Rural ministry seeks 12% hike in outlay of Rs 5.23 lakh crore for MGNREGS over 5 years

Indian Express

3 days ago

The Ministry of Rural Development (MoRD) has sought an outlay of Rs 5.23 lakh crore for Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) for five years until 2029-30 in its May 15 proposal to the Expenditure Finance Committee, The Indian Express has learnt. EFC is a panel under the Finance Ministry that appraises all government schemes and projects.
The outlay for five years till 2029-30 is about 12 per cent higher than the Central release of Rs 4.68 lakh crore for MGNREGS during the previous five financial years, 2020-21 to 2024-25. The release had peaked at Rs 1,09,810 crore in 2020-21, the first full year after Covid outbreak. During this year, there was a spike in demand for work when a record 7.55 crore rural families availed the scheme, which became a safety net for migrants who returned to their villages after a national lockdown was imposed.
The Central release progressively declined to Rs 85,680 crore in 2024-25, the lowest in the last five years. The number of families working under the scheme gradually dropped over the years — 7.25 crore in 2021-22; 6.18 crore in 2022-23; 5.99 crore in 2023-24; and 5.79 crore in 2024-25. In 2024-25, the total Central release was Rs 85,680 crore.
The last three financial years (2022-23 to 2024-25) do not include MGNREGS beneficiaries' figures for West Bengal, where the scheme has been suspended since March 2022.
Sources in the government said the EFC appraisal and approval is part of the Centre's exercise to evaluate and approve its schemes for the next Finance Commission cycle. The MGNREGS is backed by law and therefore the EFC approval is just a formality. The outlay proposed by the MoRD is just 'estimated' and is 'subject to change' as the MGNREGS is a demand-driven scheme, they said.
The scheme is notified by different states and UTs under Section 4 of the MGNREG Act 2005, which says that 'every State Government shall, within six months from the date of commencement of this Act, by notification, make a Scheme, for providing not less than one hundred days of guaranteed employment in a financial year to every household in the rural areas covered under the Scheme and whose adult members, by application, volunteer to do unskilled manual work subject to the conditions laid down by or under this Act and in the Scheme…'
Section 22 of the Act provides for funding patterns of the scheme. According to the Act, the Central government is responsible for paying 100 per cent cost of three components — wages, administrative expenses and Social Audit Units (SAUs) — and up to three-fourths of the material cost of the scheme, including payment of wages to skilled and semi-skilled workers, subject to provisions of Schedule II of the Act. The state governments are responsible for meeting the costs of the following: (a) cost of unemployment allowance payable under the scheme; (b) one-fourth of the material cost of the scheme, including payment of wages to skilled and semi-skilled workers, subject to provisions of Schedule II; (c) administrative expenses of the State Council.
'No change is proposed in the current funding pattern across all components,' a source told The Indian Express.
The MGNREGS was launched in 200 most backward rural districts of the country in 2006-07 and was extended to an additional 130 districts during 2007-08; and to the entire country from financial year 2008-09.
The MoRD has circulated the EFC note at a time when the government has set in motion the process of prioritising its schemes for the 16th finance cycle starting April 1 next year. The Ministry of Finance has told all ministries and departments that no Centrally Sponsored Scheme or Central Sector Scheme will be considered for continuation beyond March 31, 2026, unless a third-party evaluation of the scheme is carried out.
According to the Finance Ministry, there are 54 Centrally Sponsored Schemes and 260 Central Sector Schemes, which have their terminal date of approval until March 31, 2026 and are likely to be submitted for re-appraisal.
Harikishan Sharma, Senior Assistant Editor at The Indian Express' National Bureau, specializes in reporting on governance, policy, and data. He covers the Prime Minister's Office and pivotal central ministries, such as the Ministry of Agriculture & Farmers' Welfare, Ministry of Cooperation, Ministry of Consumer Affairs, Food and Public Distribution, Ministry of Rural Development, and Ministry of Jal Shakti. His work primarily revolves around reporting and policy analysis. In addition to this, he authors a weekly column titled "STATE-ISTICALLY SPEAKING," which is prominently featured on The Indian Express website. In this column, he immerses readers in narratives deeply rooted in socio-economic, political, and electoral data, providing insightful perspectives on these critical aspects of governance and society. ... Read More