Reduced funds for MGNREGA in Budget 2023-24


    In News

    • Recently, the funds for Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme have been reduced in the Budget 2023-24


    • The Indian government has reduced the budget for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme to 60,000 crore rupees in 2023-24.
    • The new allocation is 33% lower than the revised estimate of ?89,000 crore for 2022-23 and 18% lower than the budget estimate of ?73,000 crore for the same year.
    • The government has shifted focus from transfers to investment, even in rural programs
    • According to the Ministry of Rural Development, MGNREGA is a demand-driven scheme and the generation of person days depends on the demand for work
    • The budget for MGNREGA was higher in 2020-21 to 2022-23 due to the COVID-19 pandemic and job and real income losses
    • The government during the pandemic had deployed two major social safety nets, the public distribution system and MGNREGA, to help vulnerable sections during the pandemic
    • MGNREGA has generated a record 389 crore person-days of employment in 2020-21 and 363 crore in 2021-22
    • As per the government, the lower budget for MGNREGA is based on the assumption that the economy has fully recovered from the pandemic and the war in Ukraine.
    • However, the consortium of activists and academics have demanded an allocation of ?2.72 lakh crore for the scheme to provide the legally guaranteed 100 days of work to all households who have worked in the current year, with even 40 days of work requiring funding of ?1.24 lakh crore.

    Major criticism

    • Activists from Peoples’ Action for Status Guarantee and the NREGA Sangarsh Morcha have criticized the allocation as it doesn’t not meet the minimum threshold to provide eligible households with 40 days of work instead of the legally guaranteed 100 days.
    • The allocation has been criticised for being brutal on the poor besides deliberate step towards killing the law by Mazdoor Kisan Shakti Sangathan.
    • Less than 3% of the households employed under MGNREGA completed the 100 days of work they are legally entitled to, with the average days of employment provided per household being only 42 which is at a five-year low.

    What is MGNREGA?

    • Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) 2005, is a flagship rural job scheme of the Indian government aimed at providing employment opportunities to the rural poor.

    • It is one of the largest public workfare programs in the world and has been instrumental in addressing the issue of rural poverty and unemployment in India.

    Important provisions

    • Employment guarantee – MGNREGA guarantees 100 days of employment to every rural household in a financial year.
    • Decentralized planning – The program is implemented through Gram Panchayats, which are local self-governance institutions, ensuring decentralized planning and implementation.
    • Legal right: The Act provides a legal right to employment for adult members of rural households.
    • Women empowerment: At least one-third of beneficiaries have to be women. 
    • Statutory limit: Wages must be paid according to the wages specified for agricultural labourers in the state under the Minimum Wages Act, 1948.
    • Time-Bound Guarantee of Work: Employment must be provided within 15 days of being demanded to fail which an ‘unemployment allowance’ must be given.
    • Supporting Panchayats: Gram Sabhas must recommend the works that are to be undertaken and at least 50 per cent of the works must be executed by them.
    • Social security measures – The program provides for a number of social security measures such as unemployment allowances and pension schemes for the aged and widows.
    • Transparency and accountability – MGNREGA provides for transparency and accountability through the use of biometric tools and a transparent complaint redressal mechanism.


    • Fund allocation and utilization – It is one of the major challenges faced by MGNREGA as the inadequate allocation of funds has resulted in a delay in wage payments and implementation of the program.
    • Corruption – Corruption at various levels such as misappropriation of funds, fake job cards, and fake muster rolls have been reported and have hampered the effectiveness of the program.
    • Delays in wage payments – Delays in wage payments are one of the major reasons for the low participation of workers in the program.
    • Lack of awareness – Many rural people are unaware of their rights and the provisions of the program, leading to low participation.
    • Lack of transparency and accountability – There have been instances of mismanagement of funds and lack of accountability, which has affected the credibility of the program.

    Importance of MGNREGA:

    • Reducing rural poverty: MGNREGA has been instrumental in reducing rural poverty by providing employment opportunities and a steady source of income to the rural poor.
    • Empowering women: The program provides equal wages for both men and women, thus empowering women and promoting gender equality in rural areas.
    • Decentralized planning and implementation: MGNREGA’s decentralized planning and implementation ensure that the program is implemented in a participatory and inclusive manner, addressing the needs of the rural poor.
    • Climate resilience: It provides for the creation of durable assets such as water conservation structures and afforestation, which help in building the resilience of rural areas to climate change.

    What more can be done?

    • Strengthening the implementation mechanism: Improving the capacity and effectiveness of the administration and implementing agencies.
    • Increasing transparency and accountability: Establishing clear and effective systems of monitoring, evaluation and grievance redressal is crucial to ensuring that the scheme is implemented in a transparent and accountable manner.
    • Improving financial management: The scheme should be financially sustainable and should have effective systems for tracking expenditures, tracking work and disbursing payments.
    • Fostering community ownership: Encouraging active community participation in the design and implementation of the scheme to ensure that the benefits of the scheme reach those who need it most.
    • Building human resources and technical capacities: Building the capacity of field functionaries, such as Gram Rozgar Sevaks and technical staff to ensure the effective implementation of the scheme.
    • Ensuring convergence with other schemes: MGNREGA should be integrated with other rural development schemes and programs to maximize its impact and improve its effectiveness.

    Way ahead

    • MGNREGA has been a game changer in addressing the issue of rural poverty and unemployment in India. However, it faces several challenges such as corruption, lack of transparency, and inadequate fund allocation, which need to be addressed for the program to be more effective. 
    • Despite its challenges, MGNREGA continues to be an important safety net for the rural poor in India and has helped in empowering the rural poor and promoting inclusive growth.

     Source: TH