 "Govt considers increasing MGNREGS funds as rural work demand rises")
The finance ministry is evaluating a proposal to release additional funds for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in the ongoing fiscal year, beyond the revised estimate of Rs 86,000 crore, to accommodate higher-than-expected demand for work, according to a report by The Economic Times.
The rural development ministry has sought extra funds under the second batch of supplementary demands for grants for 2024-25 (FY25). Currently, expenditure under MGNREGS has reached 106 per cent of the available funds, with Rs 82,963 crore already disbursed from the approved outlay of Rs 86,000 crore. The precise amount of additional allocation is yet to be determined.
Balancing additional spending
The government remains committed to maintaining its fiscal deficit target of 4.8 per cent of GDP for FY25. However, with a higher-than-expected nominal growth rate of 9.9 per cent this financial year, the government has an additional spending capacity of approximately Rs 20,000 crore. A significant portion of the second batch of supplementary demands for grants, expected to be presented in Parliament later this month, may be met through savings or increased receipts from various ministries, ensuring that overall government spending remains under control.
Rising demand for rural employment
So far in FY25, MGNREGS has generated 2.64 billion person-days of employment, surpassing the full-year target of 2.44 billion, according to preliminary data from the rural development ministry. This is despite an initial reduction in the annual person-day generation target, which was set 20 per cent lower than in 2023-24, when 3.1 billion person-days were recorded. The lower target was based on expectations of moderating demand due to improved economic conditions and the availability of alternative employment opportunities.
However, work demand, which had consistently declined between November 2023 and October 2024, started rising again. While demand remained lower year-on-year until February 2024-25, it exceeded initial government estimates, prompting the need for additional funding. The government has reiterated its commitment to providing more funds for MGNREGS if required, given its demand-driven nature.
Ministry of Rural Development funding
MGNREGS and the Pradhan Mantri Awas Yojana-Gramin (PMAY-G) account for 75 per cent of the budgetary allocation for the Department of Rural Development.
With 65 per cent of India’s population residing in rural areas as of 2021, ensuring sufficient funding for employment and housing schemes remains a critical priority.
The Ministry of Rural Development received an allocation of Rs 1,90,406 crore in the 2025 Union Budget.