States' MGNREGA under probe for potential financial misappropriation

Some states have been using more than permitted MGNREGA funds to build rural infrastructure instead of generating livelihood opportunities for rural needy, says Central government

Concerned about potential financial misappropriation, the Centre has sent a warning to the states urging them to adhere to the true spirit of the flagship rural job guarantee programme, reported The Economic Times. Some state governments have been constructing rural infrastructure with more than permitted funds under the flagship Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) rather than creating livelihood opportunities for the needy in rural areas.
 

According to an official, this was one of the main causes for the increase in programme expenses that strained the Center's budget.
 

While investigation into additional states is ongoing, the trend has been observed in the cases of two southern states.

Also Read: What is MGNREGA scheme?
 

"We are noticing a worrying trend whereby states have cut down spending under some of their schemes and are using MGNREGA funds for the creation of rural infrastructure like Anganwadis and crematoriums among others," a senior government official told The Economic Times.
 

60 per cent of the scheme allocation in a year has to be utilised for agriculture and allied activities and 40 per cent for asset or infrastructure creation, administrative purposes and wages.
 

The official further states that the rural development ministry has expressed its concern to the states and will pressure them to ensure that funding is focused on job creation as required under the scheme.
 

Agriculture and related industries must receive 60 per cent of the annual scheme allocation, while asset or infrastructure creation, administrative costs, and wages must be allocated 40 per cent of the budget allocated to the scheme.
 

"Rural infrastructure creation should only be a small part of MGNREGA, up to 25 per cent maximum, but some states are doing much more than that," the official said to ET.
 

In addition to the Rs 73,000 crore budget provision from the previous year, the government allocated an extra Rs 25,000 crore to the scheme in the Financial Year 2022. An additional outlay of Rs 40,000 crore was made in 2020–21. The budgetary allocation of Rs 73,000 crore for the Financial Year 2023 has not changed. With more than five months left in the current fiscal year, the Centre has already released Rs 48,594 crore, or about two-thirds of the planned amount.
 

According to experts, the Center shouldn't have a problem as long as the money is being spent productively and is not being syphoned off for any other unproductive use.