Panchayats facing crisis as material costs for MGNREGS in previous financial year yet to be disbursed

Even as Keralam, just like the rest of the States, has shifted to Viksit Bharat – Guarantee for Rozgar and Ajeevika Mission (Gramin) [VB–G RAM G], the Union government is yet to disburse to the panchayats material costs of works taken up under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in the previous financial year.According to the office bearers of the Kerala Grama Panchayat Association, who met Local Self Government Department Minister K.M. Shaji earlier this week to raise the issue, most of the panchayats in the State are facing a crisis, with contractors demanding payment for their bills. The total material costs owed to the panchayats in the State is estimated at over ₹500 crore.“The material costs for works taken up under MGNREGS over an entire year is pending. When we contacted the MGNREGS mission here, even they were unsure of whether the fund will be allocated. On the other hand, fund for works under the VB–G RAM G, which started this year, have already been disbursed. We have discussed the matter with the Minister for LSGIs, who will take it up with the Union Minister,” said K.B. Madan Mohan, CEO of the Grama Panchayat Association.The VB–G RAM G came into force across the country on July 1, replacing the MGNREGS. The steering committee has been formed to guide the State-level implementation of the new programme. One of the major issues cited regarding the revamped scheme is that the State will have to bear the additional financial burden arising from the scheme while the Union government retains the power to decide the share of the States.The Union government would set a ‘normative allocation’, 40% of which would be borne by the States. The complete responsibility of all working days beyond this allocation has to be borne by the States. It is estimated that Kerala would incur an additional burden of ₹3,500 crore on account of this new condition. Published - September 17, 2026 09:37 pm IST