Government to withdraw unspent money from NREGA

The government is going to withdraw the unspent funds from its flagship Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), this withdrawal of money from the flagship MGNREGS scheme is expected to provide some relief to government which is facing several financial crunches.

The state governments are estimated to have around Rs 15,000 crore as unspent balance under the NREGA scheme left over from last financial year. A finance ministry official has said, “We estimate that states have about Rs 15,000 crore left from 2010-11. We have written to them to let us know the exact amount of unspent money they have. Accordingly their allocation for the current fiscal will be fixed,” adding further the official said that this would result in net savings for the government in 2011-12. States are expected to surrender unspent balances before getting fresh allocation.

During the last financial year, central government had allocated Rs 40, 100 crore to the MGNREGS scheme and almost the same amount in the current financial year i.e. 40,000 crore. The finance minister official said, “MGNREGS is a last resort for people when they do not get any jobs. With the economy doing largely well and better employment available, we expect that the demand for jobs under the scheme could be lower,” adding that the government could save as much as Rs 18,000 crore from the scheme’s allocation in 2011-12.

This would be good news for the central government, which is trying hard to meet the fiscal deficit target of 4.6% of the GDP for the present financial year. The slowdown in economic growth due to high inflation led by elevated global crude and commodity prices and increased interest rates by the central bank to curb inflation, has raised the concern of government over meeting the fiscal target for the present financial year.