One of the major rural employment schemes of the Union government, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) has already depleted almost 60% of its financial provisions in the coming 2025-26 financial year. According to the Ministry of Rural Development data, 51,521 crore of 86,000 crore that has been allocated to the scheme has already been expended; and there remains a month to the second quarter. The Finance Ministry had limited the spending to 60% of the annual budget in the first half of the year.
Key Points
Budget Exhaustion and Pending Liabilities:
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To date 86,000 crore funds allocated to MGNREGS have been expended in the 2025-26 financial year on 3 projects and 309 activities.
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This spending constituted 38% of the clearing of arrears of the last financial year (2024-25).
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As per the Ministry of Rural Development, the amount of wage liabilities and material liabilities were outstanding as ₹17,259.56 crore and 15,641 crore respectively as at April 1, 2025.
Government's Cap on Spending:
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The Finance Ministry has capped spending below MGNREGS in the first half of the financial year at 60% and hence reserves 79 crore to be spent on in September 2025.
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This limit implies that the government has already surpassed its budget limit at a faster rate than was expected, considering it has only a month left in the second quarter.
Number of Active Workers:
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The MGNREGS remains to be an essential lifeline to rural households as 12.15 crore active workers rely on the scheme to be provided with income supplement.
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This high figure of labourers makes the expenditure to be high with the scheme paying wages and material expenses on rural work.
Shortfall and Lack of Additional Funds:
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The cost of the same period last year of the last financial year (2024-25) was ₹61,829 crore that led to a dire shortfall.
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Although the financial pressure is continuing to increase, the Finance Ministry has not offered any extra budget towards the scheme.
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The Ministry of Rural Development officials have sought a reallocation rate but no signs of the Finance Ministry has shown that they will send additional resources.
Conclusion:
The 2025-26 financial year budget deficit in the MGNREGS is very high, with almost 60% of the budget expended in the initial five months. The necessity of more funds is also significant, particularly because a large fraction of the budgeted funds has to be spent on paying off the past year liabilities. Although 12.15 crore active workers are benefiting through the scheme, the Finance ministry has not yet given its consent on any extra funds as this strains the rural employment program. The case illustrates the increasing pressures of servicing the financial requirements of one of the flagship welfare programs in India.
