Demand for work under rural job guarantee scheme hits four-month low in March, indicating likely shift in labour market

New Delhi: After months of rising demand, the number of people that sought work under the government’s rural job guarantee scheme dipped to a four-month low in March, indicating a potential shift in labour market conditions.

Government data showed that people from 186.4 million households sought work under the under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in March. That was a 14.5% drop from 217.9 million households in February. The numbers were 224.9 million in January and 215.7 million in December.

The moderation in demand likely reflects improving rural job opportunities outside the scheme and seasonal shifts in employment patterns. MGNREGS demand often acts as a barometer of rural distress, rising when job availability in agriculture or other informal sectors drops.

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“The rise in MGNREGS work demand between November and February was largely due to seasonal factors,” a senior official said, requesting anonymity. “However, the recent decline is due to increased farm and non-farm activities in rural areas.”

India’s GDP growth accelerated to 6.2% in Q3 (October-December) of FY25 from 5.6% in the previous quarter, driven by rural consumption following a good monsoon and higher government spending. The agriculture sector grew by 5.6% during this period, compared with 1.5% in the corresponding quarter of the previous year and 4.1% in the September quarter.

The spokesperson of the ministry of rural development, the nodal ministry for the scheme, didn't respond to emailed queries.

Allocation unchanged

The allocation for MGNREGS in the FY26 budget was ₹86,000 crore, unchanged from the previous year. 

In FY24, although the initial budget estimate pegged an allocation of ₹60,000 crore, actual expenditure reached ₹1.06 trillion, according to official data, exceeding even the revised estimate of ₹86,000 crore. That reflected strong demand for rural jobs, largely due to uneven rainfall affecting livelihoods.

Also Read | MGNREGS funding likely to remain unchanged in FY26 amid rural recovery

The Centre is relying on sustained capital spending and a revival of rural demand, supported by a favourable monsoon, to fuel economic growth in the current fiscal year. The India Meteorological Department has predicted above-normal cumulative rainfall for the monsoon season this year.

The central government may take a call on increasing the allocation for MGNREGS later in the year, a second senior government official said on condition of anonymity.

"A review will be carried out at the halfway point of the ongoing fiscal year in September-October. If required, the allocations under the scheme can be enhanced then," the person added.

Guaranteed employment

MGNREGS provides the poorest households in rural areas with at least 100 days of guaranteed waged employment in a financial year. The work offered typically involves unskilled manual labour related to public works such as building rural infrastructure, water conservation or afforestation.

Also Read | The dichotomies that define India’s rural jobs promise

The number of workdays demanded under MGNREGS often serves as an indicator of rural economic distress. More people turn to the scheme to secure an income due to factors such as poor agricultural output, drought, floods, or lack of employment opportunities in the informal sector.

As a result, demand for work under MGNREGS tends to rise in periods of rural hardship and decline when farm and non-farm job opportunities improve.