	19,000	15,414	81%
2019-20	19,000	14,070	74%

 Note: The ‘actuals figure for 2019-20 is the revised estimate.  

Sources: Union Budgets 2012-13 to 2020-21; PRS.

Slow pace of work:  The Standing Committee on Rural Development (2018-19) noted that the pace of work under the scheme has been really low, especially in hilly states like Uttarakhand.  It recommended that the pace of completion of projects be increased to ensure achievement of the target of the scheme. [10]

Difference between targets and achievements:  

Figures 8 and 9 give details of length of roads constructed and habitations connected in the last seven years, under the scheme.

Figure 8: Length of road constructed under PMGSY (in km)

Note:  Data for 2019-20 is as of February 9, 2020.

Sources: Pradhan Mantri Gram Sadak Yojana Online Management, Monitoring and Accounting System (OMMAS), Ministry of Rural Development; PRS.

In 2014-15 and 2015-16, the length completed was more than the target length.  However, since 2016-17, the Ministry has not been able to achieve its targets for both number of habitations to be connected and length of road.  As of February 8, 2020, in 2019-20, 33% of target road length was constructed and 20% of the target habitations were connected. 

Figure 9: Habitations connected under PMGSY

 

Note:  Data for 2019-20 is as of February 9, 2020.

Sources: Pradhan Mantri Gram Sadak Yojana Online Management, Monitoring and Accounting System (OMMAS), Ministry of Rural Development; PRS.

In the budget speech of 2019-20, it was highlighted that the target of connecting all eligible and feasible habitations under PMGSY will be completed by 2019.  The budget documents indicate that 95% of the eligible (as per the census 2001) and feasible habitations have been connected.⁹

Maintenance of roads:  For ensuring sustainability of roads built under PMGSY, each contractor has to provide for: (i) defect liability for five years, and (ii) paid routine maintenance after completion of work.  The Standing Committee on Rural Development (2019-20) noted that the upkeep and maintenance of roads has been poor.  It recommended the Ministry to ensure stricter norm compliance and hold the contractors and agencies accountable for their negligence.⁷

National Social Assistance Program

National Social Assistance Program (NSAP) is a welfare program which comprises of a number of sub-schemes that primarily aim to provide public assistance to citizens in case of unemployment, old age, sickness, and any form of disability.  The major schemes include Indira Gandhi National Old Age Pension Scheme, Indira Gandhi National Widow Pension Scheme, and Indira Gandhi National Disability Pension Scheme.

The funds allocated to the scheme (Rs 9,197 crore) comprise 7.7% of the Department’s finances. 

Table 8 shows the budget estimates and actual expenditure by states under the scheme from 2012-13 to 2019-20.

Table 8: Expenditure under NSAP (Rs crore)

Year	Budgeted	Actuals	% of Budgeted
2012-13	8,447	6,912	82%
2013-14	9,615	8,534	89%
2014-15	10,635	7,087	67%
2015-16	9,082	8,616	95%
2016-17	9,500	8,854	93%
2017-18	9,500	8,694	92%
2018-19	9,975	8,418	84%
2019-20	9,200	9,200	100%

Note: The ‘Actuals’ figure for 2019-20 is the revised estimate.  

Sources: Union Budget 2012-13 to 2020-21; PRS.

Shortfall and underutilisation of funds:  The Standing Committee on Rural Development (2018-19) noted shortfall of funds for the scheme due to the slow rate of fund release.¹¹  The reason given by the Ministry for the same is non-submission of requisite documents by the states/UTs in time.  This impacts the implementation of the scheme. [11]  At the same time, the Committee also noted that there was continuous underutilisation of funds under the scheme.  This can also be seen in Table 8.  In 2018-19, 16% of the funds budgeted were not utilised.  However, in 2019-20 the budgeted amount is estimated to be fully utilised. 

National Rural Livelihoods Mission 

National Rural Livelihoods Mission (NRLM) aims to reduce poverty through promotion of diversified and gainful self-employment and skilled wage employment opportunities.  In 2020-21, the funds allocated to the scheme (Rs 9,210 crore) comprise 7.7% of the Department’s finances.

Table 9 shows the actual expenditure by states under the scheme from 2012-13 to 2019-20.

Table 9: Expenditure under NRLM (Rs crore)

Year	Budgeted	Actuals	% of Budgeted
2012-13	3,915	2,195	56%
2013-14	4,000	2,022	51%
2014-15	4,000	1,413	35%
2015-16	2,705	2,514	93%
2016-17	3,000	3,157	105%
2017-18	4,500	4,327	96%
2018-19	5,750	5,783	101%
2019-20	9,024	9,024	100%

Note: From 2015-16, allocation to start-up village entrepreneurship program has also been included.  

Sources: Union Budgets 2012-13 to 2020-21; PRS.  

Department of Land Resources

The Department of Land Resources implements two key schemes: (i) Integrated Watershed Development Component of Pradhan Mantri Krishi Sinchai Yojana (WDC-PMKSY), and (ii) Digital India Land Records Modernisation Programme (DILRMP).

