Finance ministry releases Rs 10,000 crore in urgent aid for NREGS

New Delhi: The finance ministry has released ₹10,000 crore in urgent assistance to meet unexpected enhanced expenditure under the rural job guarantee scheme until the first batch of supplementary demands for grants is approved by parliament at its next session, a senior official said.

The unusual move came after 95% of the FY24 budgetary outlay of ₹60,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) was exhausted well before the commencement of the winter session of parliament, thanks to a rise in work demand, the official told ET.

The urgent funds, released last week to the rural development ministry, will form a part of the additional ₹28,000 crore that could be allocated for the scheme in the first batch of supplementary demands for grants for FY24, he said.

The government is yet to announce the dates for the winter session of parliament.

At a pre-budget meeting in October, the rural development ministry had asked the finance ministry for additional funds for the rural employment scheme due to enhanced work demand.

More people sought work under the MGNREGS until October this fiscal year from a year before, contradicting initial official projections of a moderation in demand. This is mainly due to an erratic monsoon that prevented the usual migration of workers to farming and a tentative industrial recovery, experts have said. Despite a 10.3% surge in August, industrial output grew 6.1% in the first five months of this fiscal year, lower than 7.7% a year before.An up to 10.4% increase in wage rates under the MGNREGS, too, kept expenditure under the programme elevated.Moreover, an expected shift of workers to programmes such as rural housing and water, which witnessed a spike in the FY24 budgetary outlay, didn’t quite materialise. MGNREGS work demand has remained particularly high since the outbreak of the pandemic in 2020.

The budget for FY24 had trimmed the MGNREGS outlay by a third to Rs 60,000 crore from the revised estimate of Rs 88,400 crore for FY23. However, finance minister Nirmala Sitharaman had pledged more funds for the scheme if required.

The person-day work generation, which influences the budgetary allocation for MGNREGS, has already exceeded 87% of the FY24 target so far, according to preliminary data compiled by the rural development ministry.

Person-days generated under the scheme rose 9.3% between April and October from a year earlier to breach the 2 billion mark, the data showed. About 214.5 million individuals opted for work under the scheme until October this fiscal year, up 5.8% from a year before.

Members of 169 million households demanded work until October this fiscal, up almost 9.5% from a year before. The data typically get revised as and when updated information flows in.