Budget 2020 | Allocation for MGNREGS slashed by ₹9,500 crore

Scheme will get ₹61,500 crore in 2020-21, a 13% drop from the 2019-20 revised estimates of ₹71,000 crore.

February 01, 2020 10:04 pm | Updated June 19, 2020 06:26 pm IST - New Delhi

Flagship scheme: A file photo of people building a tank under MGNREGS in Kalaburagi district of Karnataka

Flagship scheme: A file photo of people building a tank under MGNREGS in Kalaburagi district of Karnataka

Despite a slowdown in the rural economy and the need to stimulate rural demand, the Centre has slashed budgetary allocation for the Mahatma Gandhi National Rural Employment Guarantee Scheme by ₹9,500 crore for the coming year.

Finance Minister Nirmala Sitharaman announced ₹61,500 crore for the scheme in 2020-21, a 13% drop from the 2019-20 revised estimates of ₹71,000 crore.

MGNREGS, which provides 100 days of unskilled work for every rural household, helps generate rural employment and provides a social safety net. Before the Budget, a number of economists had suggested that putting money directly into the hands of rural consumers at the bottom of the pyramid would be needed to create liquidity and spur consumption demand.

‘Will meet demand’

Asked about the cut, Economic Affairs Secretary Atanu Chakraborty said that if additional allocations were required for the scheme, it would be given later in the year.



“MGNREGS is a demand-driven scheme. This year, we went up because there was a demand for this in certain areas and the full money was provided. For the next year, it’s a usual, normal level of funding, which has been provided for MGNREGS. If there is an additional demand from some areas which comes up, we will again meet it accordingly at RE stage,” he said in response to The Hindu ’s query during a post-Budget press interaction. “Revised estimates for 2019-20 reflects meeting the demands fully, not rolling them over.”

As of last week, the scheme had already run through its original budgetary allocation for 2019-20, and 15 States were already in the red. The additional money granted in the revised estimates provides some breathing space. However, groups representing rural workers said the lower allocation would have a disastrous impact on rural economy.


“This is a travesty for the rural poor, for whom the MGNREGS is a potential lifeline,” said Rajendran Narayanan, an assistant professor with the Centre for Sustainable Employment at Azim Premji University. “Rural distress has risen to alarming levels. As per the Periodic Labour Force Survey (PLFS) of 2017-18, rural unemployment has increased by 8% from 2011-12, and overall unemployment is the worst in 45 years. In conjunction with double-digit food inflation levels, this is a serious concern. The situation is much worse for the landless depending on casual manual labour, who constitute more than half the rural population.”

Rakshita Swamy of the People’s Action for Employment Guarantee, an advocacy group for MGNREGS, said pending liabilities have been amounting to nearly one-sixth of each year’s allocation.




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