According to the financial statement of “Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme”, it is running out of funds in 21 states.

Highlights

• The scheme has run out of funds halfway in the financial year 2021, and supplementary budgetary allocations will not be provided to compensate till the next Parliamentary session starts.
• It is showing a negative net balance of Rs 8,686 crore.

What does it imply?

Shortage of funds mean that, payments for MGNREGA workers and material costs will be delayed, unless States use their own funds.

Centre’s take

Centre is accusing some of the states with “artificially creating demand” for work.

Why there is shortage of funds?

The MGNREGA is a demand driven scheme. It guarantees 100 days of unskilled work to any rural household in need. During the lockdown period in 2020 amid covid-19 pandemic, this scheme was given its highest budget of Rs 1.11 lakh crore. This fund was used to provide a critical lifeline for 11 crore workers.  But in Union Budget 2021-22, the scheme was allocated Rs 73,000 crore, as nationwide lockdown was over. Centre also announced that supplementary budgets will be allocated if money ran out. As of October 29, total expenditure including payments due already reached to Rs 79,810 crore. 21 states including Andhra Pradesh, West Bengal and Tamil Nadu are showing negative net balance.