NREGS may get extra funds to meet higher work demand

The finance ministry is weighing a proposal to release more funds under the rural employment guarantee programme this fiscal, over and above the revised estimate of ₹86,000 crore, to meet higher-than-expected work demand, a person familiar with the matter said.

The move follows a request by the rural development ministry for additional funds for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), a demand-driven programme, under the second batch of supplementary demands for grants for 2024-25, said the person, who did not wish to be identified.

So far in 2024-25, expenditure under the scheme is pegged at 106% of the available funds, according to the official data. Of the already approved outlay of ₹86,000 crore, the rural development ministry has released ₹82,963 crore.

The precise amount of extra MGNREGS allocation is being worked out.

A large part of the second batch of supplementary demands for grants, which will be taken up by Parliament later this month, may be met through savings or enhanced receipts of various ministries and departments, without letting the overall spending skyrocket, said another person.

The government expects to meet its 2024-25 fiscal deficit target of 4.8% of gross domestic product (GDP). As such, the higher-than-expected nominal growth rate of 9.9% for this fiscal has created space for additional spending of about ₹20,000 crore.

"It's possible that the entire or part of the extra amount for MGNREGS may be adjusted against savings from another expenditure head," said the second person.

As many as 2.64 billion person-days have been generated under the scheme so far in 2024-25, against the full-year target of 2.44 billion, showed the preliminary data compiled by the rural development ministry. In 2023-24, almost 3.1 billion person-days were recorded.

The person-day generation target for 2024-25 was a fifth lower than a year earlier, as states had expected a demand moderation in the wake of improved economic activities, which usually open up more remunerative job prospects in various sectors, reducing workers' reliance on the mainly unskilled MGNREGS employment.

Monthly work demand under the scheme had eased consistently between November 2023 and October 2024 before rising again. While there was a year-on-year fall in demand until February this fiscal, it remained well above the initial official assessment, necessitating extra allocation.

The government has maintained that more funds for MGNREGS will be released if required, given that the scheme is a demand-driven one. For the next fiscal, the government has budgeted ₹86,000 crore again.