NREGS may get Rs 28,000 cr more, over and above budgeted Rs 60,000 cr

Union Budget 2024: The finance ministry may allocate about ₹13,500 crore more for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in this financial year, bringing the total outlay to about ₹88,000 crore. The additional amount could be part of the second batch of supplementary demands for grants, reflecting in the revised estimate.

India's fiscal deficit for the first three quarters of the fiscal year reached 55% of the annual target, down from 58.9% the previous year. The fiscal gap until December 2023 stood at ₹9.82 lakh crore, compared to ₹9.92 lakh crore a year earlier. The government maintained control over revenue spending, which eased for the fourth consecutive month in December. Capital spending, however, increased by 37.5% to ₹6.74 lakh crore until December, representing 67.3% of the annual target. The fiscal gap in December alone widened to ₹75,694 crore, more than five times the November level.

The central government contained its fiscal deficit in the 2023-24 financial year at 63.6% of the revised target despite a moderation in nominal GDP growth. The deficit dropped 7.3% from a year ago period to ₹11.03 lakh crore. Revenue spending moderated while capital spending remained lower than the revised target.

About 93% of the FY24 budgetary allocation of ₹60,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) has been released, a person familiar with the details told ET. This has prompted the rural development ministry to seek substantial supplementary demands for funds to run the scheme throughout this fiscal year, he said.

In the upcoming interim budget for FY25, the Indian government is expected to allocate around ₹88,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), compared to the budgeted ₹60,000 crore for the current fiscal year. The allocation may increase if demand exceeds initial expectations.

India's fiscal deficit in the first seven months of the FY ending in March 2024 was $96.86 billion, or 45% of the estimate for the whole year, according to official data.

“If spending remains muted in the current quarter, the deficit may end up at 5.8% of GDP,” the global investment bank said, noting that receipts upside of 0.2% will help meet this years target and that the government will follow the path of fiscal consolidation.

The unusual move came after 95% of the FY24 budgetary outlay of ₹60,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) was exhausted well before the commencement of the winter session of parliament, thanks to a rise in work demand, the official told ET.

An additional Rs 16,143 crore was allocated for the flagship rural employment scheme in December. Sources said that an additional Rs 10-12,000 crore is likely to be spent, bringing the total outlay to nearly Rs 88,000 crore till March 31 this year.

In reply to a question on the MGNREGS funds being exhausted, Minister of State for Rural Development Sadhvi Niranjan Jyoti said the Union government has released Rs 66,629 crore to states for wage, material and administrative components under the scheme till November 29.