Government to give additional funds for rural schemes to ease pain - Report

A person working under the Mahatma Gandhi National Rural Employment Guarantee Act or MNREGA scheme (Image by PradeepGaurs/Shutterstock)

The Indian government will likely raise its allocation to the rural development ministry by 18% to 1.60 trillion Indian rupees ($14.19 billion) for the current fiscal year, partly to bolster its job scheme, a top government source told Reuters.

India had allocated 1.36 trillion rupees for 2022/23 for various schemes in the hinterland, but the stress in rural areas has led to increased demand for the Mahatma Gandhi National Rural Employment Guarantee Scheme, or MNREGA, the country's only minimum job guarantee scheme, which pays $2 to $3 a day.

The additional funds will be used to bulk up job and affordable housing schemes in the fiscal year ending March 2023, said the official, who did not want to be named as the information is yet to be made public.

India's finance and rural development ministry did not immediately respond to requests for comments.

The government had initially budgeted 730 billion rupees for the job scheme and 200 billion rupees for the housing scheme. It has already spent 632.6 billion rupees on the jobs programme, according to the rural development ministry's website.

Coming out of the pandemic, the Asian country's rural areas were under stress, with rising prices and limited non-farm job opportunities forcing more people to sign up for the government's job scheme.

The rural unemployment rate has remained above 7% for the majority of the months in the current fiscal year that started on April 1, according to data from Centre for Monitoring Indian Economy (CMIE), a private think-tank.

The rural unemployment rate was 8.04% in October, according to CMIE.

The government is likely to seek approval for these additional funds in the next parliament session, which starts on Dec. 7.