Finance Ministry releases additional ₹3.4kcr for rural jobs guarantee scheme

The rural development ministry has pegged the 2024-25 person-day generation target (called labour budget) at 2.21 billion under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), down 27% from the actual level in the previous fiscal.

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.

Total expenditure under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) - including states' contribution for materials used in the work - stood at Rs 1.05 lakh crore in 2023-24, against Rs 1.01 lakh crore in the previous year, showed preliminary data compiled by the rural development ministry. Erratic monsoon reduced the typical large-scale migration of workers to farm activities in the second quarter of the financial year, experts said.

Relatively strong work demand, wage hikes and inflation could push up expenditure under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in FY25, a person aware of the details told ET.

Person-days generated under the scheme totalled 1.11 billion during the first quarter of this fiscal year, against about 1.14 billion and 1.16 billion in the corresponding quarters of FY23 and FY22, respectively, according to an analysis by the rural development ministry.Suspension of MGNREGS work in West Bengal following alleged fund diversion contributed to the decline, experts said.

After the pandemic years, which forced the government to scale up spending on the scheme, the disbursal of funds were apparently curbed in FY23, given a pick-up economic activities.

The Centre may have to sharply increase the outlay for its flagship rural job guarantee scheme, with 58% of the budgeted Rs 60,000 crore for 2023-24 used up in the first quarter itself, an official indicated. Almost steady work demand and up to 10.4% hike in wage rates under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) have kept expenditure under the programme elevated, the official told ET on condition of anonymity.

MGNREGS wages of about ₹35,000-40,000 crore are estimated to have gone into the construction of houses under the PMAY (Gramin) since the scheme was rolled out in November 2016 by revamping the erstwhile India Awas Yojana, said the person. House construction has picked up pace in the last two years, pushing up the MGNREGS wage costs on such an account.

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.