Budget 2022: India Lowers MGNREGA Allocation To Rs 73,000 Crore In FY23

The government has allocated Rs 73,000 crore for India’s rural jobs guarantee programme in the upcoming fiscal.

The revised estimate for the Mahatma Gandhi National Rural Employment Guarantee Act for FY22 now stands at Rs 98,000 crore, Finance Minister Nirmala Sitharaman said in her Budget 2022 speech.

The government had budgeted just as much for the scheme in FY22 but had to step up allocations during the year as demand for work surged.

The scheme remains pivotal in rural areas, where it has provided a safety net to a large section of the vulnerable population.

There are vulnerabilities at the bottom of the pyramid which could keep demand and growth weak, as such, it may be a good idea to keep social welfare spending elevated for longer, Pranjul Bhandari, chief India economist at HSBC had said in a note ahead of the budget. Given limited resources and fiscal consolidation pressures, one way is to keep pre-existing schemes like MGNREGA well-funded, rather than exploring new schemes, she said.

In a conversation with BloombergQuint last week, Gita Gopinath, first managing director at the IMF, had also said the government should make sure that the MGNREGA remains well funded. "In terms of where the budget should go, there is certainly one piece that should address the very unequal recovery within the economy. One dimension is making sure the rural employment guarantee scheme remains well-funded," Gopinath said, adding that the government could also consider providing free food staples for somewhat longer rather than letting it expire in March.