The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) saw no revised allocation of funds for the first time in at least five years.
The funds for the financial year (FY) 2024-25 have been exhausted, with another two months to go. However, no additional funds have been allocated for the demand-driven scheme, noted a statement by NREGA Sangharsh Morcha (NSM), an umbrella body of workers and activists.
The deficit of funds stood at Rs 9,860 crore as of January 25, according to the Management Information System of the Union Ministry of Rural Development. Pending wages alone amounted to Rs 6,948.55 crore.
Arjun S Unnikrishnan, Secretariat Coordinator of the NREGA Sangharsh Morcha, said the budget allocation for FY 2025-26 continues to remain stagnant for the fifth consecutive year at Rs 86,000 crore.
“However, adjusting inflation, the funds are approximately Rs 4,000 crore less compared to the previous FY 2024-25,” he said.
The situation is similar to FY 2021-22, when the deficit was noted at Rs 1,964 crore followed by FY 2023-24, when the deficit was Rs 8,791 crore.
In 2019-20 annual budget, MGNREGS was allocated Rs 60,000 crore, equal to the allotment in the interim budget.
In the Union Budget 2018-19, the flagship programme of the Union government got Rs 61,084 crore (revised estimate). The budget saw an increase to the amount from Rs 34,000 crore received in 2014-15.
The impact of an inadequate budget is that it results in massive delays in wage payments and increases financial distress for millions of rural workers under MGNREGS, the statement stated.
Chakradhar Buddha, from LibTech, a team engineers, social workers and social scientists working to improve public service delivery in India, said the lack of funds also results in suppression of work demand, denying people their right to work under the law and impact asset creation in rural areas.
“Many workers report about the officials on ground denying application to work due to shortage of funds. With no budget for states on ground, the demand is suppressed indirectly,” he added.
Unnikrishnan said over at least the past five years, the expenditure has always been more than than the allotted funds. “In FY 2020-21, the funds allotted during budget were Rs 61,500 crore and later revised to Rs 1,11,500 crore. The same continued with an estimated budget of Rs 73,000 crore in 2021-22 and revised to Rs 98,000 crore,” he said adding that in 2022-23, the estimated budget was Rs 73,000 crore and revised to Rs 89,400 crore.
In 2023-24, the estimated budget was Rs 60,000 crore and later revised to an allocation of Rs 86,000 crore.
Unnikrishnan said the government data demonstrates that the MGNREGS programme needs more funds than are allotted each year. “The ideal requirement is an allocation of 1.2 per cent of the GDP. The current contribution of 0.24 per cent,” he added.
The NSM has alleged the low allocation of funds is part of a deliberate attempt by the Union government to suppress MGNREGA work demand.
“At a time when the government is making headlines for wooing the middle class with reliefs in direct tax to counter declining consumption, a larger budget for MGNREGA could have significantly boosted rural demand,” the NSM said in their statement.
Inadequate budgets lead to severe operating capacity of the programme. The programme promises 100 days of guaranteed work, but the limited fund allocation can only offer households 45-55 days of work that is half the capacity, Unnikrishnan said.
“This cannot be called as neglect; rather, it is a systematic sabotage of a critical lifeline for millions,” he added.
The statement further said the Parliamentary Standing Committee on Rural Development and Panchayati Raj had clearly flagged the shortage of funds as a major obstacle to MGNREGA’s smooth implementation, emphasising its impact on timely wage payments, material costs, and overall progress.
“The Committee had recommended that the Ministry of Rural Development pragmatically seek increased funds from the Ministry of Finance to ensure effective implementation. However, these warnings have been completely ignored once again, exposing just how little the Union Government values its own parliamentary institutions and their recommendations,” the statement said.
In December last year, NSM and other organisations supporting the cause of rural workers visited Union Minister for Rural Affairs Shivraj Singh Chouhan to raise concerns.