This year, the Department saw a 18% increase in allocation, over the revised estimates of 2019-20.

Out of the Rs 2,251 crore allocated to the Department, Rs 2,000 crore will be spent on WDC-PMKSY, and Rs 239 crore will be spent on DILRMP.  The allocation for WDC-PMKSY has increased by 9% and the allocation for DILRMP has increased by 377%, from the revised estimates of the previous year.

Table 10: Budgetary allocation to the Department of Land Resources (Rs crore)

Major Heads	Actuals 18-19	Revised 19-20	Budgeted 20-21		% Change (RE to BE)
WDC - PMKSY	1,786	1,838		2,000	9%
DILRMP	68	50		239	377%
Secretariat	10	12		13	5%
Total	1,864	1,900		2,251	18%

Note: WDC - Watershed Development Component PMKSY is Pradhan Mantri Krishi Sinchai Yojana.  DILRMP is Digital India Land Records Modernisation Programme.  BE is budget estimate and RE is revised estimate.  

Sources: Demands for Grants 2020-21, Department of Land Resources, Ministry of Rural Development; PRS.

Watershed Development Component of Pradhan Mantri Krishi Sinchai Yojana

The Integrated Watershed Management Programme aims to develop rain fed portions of net cultivated area and culturable wastelands. [12]  In 2015, it was subsumed as one of the components of Pradhan Mantri Krishi Sinchayee Yojana (PMKSY).  

The activities under Watershed Development Component are drainage line treatment, soil and moisture conservation, rain water harvesting, and afforestation, among others. 

The scheme received the highest allocation of Rs 2,000 crore (89%) under the Department’s budget.  Table 11 shows the actual expenditure by states under the scheme from 2015-16 to 2019-20.  Note that there is under-utilisation of the budgeted amounts since the last four years.

Table 11: Expenditure under WDC-PMKSY (Rs crore)

Year	Budgeted	Actuals	% of Budgeted
2015-16	1,530	1,527	100%
2016-17	1,550	1,510	97%
2017-18	2,150	1,671	78%
2018-19	2,251	1,786	79%
2019-20	2,066	1,838	89%

Note: Values for 2019-20 is revised estimate.  

Sources: Union Budgets 2015-16 to 2020-21; PRS.

Completion of projects:  The Standing Committee on Rural Development (2019-20) noted that as of November 2019, of the 8,214 sanctioned projects, 2,770 (34%) projects have been reported completed. [13]  The Committee recommended that the delay in completion of projects needs to be resolved fast.  

Digital India Land Records Modernisation Programme (DILRMP) 

DILRMP is a part of the Digital India initiative. [14]   The scheme was changed into a Central Sector Scheme in April 2016. [15]   With this change, the scheme is now implemented by the central government with 100% of the grants coming from the centre.  

The major components of the programme include: (i) computerisation of all existing land records, (ii) digitisation of maps, (iii) survey/re-survey, and updating of all settlement records, and (iv) computerisation of registration and its integration with the land records maintenance system.

In 2020-21, the programme has been allocated Rs 239 crore, which is a 377% increase over the revised estimates of 2019-20.  Table 13 shows the trends in allocation and actual expenditure on the programme over the past ten years.  Note that there is significant underspending across all the years.  In 2018-19, the expenditure on the scheme was 27% of the budget estimates for the year.  Similarly, 2019-20, the revised estimates for the scheme are 33% of the budget estimates for the year.

Table 12: Budgeted versus actual expenditure on Land Records Modernisation Programme (Rs crore)

Year	Budgeted	Actuals	% of Budgeted
2010-11	200	156	78%
2011-12	150	106	71%
2012-13	150	95	63%
2013-14	378	213	56%
2014-15	250	179	72%
2015-16	90	40	44%
2016-17	150	139	93%
2017-18	150	93	62%
2018-19	250	68	27%
2019-20	150	50	33%

Note: The ‘utilised’ figure for 2019-20 is the revised estimate.

Sources: Union Budgets 2009-10 to 2020-21; PRS.

Progress of components under DILRMP: DILRMP is currently being implemented in all states, but with differential progress. [16]  

Land records have been computerised for 90% of the villages.¹⁶  However, the mutation records (recording the transfer of ownership) have been computerised for only 59% of the villages.¹⁶  This means that the remaining 41% of the villages do not have updated records with the current data on ownership.  If the intent of digitising records is to have easy access to correct data, real time updating of property records becomes essential.  

However, real time updation of Record of Right (RoR) and maps has been done for only 22% of the villages.¹⁶  The RoR is the primary record that shows how rights on land are derived for the land owner, and records the property’s transactions from time to time. 22 states/ UTs have started issuing digitally signed RoRs.¹⁶ 

Slow pace of work:  The Standing Committee on Rural Development (2019-20) noted that the work under the programme is being completed at a slow pace.  It recommended the Ministry to ensure expeditious completion of modernisation of land records in all states.¹³