Slower Recovery: 19 States overshoot MGNREGA budget

At least 19 states have overshot the expenditure on the rural employment guarantee scheme for the current year even with more than a month left for the fiscal year to end, reflecting the slow recovery in the labour market and the continued stress on the Mahatma Gandhi National Rural Employment Guarantee Act (Mgnrega) scheme.

Data from the rural development ministry website shows states such as Jharkhand, Gujarat, Uttar Pradesh and West Bengal have utilised 128%, 110%, 100% and 109% of the funds, respectively, for the year till February 21.

Other states that have spent more than 100% of the funds allocated to them include Andhra Pradesh (111.15%), Haryana (105.56%), Madhya Pradesh (104.75%), Odisha (100.45%), Uttarakhand (107.78%), Karnataka (100.36%) and Kerala (111.91%).


Consequently, the overall expenditure on the scheme has shot up to 102.39% or Rs 95,664.72 crore out of the Rs 93,428.51 crore available. This is despite the fact that the number of households that have completed 100 days of work is the lowest in the current fiscal since 2018-19.

So far, 3.73 million households have completed 100 days of work, much lower than 7.19 million households in 2020-21, 4.06 million in 2019-20 and 5.25 million in 2018-19.

Most of these are labour rich states and the high demand for work under Mgnrega in these states could be because the complete migration back from rural to urban India is yet to be at the pre-Covid levels. Millions of labourers had moved back to rural homes at the onset of Covid in March 2020.

“This persistent demand for work under Mgnrega clearly reflects slack in jobs in rural areas and stubbornly higher unemployment in urban India,” labour economist KR Shyam Sundar said, adding that the labour market has not fully recovered from the impact of Covid-19 pandemic.

Since Mgnrega is a demand-driven scheme, states are likely to continue to provide work under the scheme even if it leads to a fund deficit, which will be met by next year's allocation. Mgnrega is a 100% centrally-sponsored scheme. The Centre had in the revised estimates enhanced the allocation for Mgnrega from Rs 73,000 crore to Rs 98,000 crore for 2021-22. Mgnrega guarantees 100 days of paid employment to rural households every year.