Why is News :
- For the first time, the Union Finance Ministry has imposed a 60% cap on MGNREGS spending for the first half of FY 2025–26.
- This makes the demand-driven MGNREGS subject to the Monthly/Quarterly Expenditure Plan (MEP/QEP) framework.
About MGNREGS
- Enacted under MGNREG Act, 2005, it provides 100 days of wage employment per year to every rural household demanding work.
- It is a statutory right, not a discretionary scheme.
Rationale for the Cap
- Chronic Budget Overruns: 70%+ of funds often exhausted by September, leading to repeated supplementary allocations.
- Pending Dues: ₹15,000–25,000 crore unpaid annually; ~20% of the next year’s budget goes into settling them.
- Fiscal Prudence: Aim to avoid front-loading expenditure and improve cash flow management.
Current Financial Snapshot (FY 2025–26)
- Total Budget: ₹86,000 crore
- Already released: 28%
- Pending dues from FY25: ₹19,200 crore
- Pending dues in FY26 (as of June 12): ₹3,262 crore
- Nearly 50% of the budget may be consumed by past dues alone.
Key Issues and Criticisms
Mismatch with Rural Demand Patterns
- Rural demand for work is seasonal (April–June, post-Kharif) and climate-dependent.
- Fixed cap ignores droughts, floods, and economic shocks.
- E.g.: Karnataka exhausted 70% of funds within 6 months due to drought in 2023.
Violation of Legal Guarantees
- MGNREGS is a right, not a welfare program.
- Section 3: Right to work within 15 days.
- Schedule II, Para 29: Wages within 15 days
- Spending cap limits government’s legal obligation to provide guaranteed work.
Constitutional and Judicial Safeguards
- Courts have ruled budgetary constraints can’t justify denying statutory entitlements:
- Swaraj Abhiyan v Union of India (2016)
- Ratlam v Vardhichand (1980)
- Paschim Banga Khet Mazdoor Samity v State of WB (1996)
Legal and Administrative Ambiguity
- No clarity on what happens after 60% spending limit is hit:
- States may deny work.
- Workers may not be paid on time.
- Could lead to violation of the Act and future litigation.
Worsening Existing Implementation Failures
- Wage delays, non-payment of unemployment allowance, and poor grievance redressal already persist.
- The cap may exacerbate systemic inefficiencies.
Conclusion
- While fiscal management is important, spending controls must not violate statutory rights.
- The cap undermines the core goal of MGNREGS: providing timely, guaranteed employment during rural distress.
- A balance is needed between fiscal discipline and the constitutional duty of the state to support vulnerable citizens.
UPSC Relevance :
GS Paper: GS2 – Welfare Schemes | GS3 – Budgeting & Public Finance
Mains Practice Question
Q. Critically examine the implications of the expenditure cap imposed on MGNREGS in FY 2025–26. Do you think such fiscal controls are compatible with the legal and constitutional mandate of the scheme?