Govt trims budget for MGNREGS as PMAY, Jal Jeevan get more funds: CEA

New Delhi: Chief Economic Advisor V Anantha Nageswaran on Monday said the allocation for the Mahatma Gandhi National Rural Employment Scheme (MGNREGS) has been reduced in the Budget for 2023-24 as more funds have been allocated towards Pradhan Mantri Aawas Yojana and Jal Jeevan Mission, which are expected to provide jobs to the same set of workers in rural areas.

Nageswaran also said due to measures taken by the government, money in the hands of beneficiaries has doubled. "One of the reasons why allocation for MGNREGS was lowered is because there is a much larger substantive increase in allocation in particularly PMAY (rural) and Jal Jeevan Yojana. "...so the expectation is that the rural workers would be able to find jobs in these projects," he said at an event here.

The allocation for the Mahatma Gandhi National Rural Employment Scheme has been cut by almost one-third by finance minister Nirmala Sitharaman.

MGNREGS has been allocated Rs 60,000 crore for 2023-24, almost 32 per cent lower than revised estimates for the last fiscal.

He further said, "If they (rural workers) don't get absorbed (in PMAY or Jal Jeevan Mission) then since MGNREGS is a demand-driven programme, we can accommodate them through higher allocation in MGNREGS."

Explaining further the thinking behind allocating fewer funds for MGNREGS, Nageswaran said as India's economic growth is expected to be around 10.5-11 per cent next fiscal year in nominal terms, that will also see some of the rural workers migrating back to urban areas and finding jobs. "So, both these factors put together have led us to expect that in the coming financial year, demand for MGNREGS will be lower," he said.

Sitharaman had announced an increase in the Budget outlay for the Pradhan Mantri Aawas Yojana (PMAY), allocating Rs 79,590 crore for the scheme.

However, Budget documents show the hike is primarily in the rural component of the plan. In the Budget presented on February 1, the government earmarked Rs 25,103 crore for the urban component of the scheme, while Rs 54,487 has been allocated for the rural component, making it a total of Rs 79,590 crore. In the last fiscal, Rs 20,000 crore was allocated for the urban component of PMAY, while the revised estimate for the expenditure was Rs 28,708 crore.

The Centre’s marquee Jal Jeevan Mission has been allocated Rs 69,684 crore, up from the Rs 54,808 crore the department is expected to spend in the current financial year.