Budget 2025-26: All Eyes On MGNREGA, Other Social Sector Schemes

The budgetary allocations of flagship Centrally sponsored schemes including MGNREGA and NSAP, were reduced from their actual expenditures last year.

By Krishnanand

New Delhi:In every Union Budget, the Central government spends a significant amount of money on the social sector, which is allocated on schemes such as rural employment guarantee scheme MGNREGA and those for socially vulnerable groups such as minorities and scheduled castes and scheduled tribes.

In February last year, while presenting the Union Budget for the current financial year, Finance Minister Nirmala Sitharaman had listed out nine focus areas as priority areas for the first regular term Budget of Prime Minister Narendra Modi’s third term. Inclusive human resource development and social justice was listed at the third place after productivity and resilience in agriculture and employment and skilling of youth.

Usually, the government used to list out eight Centrally sponsored schemes under the core of the core schemes, including allocation for rural employment guarantee program – MGNREGA, national social assistance program, and umbrella guarantee programmes for minorities, other vulnerable groups, including scheduled castes and scheduled tribes.

The cumulative expenditure on these eight core of the core schemes was around Rs 1.66 lakh crore in FY 2020-21, with MGNREGA being the biggest such scheme as it had expenditure of over Rs 1.11 lakh crores in that year.

However, there was a sharp cut in the allocation for MGNREGA scheme in FY 2021-22 Budget as the allocation was slashed from actual expenditure of Rs 1.11 lakh crore in FY 2020-21 to just Rs 73,000 crores. A drastic cut of over 34 percent in a single financial year.

Since then the MGNREGA scheme has seen many ups and downs in terms of budgetary allocation and actual expenditure but never went above Rs 1 lakh crore, either in terms of budgetary allocation or actual expenditure.

When Sitharaman presented the Union Budget for FY 2024-25 in February last year, the revised estimate of the scheme for FY 2023-24 showed an expenditure of Rs 90,800 crores as against the budgetary allocation of Rs 60,000 crores for the fiscal.

Since MGNREGA is a demand driven scheme funded by the Union government therefore a sizeable increase of over Rs 30,000 crore from the budgetary allocation showed that the demand for work in rural areas has been strong even after the Covid.

However, despite a clear signal of the strong demand for work in the rural areas under the MGNREGA Scheme, the government again cut the budgetary allocation for the scheme for the current financial year and allocated only Rs 86,000 crore which is less than the revised estimates for the scheme for FY 2023-24.

In other words, the budgetary allocation for this flagship Centrally sponsored scheme, having the lion’s share among all eight core of the core schemes, has been reduced from the actual expenditure of Rs 1.11 lakh crore in FY 2020-21 to just Rs 86,000 crore, a drastic cut of Rs 25,000 crore. It was done despite a clear indication about the strong demand for work in rural areas under this scheme in recent years.

Focus on MGNREGA allocation in this year’s Budget

This year, MGNREGA scheme is completing 20 years of the passage of the Act which was passed by the government in August 2005 and scheme was implemented from February 2006.

In fact, ahead of the presentation of the budget this week, senior Congress leader Jairam Ramesh, Monday, issued a statement, blaming the government for throttling the MGNREGA scheme.

He demanded that the government must remove the technical glitches and increase the minimum wages under the scheme to Rs 400 a day for the entire country.

Ramesh also demanded that payment of wages under the MGNREGA scheme must not be made compulsory through Aadhaar based authentication system.

The Congress leader also demanded an increase of the number of days under the MGNREGA scheme from present 100 days to 140 days of work in a year.

Ramesh said that the allocation to MGNREGA has been reduced to just 0.26 percent of the GDP for FY 2024-25 whereas the World Bank had recommended that the budgetary allocation to the MGNREGA scheme be increased to 1.7 percent of the GDP.

National Social Assistance Programme

National Social Assistance Program (NSAP) is another scheme, which has seen a drastic cut from the actual expenditure of over Rs 42,000 crores in FY 2020-21 to a budgetary allocation of just over Rs 9,600 crores in FY 2024-25. In fact, the budgetary allocation for the scheme was reduced to just Rs 9,200 crores in the next fiscal (FY 2020-21) as against actual expenditure of Rs 42,443 crores in the previous year.

The revised estimates for FY 2021-22 showed that actual expenditure further declined to Rs 8,730 crores against the budget of Rs 9,200 crores. Since, 2021-22, the budgetary allocation and the actual expenditure under the scheme have been below Rs 10,000 crores.

The Union government relied heavily on the MGNREGA scheme during the Covid period of 2020-21 and 2021-22 to alleviate the suffering of the migrant workers who had left the cities due to lockdown and came back to their villages. However, since then this socially important employment guarantee scheme has seen many ups and downs.

For example, the Budget allocation for the scheme has been cut from the actual expenditure of Rs 1.11 lakh crore in FY 2020-21 to just Rs 60,000 crore in 2023-24 and Rs 86,000 crore in FY 2024-25.