Finance ministry likely to give additional Rs 25,000 crore for MGNREGS

But asks rural development ministry to identify and remove inefficiencies

The finance ministry is likely to accept the rural development ministry’s demand for an additional Rs 25,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) for the current fiscal year (FY23), Business Standard has learnt. But given that for the past three years, the actual outlay has exceeded the Budget Estimates (BE) and for two years, it has been above or close to Rs 1 trillion, the finance ministry wants inefficiencies in the scheme to be identified and eliminated.

An additional Rs 25,000 crore will take the outlay for FY23 to Rs 98,000 crore, the same as the Revised Estimate (RE) for FY22. “Allocation for the MGNREGS is demand-based and the additional amount may be given. But the finance ministry has been raising some queries with the rural development ministry,” a senior government official said.

Of particular concern to central policymakers is the fact that the number of MGNREGS beneficiaries which was around 50 million before the Covid-19 pandemic rose to around 70 million as the economy slumped, and that has not come down to pre-pandemic levels, even as jobs in urban areas are coming back. Also, the rural development ministry has been asked to identify why some better-off districts across the country have more MGNREGS beneficiaries (as a percentage of population), as compared with neighbouring aspirational (less-developed) districts. This has been an ongoing exercise. “The pandemic was a one-off event. But since then, we have assessed keeping the MGNREGS outlay below Rs 75,000 crore. It, however, ends up being close to Rs 1 trillion,” a second official said.

Demand for work under the scheme has shown signs of slackening over the past few months. In October, around 15.5 million households sought work under it which is higher than the corresponding pre-Covid period of October 2019, but much less than the demand during the same month in 2020 and 2021. The October work demand was the lowest during this fiscal year, so far, according to the scheme website.

But the fact that still a significant number of people are seeking work under this scheme mean that if the trend continues in the coming months, there is a possibility that once again close to 70 million households may seek work, said experts.

If this year, too, over 70 million households demand work, it will mean that fundamentally, the scheme characteristics have undergone a change and overall economic growth is still not percolating to the rural and unorganised segments of society. According to the Centre for Monitoring Indian Economy, the unemployment rate in October rose to 7.77 per cent from 6.43 per cent in September. The rural unemployment rate rose to 8.04 per cent in October from 5.84 per cent in September. The urban unemployment rate slid to 7.21 per cent in October compared to 7.7 per cent in September.

So far, almost 83 per cent of the allocated budget for the scheme has been spent.