Rural economy gets spending boost in Budget with allocations to jobs scheme

Subscribe to enjoy similar stories. The Union Budget 2026-27 gave a massive spending boost to the rural economy, thanks to a sharp increase in the allocations for the government’s flagship jobs scheme—Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). The push comes as the Centre begins transitioning away from MGNREGA to the revamped scheme.

Since the scheme is in a transitory phase, the budget provides funding for both the existing MGNREGA and its proposed successor, the Viksit Bharat—Guarantee for Rozgar and Ajeevika Mission (Gramin), or the G-RAM G Act, signalling a phased shift rather than an abrupt overhaul. While MGNREGA has been allocated ₹30,000 crore, its lowest allocation in many years, the new G-RAM G scheme has received ₹95,692, marking a decisive tilt in favour of the revamped programme. Together, the two schemes account for over ₹1.25 trillion in rural employment spending, and account for 2.4% of the total budgeted expenditure.

Rural development spending, which has been witnessing a steady decline in welfare allocations since the past four years, sees a noticeable revival in this budget. Thanks to the increased allocation to the rural jobs scheme, it rose to 5.1% of total expenditure from 4.3% in the previous fiscal year. The reversal follows a period in which rural allocations were gradually pared back as pandemic-related pressures eased and employment demand moderated.

The uptick reflects renewed policy attention to rural livelihoods, driven largely by changes to employment schemes. On the other hand, agriculture spending has stabilised around the 3%-mark in the past few years. At 3.04% in 2026–27, it remains broadly unchanged from the previous year.