The Union finance ministry has decided to allocate only a little more than half the additional funds sought for the rural job scheme MGNREGA, government sources said, despite a rise in demand for work under the programme fuelled by a high unemployment rate.

The Union rural development ministry had sought an additional Rs 50,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) programme for 2023-24 since all the funds allocated in the Union budget had been used up.

But the finance ministry agreed to allocate only Rs 28,000 crore, a finance ministry official said. The additional allocation will need parliamentary approval as part of the supplementary budget. The finance ministry has already released Rs 10,000 crore pending Parliament's sanction.

Chakradhar Buddha, a senior researcher at LibTech India, a private organisation that mainly researches the MGNREGA, said the demand for jobs under the scheme had increased by around 9 per cent over last year. The person days generated under the programme was 205.94 crore on October 31 this year, against 188.42 crore on October 31 last year.

"If the government has decided to allocate Rs 28,000 crore in the supplementary budget, it's grossly inadequate. Already there is a pending liability of over Rs 9,000 crore," Buddha said.

"I feel that once the funds are exhausted in the next two or three months, the state governments will be unlikely to allow any new work. If new work is allowed, the workers will not be paid on time."

Buddha said the demand for work under the scheme had risen despite the government deleting over 5 crore job cards in 2022-23 and pushing the Aadhaar Enabled Payment System and an online attendance system, which would have deterred many would-be workers.

"If the government had not deleted the job cards and not pushed the technology-driven measures, the demand for MGNREGA jobs would have increased even further. So what we see is a neglect of the job scheme," he said.

A labour economist said one reason for the increase in demand is a high unemployment rate. According to the Centre for Monitoring Indian Economy, a private research group, the unemployment rate had hovered around eight per cent since the start of the financial year before crossing 10 per cent in October.

Buddha calculated that the available funds after the deduction of the current liabilities would be Rs 18,375 crore, which can generate only 57.3 crore person days of work.

With the Union budget having allocated Rs 60,000 crore under the scheme, and the additional funds likely to be only Rs 28,000 crore, Buddha said the funds this year would be the lowest in four years. The total allocations for the scheme were Rs 89,400 crore in 2022-23 and Rs 98,000 crore in 2021-22, while the expenditure was Rs 1.1 lakh crore in 2020-21.

The rural development ministry had estimated that the spending under the scheme would be higher than last year because of an about five per cent rise in the wage rate and the increased demand for work.

The MGNREGA provides for up to 100 days’ employment a year to every rural household and is seen as a livelihood support system in rural India during the lean agricultural period.