The committee has recommended an urgent revision of wage rates to at least ₹400 per day
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RITU RAJ KONWAR
The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA) is falling short of one of its core objectives — to strengthen the livelihood resource base of rural poor — according to a scathing assessment by the Standing Committee on Rural Development and Panchayati Raj. In its latest report released in April, the committee expressed concern that stagnant wage rates under the scheme, coupled with an unchanged budget allocation of ₹86,000 crore for FY26, are leaving millions of rural workers with earnings below subsistence levels.
It has recommended an urgent revision of wage rates to at least ₹400 per day, arguing that the current payments are inadequate to meet even the most basic daily expenses amid rising inflation. The median wage rate across States in FY25 is ₹259, with 10 States/UTs having daily wages of more than ₹300.
According to the government data, in FY22, total spend under the scheme reached its highest at ₹1,06,489.52 crore, with wage expenditure at ₹75,091.63 crore, indicating a robust push to provide rural livelihood during and after the Covid-19 crisis. While the following year (2022–23) saw a slight dip, the government managed to raise the outlay again in FY24.
In FY23, the Centre had budgeted ₹73,000 crore for MGNREGA. However, the Revised Estimate shot up to ₹89,400 crore, and the Centre ultimately released ₹90,810.99 crore. Despite these mid-year adjustments, State governments spent a staggering ₹1,01,120.08 crore, overshooting the original budget by nearly 38 per cent. The following year, in FY24, the story repeated itself — only more starkly. The initial allocation was slashed to ₹60,000 crore, but the expenditure again crossed ₹1.05 lakh crore. Even with a higher Revised Estimate of ₹86,000 crore, the funds released — ₹89,268.31 crore — were still insufficient to meet the growing demand.
Worrying Trend
The pattern reveals a worrying trend. Every year, the scheme starts with a conservative budget, only to require upward revision as the year progresses. In FY25, the Centre earmarked ₹86,000 crore in the Budget Estimate itself. But by December 31, 2024, ₹80,495 crore had already been released, and States had spent ₹80,979.24 crore, nearly exhausting the annual allocation in just three quarters. With one quarter of the fiscal year still to go, the likelihood of yet another overshoot looms large.
Experts say that this recurring financial shortfall raises critical questions about the Union government’s approach to rural employment guarantees. When budget allocations are out of step with the realities on the ground, the result is not just administrative inconvenience — it is erosion of confidence in the system. For FY26, the Budget Estimate remains at ₹86,000 crore. If past patterns hold, the budgeted figure is likely to fall short once again.
Fair Wages
The latest report by LibTech India researchers states that only 7 per cent of households get the promised 100 days of work under the MGNREGA. The World Bank recommends that at least 1.7 per cent of the country’s GDP should be allocated to this programme. The 2024–25 allocation, however, accounts for just 0.26 per cent of GDP.
“Wage rates under MGNREGA should be revised in line with inflation and the Consumer Price Index for Agricultural Labourers (CPI-AL) to prevent stagnant wages and discourage the use of machinery over manual labour, the Standing Committee has recommended.
Published on May 30, 2025
