The government has capped Mahatama Gandhi National Rural Employment Guarantee Scheme (MGNREGS) allocation for the first half of the fiscal while around ₹40,000 crore has already been spent during April-June period, a senior Government official said on Tuesday. This is nearly 78 per cent of capped allocation for the first six months.

An office memorandum (OM) of the Economic Affairs Department, seen by businessline, has allowed the Rural Development Department to spend up to 60 per cent of the annual allocation for MGNREGS during the first half of the FY26. The Budget has provided ₹86,000 crore for the full fiscal which means ₹51,600 crore can be spent during the first half. Though the OM cited urgent need for expenditure as the reason for fixing the allocation, the official said that this is capping of the expenditure and that too for the first time.

Speaking on the subject during an interview to businessline, Finance Minister Nirmala Sitharaman said: “Capping for the first half is part of my finance management.” She said as MGNREGA is a demand-driven scheme, as the demand comes, so shall the release. “It’s also a question of how based on the BE Budget Estimates), within the first half year itself, everything gets exhausted,” she said.

She also quoted a report by C&AG in which it was observed that there are states which have senior citizens taking money out of MGNREGA. Are they productive enough to be employed and given payment, she asked. She also clarified that It is demand-driven and “I am duty-bound, rule-bound, law-bound and Parliament-bound to pay when the demand comes.

It may be noted that the BE of ₹86,000 crore for FY26 is the same as the BE and Revised Estimates (RE) of FY 2024-25. Notably, this amount was also the same as the RE for fiscal year 2023-24. The total budget allocation for the scheme has been raised by a Parliamentary Committee. In a report submitted last month, the committee emphasised that the scheme provides a legal right to work for the most economically disadvantaged sections of the rural population willing to work. “It is a last resort of succour for the jobless section of society who have no other means of livelihood to feed their family members,” the committee noted.

Fresh assessment urged

The committee urged a fresh assessment of the fund allocation requirement, given the established procedure that MGNREGA, being a demand-driven scheme, allows for funds to be increased at the RE stage accordingly. The committee recommended that the Department of Rural Development more realistically assess the continued high demand for jobs under MGNREGS at the ground level and press the Ministry of Finance for an increased allocation.

The committee also noted, based on data from the Rural Development Department, that approximately 50.31 lakh job cards were deleted in 2021-22 due to minor spelling errors or mismatches in Aadhaar details. It stated that the figures have not significantly decreased since then, and thousands of eligible workers are regularly being denied work under MGNREGS.

Published on June 30, 2025