In order to keep a tight check on the cash flow and borrowings of all Central ministries, the finance ministry has now chosen not to spare even Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), which has so far operated as a demand-driven programme under the ministry of rural development (MoRD). It has informed MoRD that it will now be brought under the Monthly/ Quarterly Expenditure Plan (MEP/ QEP), a spending control mechanism set up in 2017 to oversee the cash flow and borrowings of ministries.
MGNREGS has so far remained outside the mechanism, with the Modi government going along with the reasoning that the demand-driven nature of the scheme makes fixed spending caps unworkable for it.
That is not all. The rural development ministry had submitted its MEP/ QEP for MGNREGS to the budget division of the finance ministry and had proposed a higher spending limit for Q1 and Q2 of 2025-26. The finance ministry, however, didn't agree to the proposal.
The two ministries held several rounds of talks and the finance ministry finalised that MoRD could spend 60 per cent of MGNREGS’s annual outlay of Rs86,000 crore in the first half of the financial year. This implies that the ministry will have Rs51,600 crore available for the scheme until the end of September.
The finance ministry also questioned the pending liabilities, which are set to be cleared from MGNREGS allocation this year. Citing the MGNREGA Act of 2005, which mandates the payment of wages within 15 days, the ministry questioned how dues worth over Rs21,000 crore were still pending. The significant dues will likely make it even more difficult to manage spending for the scheme within the given limit.
Guaranteed employment
MGNREGS provides at least 100 days of guaranteed wage employment in a financial year to every rural household, whose adult members volunteer do unskilled manual work.
The programme, which got Parliament’s nod in August 2005, was implemented in February 2006 in the country’s poorest districts. In 2008, it was extended across the country.
While some economists still argue that this law has been a crucial safety net for millions of people living in rural India and make out a case for an urban version of the law, the Modi government has been critical of it. However, it has chosen not to entirely scrape it, even allocating Rs86,000 crore for it in the last budget. It has used the law to provide rural succour, as during the Covid pandemic, by ramping up allocations. The government had even increased MGNREGS wages by 3-10 per cent in nominal terms for 2024-25, just before the general elections were announced last year.
Side by side, the government has been taking steps to plug leaks in the job scheme, ranging from mandatory digital attendance of workers through the National Mobile Monitoring System, to ensuring wages are paid through Aadhaar-linked bank accounts. The reforms have raised the hackles of the Congress party as MGNREGS was a showpiece project of the Sonia Gandhi-led National Advisory Council during the UPA years. Raising the issue in Parliament during the budget session, Sonia Gandhi charged the BJP with ‘systematically crippling the world’s largest rural employment scheme’, first by slashing budget allocations, then by delaying wage payments, and now by imposing ‘cruel digital hurdles’ that exclude the most vulnerable. Despite rising demand for work, the government is cutting funds, forcing states to bear the burden and leaving millions of job-seekers helpless. From Aadhaar-linked wage payments to app-based attendance, artificial obstacles are being used to push out those who need MNREGA the most like marginalised labourers, dalits, adivasis and women.
The Congress parliamentary party chairperson demanded that adequate financial provisions be made to sustain and expand the scheme. Also, the minimum wage should be increased to Rs400 per day, along with their timely disbursement, she said, adding that the number of guaranteed workdays should be raised from 100 to 150 per year.
Besides, the wages vary from state to state and are in the range of Rs237 (Uttarakhand) to Rs300 (Andhra Pradesh) a day. Demanding the removal of the Aadhaar Payments Bridge System, Sonia said that “these measures are essential to ensure that MGNREGA provides dignified employment and financial security.”