MGNREGS work demand plummets by over 25%

Demand for work under the government’s flagship rural employment scheme dropped by a quarter in August from a year before, reflecting buoyant economic activities that usually open up better-paying job opportunities in industrial and other sectors.

About 14.19 million people sought unskilled work under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) during the month, against 18.98 million a year ago, showed the rural development ministry data.

These people came from 11.88 million houses, a 26% year-on-year decline. The data lends further credence to the finance ministry’s assertion that the rural economy remains resilient.


This was the second straight month when MGNREGS work demand fell on a year-on-year basis. But the drop in August was steeper than in the previous month, when the number of people seeking such work saw an 11.5% decline.

“The moderation in August comes on an unfavourable base (work demand had fallen in August last year). This means rural economic activities remained strong,” said a senior official, who did not wish to be identified. “Also, monsoon rains remained plentiful in August, both last year and this year. So, the usual migration of unskilled labour to agriculture during the monsoon season wasn’t hampered.”

The economy expanded at a better-than-expected pace of 7.8% in the April-June period, the highest in five quarters, despite uncertainties caused by the US tariffs and other external headwinds.

This has prompted the finance ministry to retain its full-year growth projection of 6.3-6.8%, despite downside risks from the doubling of the additional US tariffs on most Indian goods to 50% from August 27.

Most of the people who demanded work under the scheme in August were from Tamil Nadu (2.71 million), followed by those from Maharashtra (1.26 million), Rajasthan (1.04 million), Madhya Pradesh (1 million) and Uttar Pradesh (0.98 million).

Chief economic advisor V Anantha Nageswaran last week said the rural demand remained strong. Fast-moving consumer goods sales volume in the rural market and tractor sales in the June quarter were higher than in the corresponding periods in the past two years.

Two-wheeler and three-wheeler sales gained traction in July on brightened prospects of a healthy kharif harvest, he had said.

The resilience of the rural economy, aided by good monsoon, would prevent a spiral in MGNREGS work demand despite the unfavourable base, experts told ET recently.