Demand under rural jobs scheme seen 27% lower in FY25

NEW DELHI: The Centre expects work demand under the rural job guarantee scheme to fall sharply in this financial year owing to improved economic activities and a normal monsoon season, said senior government officials.

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.

The target is usually based on the projections made by panchayats which are assessed by the relevant district and state authorities before being submitted to the ministry for final deliberations. "A bottom-up approach is followed while fixing the labour budget, as the MGNREGS is a demand-driven programme," said one of the officials, who did not wish to be identified.


The fund allocation for this fiscal is, however, only marginally lower, at Rs 86,000 crore, than the actual release of about Rs 89,400 crore in 2023-24. The government remains prepared for any increase in work demand from the target, said the officials. The estimates don't include demand from West Bengal, traditionally a key beneficiary of the MGNREGS, as work under the scheme effectively remains suspended there since 2022-23 following allegations of misappropriation of funds, said one of the officials. Improved economic activities create job opportunities in various sectors, reducing the pressure on the MGNREGS, which provides employment mainly to unskilled workers. Similarly, in years of normal monsoon, a large number of MGNREGS workers shift to farming after the onset of the seasonal shower, unless there is a wide-scale economic distress. The International Monetary Fund expects India to remain the world's fastest-growing major economy in 2024-25.

NR Bhanumurthy, vice chancellor at Bengaluru's BASE University, said the initial target may not reflect the actual work demand conditions throughout the year, which may vary according to the situation. So, a more realistic assessment can be made later in the year, he said. The final MGNREGS allocation has exceeded the budget estimate each year since 2015-16, in the range of 12-18%. The sharpest variation was witnessed in 2019-20 following the sudden outbreak of the Covid-19 pandemic, which resulted in huge job losses.

Last fiscal, the government had budgeted Rs 60,000 crore but ended up spending about Rs 89,400 crore, as work demand pipped initial projections partly due to the monsoon failure which reduced the typical migration of labourers to farming.