Finance Ministry sets spending limit for MGNREGS for the first time ever, says report

MGNREGS

The central government has limited spending under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) at 60 percent of its total yearly allocation for the first half of the ongoing financial year 2026, The Indian Express reported. This marks the first time the government has set a spending limit for the rural jobs guarantee scheme.

MGNREGS has so far operated as a demand-driven programme under the Ministry of Rural Development (MoRD). However, the Finance Ministry has informed MoRD that it will now be brought under the Monthly/Quarterly Expenditure Plan (MEP/QEP), a spending control mechanism, the report said.

The Finance Ministry had set up the MEP/QEP mechanism in 2017 to oversee the cash flow and borrowings of ministries. MGNREGS so far remained outside the mechanism. Rural Development Ministry argues that the demand-driven nature of the scheme makes fixed spending caps unworkable for it, the report said.

The Rural Development Ministry has already submitted its MEP/QEP for MGNREGS to the Budget Division of the Finance Ministry, and has proposed for a higher spending limit for Q1 and Q2 of the ongoing financial year 2026, the report said. The finance ministry however didn't agree to the proposal.

The two ministries held several rounds of talks, and the Finance Ministry finalized that MoRD could spend 60 percent of MGNREGS's annual outlay of Rs 86,000 crore in the first half of the financial year, the report said. This implies that the ministry will have Rs 51,600 crore available for the scheme until the end of September.

The Finance Ministry also questioned the pending liabilities which are set to be cleared from MGNREGS allocation this year. Citing the MGNREGA Act of 2005, which mandates the payment of wages within 15 days, the ministry questioned how dues worth over Rs 21,000 crore were still pending, the report said.

Moneycontrol couldn't independently verify the report.

The significant dues will likely make it even more difficult to manage spending for the scheme within the given limit.

MGNREGS provides at least 100 days of guaranteed wage employment in a financial year to every rural household whose adult members volunteer to do unskilled manual work.

The programme, which got Parliament's nod in August 2005, was implemented in February 2006 in the country’s poorest districts. In 2008, it was extended across the country.

The government has been taking steps to plug leaks in the job scheme, ranging from mandatory digital attendance of workers through the National Mobile Monitoring System, to ensuring wages are paid through Aadhaar-linked bank accounts.