Overview of the Blog

{ A recent report by the Parliamentary Standing Committee on Rural Development has raised concerns over the underutilisation of funds by the Ministry of Rural Development. The committee questioned whether this issue stems from poor budget planning or inefficiencies in implementing key schemes. }

Key Highlights:

• Stagnant Budget Allocations: Funding for major schemes like MGNREGA, PMGSY, PMAY-G, and NSAP has remained largely unchanged, except for DAY-NRLM.
• Unspent Funds: Nearly ₹1.74 lakh crore remains unutilized, affecting scheme implementation and rural development progress.
• Centre vs. West Bengal Dispute: The suspension of MGNREGA funds to West Bengal since FY 2022-23 has led to economic hardships and distress migration.
• Recommendations: The committee urged the ministry to improve financial planning, ensure timely fund disbursement, and accelerate scheme execution.

The report highlights the urgent need for better fiscal management to ensure that rural development programs effectively benefit those in need.

A recent report by the Parliamentary Standing Committee on Rural Development, chaired by Congress MP Saptagiri Sankar Ulaka, has raised concerns over the underutilisation of funds by the Ministry of Rural Development. The panel expressed doubts about the ministry’s ability to effectively use the unspent 35% of the revised Budget allocation of approximately ₹1.74 lakh crore. This shortfall, the committee noted, could be due to either inadequate budgetary planning or inefficiencies in the actual implementation of rural development schemes.

Stagnant Budget Allocations and Their Impact

The committee highlighted that funding for key schemes such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), Pradhan Mantri Gram Sadak Yojana (PMGSY), Pradhan Mantri Awas Yojana-Gramin (PMAY-G), and National Social Assistance Programme (NSAP) has largely remained static. The only exception to this trend is the Deendayal Antyodaya Yojana-National Rural Livelihoods Mission (DAY-NRLM), which has seen some increases in funding.

In its report, the panel criticized the marginal increase of 2.27% in the Department of Rural Development’s (DoRD) Budget for FY26, which now stands at ₹1,88,754.53 crore, compared to ₹1,84,566.19 crore in FY25. Despite this small increment, the allocation for FY26 is nearly 9% higher than the revised estimate for the current fiscal year.

To ensure efficient utilisation of funds, the committee recommended that DoRD devise quarterly and monthly expenditure plans in advance in consultation with all stakeholders. The panel also emphasized the need to prevent delays in the implementation of schemes due to either a shortage of funds or slow execution.

Breakdown of Unspent Funds

The unspent funds under various key schemes are as follows:

• PMAY-G: ₹15,825.35 crore
• PMGSY: ₹3,545.77 crore
• NSAP: ₹1,813.34 crore
• NRLM: ₹2,583.16 crore
• MGNREGA: ₹1,627.65 crore
• DDU-GKY: ₹1,313.43 crore

While acknowledging a gradual reduction in unspent balances, the panel warned that continued non-utilisation of funds, along with pending wage and material liabilities and delays in fund disbursement, could hamper the effectiveness of rural development initiatives. The committee urged the department to adopt innovative fiscal strategies and enhance implementation efficiency.

Centre-State Tussle Over MGNREGA Funds

The panel also shed light on the ongoing dispute between the Centre and the West Bengal government regarding the release of MGNREGA funds. The committee noted that no central funds have been allocated to West Bengal for MGNREGA and other rural development schemes since FY 2022-23. This suspension of funds, it warned, has resulted in severe consequences such as increased distress migration and disruptions in rural development projects.

The committee recommended that West Bengal receive its rightful dues for all eligible years, barring the disputed year currently under judicial review. It emphasized that withholding funds has significantly affected the livelihoods of rural communities, exacerbating economic hardships in the state.

The Road Ahead

With the Rural Development Ministry, led by Shivraj Singh Chouhan, under scrutiny, the committee has called for immediate corrective measures to ensure that the allocated funds are effectively utilized. The ministry must focus on enhancing fiscal prudence and streamlining implementation processes to achieve the intended outcomes of rural development initiatives.

The report serves as a critical reminder of the need for better financial planning and execution in rural development, ensuring that allocated funds translate into tangible benefits for the rural population.

Conclusion

The underutilisation of rural development funds raises serious concerns about the efficiency of budget planning and scheme implementation. With nearly ₹1.74 lakh crore remaining unspent and major schemes facing stagnant allocations, the progress of rural development is at risk. Additionally, the Centre’s dispute with West Bengal over MGNREGA funds has worsened economic hardships in the state.

To address these challenges, the Ministry of Rural Development must adopt better fiscal planning, streamline fund disbursement, and enhance execution strategies. Ensuring timely utilisation of allocated funds is crucial to achieving the intended benefits of rural development initiatives and improving the livelihoods of millions in rural India.