Should MNREGA be expanded and better funded?

The Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA), passed in 2005, legally entitles every rural household to 100 days of paid manual work a year on public projects. It is the largest employment guarantee scheme in the world by enrolment. The question is whether its current funding lets it deliver on that legal promise, or whether the guarantee exists mostly on paper.

MNREGA was passed in 2005 and rolled out nationally by 2008, building on earlier state-level employment guarantee schemes, most directly Maharashtra's Employment Guarantee Scheme from the 1970s. It is funded almost entirely by the central government and implemented through state and local panchayat bodies.

Budget allocation has been a recurring flashpoint. The Union Budget set MNREGA funding at Rs 86,000 crore for 2024-25 and kept it unchanged for 2025-26, the fifth consecutive year the allocation has stayed flat in nominal terms, which means a real-terms cut once inflation is accounted for. Reporting based on government data found that the scheme ran a funding deficit of roughly Rs 9,860 crore in early 2025, with pending wages alone exceeding Rs 6,900 crore.

• It is a legal entitlement, not a discretionary scheme, so underfunding it means the state is failing to meet its own statutory promise.
• It functions as a rural safety net during agricultural slack seasons and economic downturns, including during the Covid-19 pandemic when demand for MNREGA work surged sharply.
• Independent reporting has found that government data shows only a small share of households (commonly cited around 7 to 8 percent in recent years) get the full 100 days they are legally entitled to, which supporters read as evidence of underfunding rather than weak demand.

• Critics argue it creates work-seeking dependency and can pull agricultural labour away from farms during peak season in some regions, raising rural wage costs.
• The shift to mandatory Aadhaar-linked payments was meant to cut fraud, but reporting has documented large numbers of workers (reported in the tens of millions) being dropped from rolls or left unpaid due to linking and verification problems, which critics on both sides see as an implementation failure rather than an argument for or against the scheme itself.
• Some economists argue funds would do more for rural incomes if redirected into infrastructure or direct cash transfers rather than guaranteed low-skill manual work.

Large-scale public employment guarantees of MNREGA's kind are unusual globally. South Africa's Expanded Public Works Programme is a partial comparison, but it is far smaller in scale and not a universal legal entitlement. Most developed economies rely on unemployment insurance or cash welfare rather than guaranteed public work, while India's scheme is closer to a hybrid of social insurance and direct job creation, tailored to a large informal rural workforce that conventional unemployment insurance does not reach.

MNREGA was introduced under the Congress-led UPA government and remains politically associated with it, though it has not been repealed by subsequent BJP-led governments, who have instead kept allocations broadly flat while emphasising other rural schemes such as PM-KISAN. Opposition parties and rural unions regularly demand higher allocations and timely wage payment; the central government's position has generally been that funding is demand-linked and adjusted through supplementary budgets.

This question sits on the Economy axis: support for expanding MNREGA reads as backing direct state intervention in employment and welfare, while opposition reads as preferring market-driven job creation or more targeted alternatives.