Nearly 60% of MGNREGS Budget Exhausted in First Five Months of FY

Swift Summary

• Spending Update: Nearly 60% of the ₹86,000 crore budget for the MGNREGS (Mahatma Gandhi National Rural Employment Guarantee Scheme) in FY 2025-26 has been used, with a month left in the second quarter.
• Pending Liabilities: 38% of this year’s allocation was spent on clearing wage and material liabilities (₹17,259.56 crore and ₹15,641 crore respectively) from FY 2024-25.
• Current Budget Status: Only ₹79 crore remains for September as spending has been capped at 60% of the annual allocation for H1 FY 2025-26.
• Requests for Additional Funds: The Ministry of rural Development has sought more funding, but there is no indication that the Finance Ministry will approve additional allocations.
• Employment days Shortfall: The average employment provided per household under MGNREGS over five years fell short of the mandated 100 days-peaking at only an average of ~52 days in FY 2023-24.
• Inspection Reports & Accountability Issues:

– At least seven Action taken Reports (ATRs) have been submitted by States/UTs following inspections revealing financial misappropriation and procedural lapses.
– West Bengal MGNREGS funding was stopped under Section 27 due too non-compliance; however, implementation remains stalled despite a Calcutta High Court directive to resume payments.

Indian Opinion Analysis

The ongoing fund exhaustion in one of India’s crucial rural welfare programs underscores significant budgetary and operational challenges.With nearly two-thirds drained midway through the fiscal year-and no new funds pledged-it risks failing its core promise to provide guaranteed rural employment. This issue is especially concerning given persistent shortfalls in delivering even half of the promised workdays historically.

The use of current funds to address past arrears reflects chronic budgeting gaps and undermines forward planning. Inspections exposing systemic “financial misappropriation” further point toward accountability deficits that threaten program credibility. Though, lackluster compliance by states with reporting requirements adds another layer to this complex governance hurdle.

These issues hold considerable implications for millions relying on rural wages amid economic uncertainties. While resolving governance lapses is critical, fiscal constraints suggest either a policy reset or prioritization strategy may soon be necesary to ensure sustainability without scaling back worker benefits drastically.

Read more: The Hindu