Demand under rural jobs scheme eases again in May

Demand for work under the government's flagship rural job guarantee scheme fell for a seventh straight month through May, indicating stronger economic conditions at the start of the new financial year.

Work demand under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) drops when better-paying employment opportunities are available.

According to preliminary data compiled by the rural development ministry, about 37.46 million individuals sought work in May under the scheme, down 12.1% from a year earlier. Similarly, members of 27.18 million households sought work in May, representing a 14.3% drop from a year before.


While work demand under the scheme tends to peak during the summer months, heat waves over vast swathes of India last month have weighed on demand, experts said.

"Elections may not have impacted demand much. During the last general election (in April-May 2019), MGNREGS work demand had risen from the previous year. Economic activity, or lack of it, is usually the biggest driver of such a demand," said an official.

Heat waves and possible temporary delay in fund flow during elections may have impacted work demand last month, apart from strong economic activity, said NR Bhanumurthy, vice chancellor of BASE University in Bengaluru and lead author of a study in 2012-13 on unspent MGNREGS allocations. The preliminary data gets revised as and when updated information is available.

The economy grew at a higher-than-anticipated pace of 8.2% in the last fiscal year. High-frequency indicators suggest the momentum has continued in FY25 as well. Goods and services tax (GST) collections rose 10% in May from a year earlier to ₹ 1.73 lakh crore.

The International Monetary Fund (IMF) has forecast India will remain the world's fastest-growing major economy in the current fiscal year and the next, with rates of expansion touching 6.8% and 6.5%, respectively, more than double the global average. The preliminary data show Andhra Pradesh led states with 6.06 million people seeking MGNREGS work in May, followed by Rajasthan (3.98 million), Telangana (3.81 million), Chhattisgarh (3.25 million), Uttar Pradesh (3.12 million), Bihar (2.75 million) and Karnataka (2.67 million).

Lower target

For the FY25 fiscal year, the rural development ministry has fixed the person-day generation target (called the labour budget) under MGNREGS at 2.21 billion, down 27% from the actual level in the previous fiscal year, thanks to the forecast of strong economic activity and a normal monsoon.

In the interim budget for FY25, the government allocated ₹86,000 crore for the scheme, marginally lower than the actual ₹89,400 crore release in FY24. The government also remain prepared for any increase in work demand above the targeted level, officials said.

India had a below-normal monsoon in 2023, the first in four years. However, demand for work started contracting every month since November, as economic activity gathered pace.