Funding freeze brings MGNREGS to a standstill in West Bengal

Central government freezes MGNREGS funds for West Bengal, causing protests; data shows severe impact on stakeholders and SC/ST households.

On March 9, 2022, the Central government issued an order freezing the transfer of funds for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) for West Bengal, citing irregularities in implementation. This unexpected halt resulted in protests by worker and vendor unions. On September 23, 2024, the Calcutta High court observed that the scheme must continue to operate even while the irregularities are investigated. Data show that the fund freeze severely affected all stakeholders.

Chart 1 shows the change in the number of individuals working under MGNREGS between FY 2021 and FY 2022 and between FY 2022 and FY 2023.

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Post-COVID-19, the share of MGNREGS workers reduced across many States neighbouring West Bengal, between 12% (Uttar Pradesh) and 20% (Jharkhand). The next year, the cutback continued, but at a slower rate, with the States’ worker reduction share limited to less than 7%. However, West Bengal saw a steep and outsized collapse in the same periods: 82% and 100%, respectively. While States such as Jharkhand also faced issues of payment delays, the accompanying worker decline was not as severe.

Chart 2A shows the number of households (in thousands) working under MGNREGS each year, by caste.

Chart 2B shows the same information, in percentage shares. Household employment rose across all groups during and immediately after COVID-19 (2020-2022) before falling sharply post the funding freeze.

In FY 2023, no household in West Bengal completed the mandated 100 days of work. However, the drop in employment did not affect all groups in a similar manner. The share of Scheduled Caste (SC) and Scheduled Tribe (ST) households reduced sharply from 24% to 10% and 8.4% to 4.8%, respectively, between FY 2022 and FY 2023. In the same period, the share of other households rose sharply from 68% to 85%. This indicates that there was “rationing” of work, i.e., whatever little work existed, it was being taken up more by other households, while the participation of SC/ST households in the scheme declined sharply.