MGNREGA returns to pre-pandemic normal, but new state-level shifts are emerging

Farmers employed under the MGNREGA scheme, at Kusugal village in Dharwad district. (PTI/File Photo)

The government's flagship rural employment scheme is settling back into its pre-pandemic rhythm. After the historic surge in demand during the Covid years, expenditure under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has reverted closer to long-term trends, even as fresh shifts emerge in how states are delivering work.

Budget data shows that after peaking at 0.56 percent of GDP in FY21, MGNREGA spending has steadily declined, falling to 0.3 percent in FY24 and budgeted at 0.27 percent for FY25. The expenditure-to-GDP ratio is projected to ease further to 0.24 percent in FY26, signalling a full return to its pre-Covid scale. Budget 2026 is expected to maintain this level of spending.

This moderation mirrors the softening in actual utilisation. After the Centre spent a record Rs 1.11 lakh crore in FY21, actual expenditure fell to Rs 98,468 crore in FY22 and Rs 90,806 crore in FY23, even though revised estimates in several years exceeded budgeted allocations. The tightening reflects both cooling distress-led demand and a recalibration of the programme after its pandemic overstretch.

Diverging state patterns as labour markets rebalance

More telling shifts are visible at the state level. Nationally, the share of households receiving work relative to those demanding it has slipped from 92 percent in 2023-24 to 88.8 percent so far in 2025-26. But the aggregate masks wide divergences.

Southern and Northeastern states remain the most efficient at delivering work. Tamil Nadu and Arunachal Pradesh continue to meet more than 93 percent of labour demand, while Kerala, Assam and Andhra Pradesh hover near or above the 90 percent mark—consistent with their historically strong administrative capacity in implementing MGNREGA.

In contrast, Haryana, Gujarat and Jharkhand continue to operate at structurally lower fulfilment ratios, with less than 85 percent of job demand met. One notable improvement comes from Uttar Pradesh, which has climbed from 78 percent in 2020-21 to nearly 90 percent today—pointing to strengthened implementation systems post-pandemic.

Sharp drop in households completing 100 days

Another sign of normalisation is the decline in households completing the full 100 days of guaranteed work. During the pandemic, reverse migration increased rural labour supply, pushing completions to multi-year highs. Rajasthan, Andhra Pradesh and Chhattisgarh recorded double-digit completion rates in 2020-21.

Those levels have now collapsed: Rajasthan has fallen from 15.3 percent to 0.6 percent in 2025-26 so far. Andhra Pradesh has declined from 16.9 percent to 2 percent, and Kerala from 26.7 percent to 3.9 percent.

Nationally, only 1.3 percent of eligible households have completed 100 days this year, compared with 8.4 percent at the peak of the pandemic and 6.9 percent last year—underscoring the cooling of distress-driven demand as rural incomes stabilise and non-farm employment recovers in parts of the country.

Yet, not all states follow this pattern. Maharashtra, Odisha and Jharkhand continue to record higher-than-average completions, indicating that MGNREGA remains an essential income stabiliser in pockets of ongoing rural stress.

A programme normalising, but unevenly

Taken together, the numbers portray a rural jobs programme returning to its pre-pandemic scale—yet evolving in geography and purpose. Even as national spending normalises, uneven recovery across states means MGNREGA continues to act as a crucial shock absorber where labour markets remain fragile, reaffirming its enduring place in India’s social safety net.