MGNREGA work demand hits a four-month high in December

This occurred despite a recovery in rural consumption during the first two quarters of the ongoing fiscal, driven by improved rainfall and the government's reliance on increased rural spending to offset declining urban consumption.

Additionally, the government aims to boost growth during the current fiscal year, which slowed to 5.4% in Q2 FY25, through higher state-backed capital expenditure.

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The number of people demanding work every month on an average under the MGNREGA has been rising steadily since September, according to data from the rural development ministry.

It was at 18.93 million in September, 19.89 million in October, 21.56 million in November and 18.98 million in August.

However, despite the number of people demanding work every month standing at a four-month high in December, it stayed below the average figures for FY23 and FY24.

The number of people demanding work every month barely changed to 27.73 million in FY24 from 27.63 million in the previous year, according to data from the rural development ministry.

Seasonal factors

Experts said the rise in people demanding work under MGNREGA during the four months ending December could be attributed to seasonal factors, with people typically seeking jobs under the scheme when farm and non-farm activities are at their lowest.

"The demand for work under the MGNREGA scheme rose between September and December due to seasonal factors. However, a bumper crop season is anticipated, with the government expecting growth in agricultural production during the ongoing fiscal," said Bhanumurthy N.R., director of the Madras School of Economics.

"So, one can expect a fall in the number of people seeking jobs under the scheme from January as farm and non-farm activities are expected to go up," he added.

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Spokespersons of the ministries of rural development and finance didn't respond to emailed queries.

MGNREGS provides the poorest households in rural areas with at least 100 days of guaranteed waged employment in a financial year.

The days under the scheme usually increase when the rural economy is weak, and people are out of work.

Allocation unchanged

On 23 September Mint reported that the scheme is unlikely to see a higher allocation in FY25, as compared to the previous fiscal, with the government hoping for an improvement in the rural economy on the back of better rains.

Initial estimates for MGNREGS stood at ₹60,000 crore and ₹86,000 crore for FY24 and FY25, respectively.

However, spending overshot estimates in FY24, thus indicating high demand for jobs under the scheme, which can be attributed to uneven rainfall impacting rural areas.

While the revised FY24 estimate for MGNREGS stood at ₹86,000 crore, the actual spending touched ₹1.06 trillion, according to the official data.

Meanwhile, the Union government is banking on sustained capital expenditure and a recovery in rural demand on the back of good monsoons to drive economic growth in the ongoing fiscal.

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Gross domestic product (GDP) growth slowed to 5.4% in the September quarter, the slowest in nearly two years, after reporting a 6.7% growth in Q1 FY25.

The finance ministry expects the economy to grow 6.5% in FY25, down from 8.2% in FY24.