Budget 2026-27: 61% of labour ministry's record FY26 outlay unspent

Even as the labour ministry received its highest-ever allocation in Budget 2026-27, revised estimates show a majority of funds remained unutilised, largely due to low spending on central schemes

Even as the Ministry of Labour and Employment received its highest-ever allocation of ₹32,666.31 crore in the Union Budget 2026-27, revised estimates show that 61 per cent of the funds allocated in the previous year remained unutilised.

 

In the previous Budget as well, the ministry received a record allocation of ₹32,646.19 crore. Of this, only ₹12,688.05 crore was spent, according to the ministry-wise expenditure budget.

 

An analysis of the allocations under the ministry shows that this was primarily due to 62.7 per cent of the funds earmarked for central sector schemes and projects in the previous year remaining unspent. Additionally, expenditure on social services also declined in FY26.

 

Of the ₹31,820.80 crore allocated to central sector schemes and projects, only ₹11,868.05 crore was utilised, according to the revised estimates. This includes outlays for the National Child Labour Project, Coaching and Guidance for SCs, STs and Other Backward Classes, National Career Services, and the Shram Registration, Inspection, Samadhan and Transparency Initiative (SRISTI).

 

This year’s allocation also includes funding for the Pradhan Mantri Viksit Bharat Rozgar Yojana (PM-VBRY), the ministry’s new flagship employment scheme announced in August 2025. The scheme received its first allocation of ₹20,082.7 crore in the 2026-27 Budget.

 

The PM-VBRY, which was approved by the Union Cabinet in July 2025, aims to promote employment generation, enhance employability, and strengthen social security across all sectors, including MSMEs and rural enterprises, with a particular focus on the manufacturing sector.

 

The incentives under the PM-VBRY are applicable to jobs created during the two-year registration period between August 1, 2025, and July 31, 2027. The scheme aims to incentivise the creation of more than 35 million jobs nationwide over this period.

 

The total budgetary outlay for the scheme is ₹99,446 crore, according to a Labour Ministry statement issued in December. Of this, 20.2 per cent has been allocated to the ministry for implementation in the upcoming financial year.

 

The scheme has replaced the earlier New Employment Generation Scheme, which did not receive any allocation this year. Of the ₹20,000 crore allocated to it last year, only 4.24 per cent was spent.

 

Expenditure on social services also declined in FY26. The total allocation for all social sector services, including welfare schemes for Scheduled Castes, Scheduled Tribes, Other Backward Classes and minorities, stood at ₹29,467.55 crore this year, largely unchanged from last year’s allocation of ₹29,437.52 crore. However, only ₹11,496.91 crore was spent, accounting for approximately 39 per cent of the budgetary allocation.

 

Similarly, only 37 per cent of the funds allocated under the labour ministry for the development of northeastern areas were utilised.  Most of the expenditure in FY26 on central sector schemes and projects was under the flagship Employees’ Pension Scheme, 1995 (EPS), totalling Rs 10,500 crores (RE). This year, the EPS received an outlay of Rs 11,144 crore.