Executive Summary:
This document addresses Lok Sabha Unstarred Question No. 2694 regarding the capping of Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) expenditure. It clarifies the government's position on fund allocation, addresses concerns about potential violations of entitlements, and provides data on pending dues and fund releases. The Department of Expenditure has allowed the Department of Rural Development to spend up to 60% of the annual MGNREGS allocation during April-September of FY 2025-26.
Key Points / Main Content:
* **MGNREGS Commitment:**
* The Government of India is committed to making funds available to States/UTs as per demand for employment under MGNREGS.
* MGNREGS is a demand-driven scheme.
* **Expenditure Cap:**
* The Department of Expenditure, Ministry of Finance, has allowed the Department of Rural Development to spend up to 60% of the annual MGNREGS allocation during the first half (April-September) of FY 2025-26.
* This is subject to the applicability of extant financial parameters.
* The Department of Rural Development has approached the Department of Expenditure for additional funds.
* **Seasonal Variations:**
* The demand for employment under MGNREGS experiences seasonal variations, with higher demand in the first quarter due to summer and the agricultural lean season.
* Demand generally declines with the onset of monsoon and subsequent agricultural activities.
* **Outstanding Liabilities:**
* As of April 1, 2025, Rs. 17,259.56 crore was pending as wage liabilities and Rs. 15,641.56 crore as material liabilities for FY 2024-25.
* In the beginning of FY 2025-26, 100% of pending wage liabilities and 50% of material liabilities have been released to States/UTs.
Impact Analysis:
* **States/UTs:**
* Impact: States/UTs are affected by the expenditure cap, which could impact their ability to meet the demand for employment under MGNREGS, particularly during periods of high demand. They will receive funds based on demand.
* Action Required: States/UTs need to manage their MGNREGS programs within the allocated budget and potentially adjust work allocation based on fund availability. They should monitor demand and communicate funding needs to the Department of Rural Development.
* **MGNREGS Workers:**
* Impact: MGNREGS workers are indirectly affected, as the expenditure cap could potentially lead to denial of work or delays in wage payments if demand exceeds the available funds.
* Action Required: Workers should be aware of potential fluctuations in work availability and wage payment timelines due to budgetary constraints.
* **Department of Rural Development:**
* Impact: The Department of Rural Development is directly impacted by the expenditure cap, as it needs to manage fund allocation and ensure compliance with the MGNREGS Act.
* Action Required: The Department of Rural Development needs to monitor fund utilization, assess the impact of the expenditure cap on employment generation, and request additional funds from the Department of Expenditure as needed.
* **Department of Expenditure, Ministry of Finance:**
* Impact: The Department of Expenditure is responsible for managing overall government finances and setting budgetary limits.
* Action Required: The Department of Expenditure needs to consider requests for additional funding from the Department of Rural Development based on the demand for employment under MGNREGS and overall fiscal constraints.
Key Entities Referenced
Mahatma Gandhi National Rural Employment Guarantee Scheme: A legally guaranteed, demand-driven scheme aimed at enhancing livelihood security of households in rural areas of India by providing at least one hundred days of guaranteed wage employment in a financial year to every rural household whose adult members volunteer to do unskilled manual work.
MGNREG Act, 2005: The legal framework that underpins the Mahatma Gandhi National Rural Employment Guarantee Scheme.
Ministry of Finance: The ministry responsible for financial matters in the Government of India; involved in capping MGNREGS expenditure.
Ministry of Rural Development: The ministry in the Government of India responsible for rural development programs, including MGNREGS.
Kamlesh Paswan: Minister of State in the Ministry of Rural Development.
Swaraj Abhiyan vs. Union of India 2016: A Supreme Court ruling relevant to the entitlements provided under the MGNREG Act, 2005.
Paschim Banga Khet Mazdoor Samity vs. West Bengal 1996: A Supreme Court ruling relevant to the entitlements provided under the MGNREG Act, 2005.
Department of Expenditure: A department within the Ministry of Finance, involved in financial management and planning related to MGNREGS.
GOVERNMENT OF INDIA
MINISTRY OF RURAL DEVELOPMENT
DEPARTMENT OF RURAL DEVELOPMENT
LOK SABHA
UNSTARRED QUESTION NO. 2694
ANSWERED ON 05/08/2025
CAPPING MGNREGS EXPENDITURE
2694. MsMahuaMoitra:
Will the Minister of RURAL DEVELOPMENT be pleased to state:
(a) whether in light of the Finance Ministry's decision to cap
Mahatma Gandhi National Rural Employment Guarantee
Scheme (MGNREGS) expenditure at 60% of the Financial Year
2025-26 allocation during April-September a first time move
aimed at curbing budget overspend yet potentially undermining
this legally guaranteed, demand-driven scheme;
(b) whether the Government recognises that this cap may force
denial of work or delay wages violating the entitlements
provided under Section 3 and Schedule II, para 29 of the
MGNREG Act, 2005, and Supreme Court rulings in
SwarajAbhiyan vs. Union of India (2016), and
PaschimBangaKhetMazdoorSamity vs. West Bengal (1996);
(c) whether the Government has assessed the risk of this cap
disrupting MGNREGS role as an automatic stabiliser during
seasonal and climatic induced rural distress such as the 20%
demand spike during the July-August heatwave of 2023;
(d) the average monthly pending dues cleared in the current and
previous financial years and the proportion of the new
allocation that has been used to clear outstanding arrears; and
(e) whether the Government plans to amend or rescind the cap to
ensure compliance with the Act's letter and spirit and uphold
the entitlement to 100 days of work and timely wage
payments?
Page 1 of 2ANSWER
MINISTER OF STATE IN THE MINISTRY OF RURAL DEVELOPMENT
(SHRI KAMLESH PASWAN)
(a),(b), (c) & (e): It is stated that Mahatma Gandhi NREGS is a
demand driven scheme and the Government of India is committed to
making funds available to States/UTs as per demand for
employment on the ground. With a view of better financial
management and planning, Department of Expenditure, Ministry of
Finance vide O.M. dated 29.05.2025 has allowed this Department to
spend upto 60% of the annual allocation for 'Mahatma Gandhi
NREGS' during the first half (April-September) of the FY 2025-26
subject to applicability of extant financial parameters. It may be
noted that, the demand for employment under Mahatma Gandhi
NREGS experiences seasonal variations and the first quarter of the
year experiences relatively high generation of Persondays due to
summer and agricultural lean season. The demand for labour
generally declines with the onset of monsoon and subsequent
agricultural activities from the second quarter onwards. Department
of Rural Development has already approached the Department of
Expenditure for allowing release of additional funds on the basis of
requirement of funds to meet the demand for employment in the
current financial year.
(d): As on 1st April, 2025 an amount of Rs. 17,259.56 crore was
pending as wage liabilities and Rs. 15,641.56 crore as material
liabilities for FY 2024-25. In the beginning of FY 2025-26 100% of
pending wage liabilities and 50% of material liabilities have already
been released to States/UTs.
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