The new rural employment law allows contractors to be hired for certain kinds of projects, a provision that will shift a portion of the jobs from the local villagers to the contractors’ staff, activists and researchers said.

They also argued that burdening the states with the liability to pay 40 per cent of the wages — earlier paid entirely by the Centre — would further delay the already tardy wage payments.

The outgoing MGNREGA contained a clause stating the “scheme shall not permit engaging any contractor for implementation of the projects under it”.

Under the new VB-G RAM G regime, contractors can be engaged for “convergence” projects — mostly construction work related to, and requiring coordination between, multiple government departments and ministries.

“In cases of convergence where components of a work are financed under other schemes, the execution of those components may follow the norms of the converging scheme, including the use of contractors where permitted,” the Ram G Bill, passed last week, said.

Activist Nikhil Dey said the involvement of contractors might lead to denial of work for large segments of the targeted beneficiaries — local rural families — eroding the main objective of the programme.

“Contractors have their own workers who are underpaid and may not be from the area where the project is implemented,” Dey, associated with the Mazdoor Kisan Shakti Sangathan, a civil society organisation that monitors the scheme’s implementation in Rajasthan, said.

“The national job scheme is aimed at benefiting villagers through local projects. Engaging contractors will reduce the scope of work for the villagers. Maybe a few villagers will get work for the sake of record.”

Explaining why the 40 per cent wage burden on the states might further stall payments, Dey said: “The Union government will delay releasing its share, too, citing the delayed release of the state’s funds. On the whole, the workers will not be paid on time.”

He said the MGNREGA was not supposed to create durable assets — a focus of the new law — since doing that means spending a large part of the money on materials and skilled work.

As a labour-intensive programme, the MGNREGA stipulated that at least 60 per cent of the expenditure should be on wages and capped the spending on materials and skilled work at 40 per cent.

Cap ache

Initially, this 40 per cent cap was enforced at the level of the gram panchayats, which chose and implemented the projects. In 2016, however, the rural development ministry decided that the cap should be maintained at the overall district level, thereby allowing wiggle room for some gram panchayats.

Dey said there had been a demand for the 60:40 ratio to be maintained at the gram panchayat level, but the VB-G RAM G Bill endorsed the 2016 arrangement.

Dey said this would benefit the contractors, who would prefer to spend more on materials.

Rajendran Narayanan, associate professor of economics at Azim Premji University and a researcher on the MGNREGA, said the hiring of contractors would also delay the payments to the suppliers of materials.

“Payment for materials is already routinely delayed. With more payments to be made to the contractors, and since the states (whose wage burden has been increased) have lower fiscal capacity, the payment for materials is likely to be delayed even more,” he said.

Narayanan said the 40 per cent cap on the expenditure on materials had been breached routinely at the gram panchayat level since 2016.

“In some panchayats, the material cost was becoming higher than 40 per cent and in some others it was lower so that on average, it was maintained at 40 per cent at the district level,” he said. “The new bill makes this official.”