The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has recently been in the spotlight due to a combination of funding challenges, implementation issues, and corruption scandals. As India’s largest rural employment program, MGNREGA is designed to provide at least 100 days of wage employment per year to every rural household whose adult members volunteer to do unskilled manual work. However, recent developments have raised concerns about the scheme’s effectiveness and sustainability.
Budgetary Constraints and Rising Demand
In the Union Budget for 2025–26, the allocation for MGNREGA remained unchanged at ₹86,000 crore, the same as the previous year. This stagnation in funding has been criticized, especially considering that the actual expenditure for the scheme in the previous fiscal year was ₹1.05 lakh crore, exceeding the allocated amount by ₹19,297 crore. Experts warn that the current allocation may be insufficient to meet the rising demand for rural employment, potentially leading to fund exhaustion by October 2025.
The government has defended the static allocation by emphasizing that MGNREGA is a demand-driven program, asserting that additional funds can be provided as needed. However, critics argue that underfunding suppresses genuine demand, as workers may be discouraged from seeking work due to delayed payments and lack of available projects.
Implementation Challenges
Beyond funding issues, MGNREGA faces several implementation challenges. In Jharkhand, for instance, there has been an 8% decline in job demand under the scheme during the 2024–25 fiscal year. A significant factor contributing to this decline is the technical barrier posed by the Aadhaar-Based Payment System (ABPS). Approximately 38.11% of MGNREGA workers in Jharkhand are ineligible for online payments due to unlinked bank accounts, leading to delayed or denied wages and prompting labor migration.
Additionally, the scheme’s wage rates in some states remain below the minimum wage for agricultural work, further disincentivizing participation. For example, in Jharkhand, the MGNREGA wage is ₹282 per day, which is less than the state’s minimum wage for agricultural labor.
Corruption Scandals
MGNREGA has also been marred by corruption scandals, undermining its credibility. In Gujarat, a ₹71 crore scam was uncovered involving fraudulent claims for projects that were never executed. Investigations revealed that payments were made to ineligible firms, with some companies receiving over ₹30.8 crore for supplying materials without proper authorization. Notably, individuals connected to the state’s agriculture and panchayat minister were implicated, including his sons and nephew. Several government officials were also arrested in connection with the scam.
Similarly, in Dahod district, Gujarat, an investigation into 79 MGNREGA projects found that 21 had not been carried out despite being marked as completed and having payments issued. This discovery was prompted by a villager’s complaint and led to the termination and arrest of involved officials.
Positive Developments
Despite these challenges, MGNREGA continues to contribute positively to rural development. In Prayagraj district, Uttar Pradesh, the rural development department plans to plant approximately 30 lakh saplings during the 2025–26 financial year under the scheme. This initiative aims to enhance green cover and biodiversity, with saplings to be planted on private lands, near ponds, along roadsides, and in school and forest areas.
Furthermore, the scheme has provided employment opportunities to vulnerable groups. In Uttar Pradesh, 23,262 differently abled individuals secured jobs under MGNREGA in the 2024–25 fiscal year, contributing to 8.28 lakh man-days of work. Since 2017–18, over 1.24 lakh differently abled individuals have been employed under the scheme in the state.
Conclusion
MGNREGA remains a vital tool for rural employment and development in India. However, to ensure its continued effectiveness, the government must address funding inadequacies, streamline implementation processes, and combat corruption. Enhancing transparency, improving wage structures, and ensuring timely payments are essential steps toward restoring confidence in the scheme and fulfilling its objective of providing guaranteed employment to rural households.
Sources:
- https://www.business-standard.com/budget/news/budget-2025-rs-1-88-trn-for-rural-sector-mgnregs-allocation-unchanged-125020101503_1.html?utm_
- https://timesofindia.indiatimes.com/city/vadodara/mnrega-scam-ministers-son-remanded-in-police-custody-for-four-days/articleshow/121298595.cms?utm_
- https://www.hindustantimes.com/cities/lucknow-news/23262-differently-abled-individuals-secure-jobs-under-mnrega-in-2024-2025-in-up-101735844084829.html?utm_
- https://timesofindia.indiatimes.com/city/ranchi/mgnrega-job-demand-dips-by-8-in-state-jkhand-has-3rd-highest-no-workers-ineligible-for-online-payment/articleshow/121275392.cms?utm_
More Current Affairs: https://learnproacademy.in/updates/