The utility of the government’s Mahatma Gandhi National Rural Employment Guarantee Scheme, launched in 2006, can be gauged by the fact that the government has been outspending on the scheme each year over the last decade compared with the initially budgeted amount.
Amidst reports that the Mahatma Gandhi National Rural Employment Guarantee Scheme may receive a higher allocation than the interim Budget, a Moneycontrol analysis shows that the actual spending on the scheme has been 29.6 percent higher on average than the initial Budget over the last decade.
The government has outspent on the scheme regardless of agricultural output growth.
In FY24, the government spent Rs 86,000 crore on MGNREGS compared with the Rs 60,000 crore allocation by the Finance Minister for the FY24 Budget.
During the Covid year of FY21, NREGA spending was 80.8 percent higher than the initial budget allocation.
Even if one discounts the Covid years of FY21 and FY22, the spending on the scheme has outpaced the initial budget estimate by 18 percent.
Further analysis shows that the divergence between the actual spending and initial budgets has more than doubled post-Covid. Between FY22 and FY24, the actual expenditure on the scheme exceeded the budgeted outlay by 34.2 percent on average, compared with a 16 percent excess spending between FY16 and FY20.
The period also corresponds with a marginally lower growth rate for agriculture post the pandemic.
Agriculture output expanded at a compounded annual growth rate of 3.6 percent between FY24 and FY21, compared with a 5.4 percent annual growth between FY16 and FY20.
Data indicates that the government has ample room to expand the programme.
Even with increased outlays, the share of MGNREGA in the total budget has fallen.
In FY24, MGNREGA spending at Rs 86,000 crore was just 1.3 percent of the central government's total spending, compared with 2.1 percent in FY19.
An earlier analysis by Moneycontrol had shown that the share of the central government’s spending on central sector schemes, which are 100 percent funded by the Union government and include subsidies and direct benefit transfer programmes like Pradhan Mantri Kisan Samman Nidhi Yojana, has risen over the last decade.
On the other hand, centrally sponsored schemes, which have a state funding component like MGNREGA, have witnessed a decline in their share of spending.
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