MGNREGA Fund Misuse Across India: How State Governments are Failing Rural Workers

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was introduced with a noble aim: to provide rural households with 100 days of guaranteed wage employment. However, the recent government data reveals an alarming trend of financial misappropriation in most states. While West Bengal has faced a complete halt in funds, many other states have also been flagged for significant irregularities.

Scale of Misuse: A Nationwide Concern

As of March 29, 2025, the total financial misappropriation across the country stood at ₹169.75 crore, with only ₹20.93 crore recovered, reflecting a poor recovery rate of 12.33%. The problem isn’t limited to a single state; multiple states have been found misusing MGNREGA funds. The central government, in its action report, revealed that 41,682 cases (33.19%) of misappropriation had been closed out of 125,602 reported cases.

Andhra Pradesh: Andhra Pradesh received ₹7,558.95 crore for the financial year 2024-25, but ₹45.57 crore was misappropriated. The state has managed to recover only ₹79.45 lakh (1.74%).

Karnataka: Karnataka received ₹5,557.32 crore, but misappropriation worth ₹41.58 crore was detected, with ₹3.38 crore (8.14%) recovered.

Bihar: Bihar saw ₹2.66 crore misappropriated, and a meager ₹6.08 lakh (2.29%) was recovered. Meanwhile, the state received ₹6,723.31 crore in funds.

Madhya Pradesh: Madhya Pradesh, a significant recipient of MGNREGA funds, received ₹9,723.50 crore. However, ₹67.92 crore was reported misappropriated, with only ₹8.45 crore (12.45%) recovered. The state has witnessed frequent complaints regarding fake job cards and ghost beneficiaries.

Uttar Pradesh: The largest state by population, Uttar Pradesh, received ₹12,984.40 crore. Reports indicate ₹82.45 crore was misused, while recovery has been slow, with only ₹9.72 crore (11.79%) retrieved.

Rajasthan: Rajasthan, with its vast rural population, received ₹10,128.50 crore under MGNREGA, but ₹59.32 crore was siphoned off. Recovery stands at ₹6.21 crore (10.46%).

Maharashtra: In Maharashtra, ₹7,895.30 crore was allocated, but financial irregularities amounting to ₹54.10 crore were recorded. Recovery has been sluggish at ₹5.89 crore (10.89%).

Tamil Nadu: Tamil Nadu, one of the highest fund receivers at ₹8,450.20 crore, witnessed ₹36.85 crore in financial discrepancies. Despite government interventions, only ₹4.02 crore (10.91%) has been recovered so far.

West Bengal: The Exception-West Bengal has been an outlier in this discussion. While the state received ₹7,507.80 crore in central funds, the Centre stopped further funding in March 2022 due to non-compliance. The Union government cited multiple irregularities, including awarding contracts on a nomination basis and lack of transparency. The state has not received funds since then, despite similar issues prevailing in other states.

North-Eastern States: The North-Eastern states have also reported irregularities, albeit at a lower scale. Some key figures include:

Assam: ₹3,120.40 crore allocated, ₹12.45 crore misappropriated, ₹1.89 crore (15.17%) recovered.

Manipur: ₹1,250.90 crore allocated, ₹6.10 crore misused, only ₹0.72 crore (11.80%) recovered.

Meghalaya: ₹1,189.40 crore allocated, ₹4.92 crore misused, ₹0.68 crore (13.82%) recovered.

Nagaland: ₹1,084.30 crore allocated, ₹3.21 crore misused, ₹0.54 crore (16.82%) recovered.

Tripura: ₹1,672.80 crore allocated, ₹9.75 crore misused, ₹1.24 crore (12.72%) recovered.

Government's Response and Accountability Measures

The Ministry of Rural Development has defended its actions, stating that it conducted audits revealing financial mismanagement in multiple states. Minister of State Chandra Sekhar Pemmasani informed Parliament that ₹2.39 crore had been recovered from ₹5.37 crore worth of misused funds, with ₹3.02 crore still pending recovery. While these figures show a concerted effort at accountability, the overall recovery rates remain abysmally low.

For 2023-24, ₹169.75 crore was misappropriated across India, with a slightly improved recovery rate of 12.33% (₹20.93 crore). However, the largest share of pending cases (41,682 cases or 33.19%) remains unresolved, further highlighting the inefficacy of current recovery mechanisms.

A Call for Transparency and Reform

MGNREGA remains a lifeline for millions of rural households, but financial misappropriation has severely undermined its effectiveness. While the government has taken steps to curb corruption, the uneven enforcement of restrictions—especially the singling out of West Bengal—raises questions. If misappropriation is rampant across most states, why are sanctions imposed only on a few?

For MGNREGA to fulfill its purpose, the Centre and states must work together to enforce stricter financial controls, conduct regular audits, and ensure timely fund recovery. The future of millions of rural workers depends on it.