It's been a strange dichotomy. While millions remain unemployed or under employed in India, allocation for the Mahatma Gandhi National Rural Employment Guarantee Act (MNERGA) has been slashed by 17.5 per cent in the last Budget.

Stranger still: It might be the only social services sector to which funds have been reduced. Does this imply that the efficacy of MNREGA has been compromised?

Allegations of large scale corruption and misuse of funds are rampant while actual outlays and disbursement on employment guarantee schemes have been looking down. Budget allocation for MNREGA in 2011-12 was a whopping Rs 40,000 crore.

However, revised estimates indicate that actual expenditure may not top Rs 31,000 crore. The scheme provided employment only to 4.09 crore households as of mid-February, substantially lower than the 5.49 crore employment envisaged for the whole year.

Therefore it is not surprising that allocation for the current year was pegged lower, at Rs 33,000 crore. And Mr Jairam Ramesh, Union Minister for Rural Development, did not take it as an affront. Instead he justified it.

Despite under utilisation and cut in funds, the scheme has some unique and interesting characteristics. Unique in that MNREGA provided employment to over 98.5 per cent of the households who requested for it 2010-11. That was no mean achievement.

In some agriculturally advanced States there were hardly any takers for the scheme. These are States which witness gross labour shortage during peak agricultural season. And agricultural wages remained invariably higher than the Government wages so there were few takers.

Even after providing employment to almost all aspirants, MNREGA had surplus funds on its hands last year. The high employment track record and poor demand from some States prompted the Government to rein in fresh allocations. And the Minister had no objections. Why should he object?

There can be no doubt that the scheme continues to be beneficial to millions of households across the country. Wells have been dug, roads have been built and rural infrastructure has been spruced up under its aegis. But the success story has not been universal.

The same with corruption: there are States where the scheme has been relatively corruption free and proved a resounding success. In others, it has been ringed with corruption and proved a boner.

MNREGA has not proved a ringing success in couple of agriculturally rich and advanced States. The case of Punjab and Haryana stand out. While Punjab accounts for 2.36 per cent of the country's population, only 0.49 per cent of its households demanded jobs.

The case of Haryana was equally stark: accounting for 2.05 per cent of the population of which just 0.42 per cent of families demanded jobs. It was not a paucity of funds that led to the low level of rural employment generation in the villages of Punjab and Haryana. These villages generated sufficient number of employment on their own, mostly in the agricultural sector. There has been criticism of MNREGA taking away labourers during the peak agricultural season. Normally it should not.

The scheme offers just 100 days of employment per household. And MNREGA wages are substantially lower than normal agricultural labour. If the problem persists, it should be addressed on a case-to-case basis by the local body.

Then there are some large North Indian States where the implementing agencies are themselves weak or flawed. This has often led to criticisms of corruption and nepotism.

Usually it is the Panchayats which are supposed to undertake and implement the employment guarantee scheme. But what happens when the Panchayati Raj is itself weak and inefficient. The demand for employment might be high but it may not get reflected on the rolls of those seeking jobs. Its execution would also be weak and inefficient, brewing tendency for corruption.

The Ministry cannot be faulted for the weak implementing agencies in the States. After all, it takes two hands to clap.

cj@thehindu.co.in