Economy better placed, other rural spends hiked: Finance Secretary on MGNREGS Budget dip

Since MGNREGS is a demand-driven scheme, the Finance Secretary said that Budget allocations will be revised upwards during the year if there is a higher demand. 

February 02, 2023 11:29 pm | Updated February 03, 2023 09:29 am IST - NEW DELHI

Women working as part of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) | File Photo

Women working as part of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) | File Photo | Photo Credit: B .Velankanni Raj


Union Finance Secretary T.V. Somanathan on Thursday defended the reduction in Budget 2023-24 allocation for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), stressing that the economy was in a better shape and there had been an enhancement in rural outlays under other schemes which would generate similar work opportunities.

The Union Budget presented on Wednesday allocated ₹60,000 crore for the MGNREGS in 2023-24, 18% below the current year’s Budget Estimates and almost 33% lower than the Revised Estimates of ₹89,000 crore.

Housing scheme

“We have major increases in allocations this year in the PM Awas Yojana (Grameen) which is even larger than the PM Awas Yojana (PMAY) as a whole,” Mr. Somanathan explained in an interview with The Hindu.

Allocations for the housing scheme are up 66% to ₹79,000 crore, but the Grameen or rural component is up over 100%, the official said.

“There’s also a big increase in Jal Jeevan Mission and the area where this is spent is the same area where MGNREGA is in operation. So roughly ₹40,000 crore extra is going through these sources into the rural areas through the Central government’s own programmes,” he pointed out, noting these spends would “obviously have some effect” on demand for MGNREGS work as they would be for the same type of people with similar type of jobs.

“So we will definitely see some reduction in demand in terms of the actual availability of employment in those areas through these two big programmes. Third, the economy is doing much better than in 2020. So the normal economic push will also be in favour of lower MGNREGS demand,” he said.

Since the MGNREGS is a demand-driven scheme, the Finance Secretary said that Budget allocations would be revised upwards during the year if there was a higher demand.

“...But we are estimating a reduction in demand. Now people can disagree with that demand… and if it warrants an increase, we will consider it at the revised estimate stage,” Mr. Somanathan said.

Also read |Laboured wages: On MGNREGS payments to States

Taking on criticism about feared reductions in spending on farmers’ welfare as “selective” data interpretation, he said agriculture and allied sectors’ spends had actually gone up, if the PM Kisan scheme is excluded.

“The PM Kisan allocation is declining from ₹68,000 crore this year to ₹60,000 crore next year. Why? Essentially, the database has been updated after a three-year gap — there were people who were ineligible, there were people who were getting it in two places and there are those who have left or migrated and those who were tax payers but had not disclosed this,” he explained.

“We are not denying anybody the benefit, but the eligible number of people has come down by 10% due to the database cleaning,” he concluded.

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