The government is expected to sustain its focus on rural development in the budget for 2025-26 with a 5-8% year-on-year increase in allocations for key schemes, said people with knowledge of the matter.
The rural development ministry has an outlay of ₹1.78 lakh crore for this financial year, up 3.8% from a year before.
While the allocation for the rural job guarantee scheme may remain unchanged or see a marginal rise in 2025-26 against the budgeted ₹86,000 crore for this fiscal, rural housing and roads schemes are likely to see a sharper increase in outlays, according to the people. The government had allocated ₹54,500 crore for the Pradhan Mantri Awas Yojana-Gramin (PMAY-G) and ₹16,100 crore for the Pradhan Mantri Gram Sadak Yojana (PMGSY) for this fiscal.
Higher government expenditure is expected to boost “resilient rural demand” and support economic growth when urban consumption is yet to turn the corner, said one of the persons, who did not wish to be identified.
Schemes such as those for rural housing and roads have a high multiplier effect, while the Mahatma Gandhi National Rural Employment Guarantee Scheme adds to the income of unskilled rural workers, according to experts. Under the rural jobs scheme, the government has so far released ₹81,278 crore of the budgeted ₹86,000 crore for this fiscal.
Another person said there could be a sharp cut in the PMAY-G outlay in the revised estimate for 2024-25, thanks to lower-than-expected spending. As the construction of houses under the government’s latest plan is expected to gain traction in the coming months, the outlay for the next fiscal is likely to be substantially higher than the revised estimate for 2024-25, he added.
In August last year, the cabinet had approved ₹3.06 lakh crore to build 30 million houses across the country over five years, 20 million of which would be built under the PMAY-G.
The target is over and above the 29.5 million rural houses that the government plans to complete under the scheme this fiscal since its inception in 2016. Against the earlier commitments, about 26.9 million houses have been built so far.
For rural roads, the government approved in September 2024 a ₹70,125 crore package spanning five years for the fourth and the latest phase of PMGSY by revamping the ongoing programme. It aims to build 62,500 km of rural roads in five years by connecting 25,000 habitations under the latest phase.
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While the allocation for the rural job guarantee scheme may remain unchanged or see a marginal rise in 2025-26 against the budgeted ₹86,000 crore for this fiscal, rural housing and roads schemes are likely to see a sharper increase in outlays, according to the people. The government had allocated ₹54,500 crore for the Pradhan Mantri Awas Yojana-Gramin (PMAY-G) and ₹16,100 crore for the Pradhan Mantri Gram Sadak Yojana (PMGSY) for this fiscal.
Higher government expenditure is expected to boost “resilient rural demand” and support economic growth when urban consumption is yet to turn the corner, said one of the persons, who did not wish to be identified.
Schemes such as those for rural housing and roads have a high multiplier effect, while the Mahatma Gandhi National Rural Employment Guarantee Scheme adds to the income of unskilled rural workers, according to experts. Under the rural jobs scheme, the government has so far released ₹81,278 crore of the budgeted ₹86,000 crore for this fiscal.
Another person said there could be a sharp cut in the PMAY-G outlay in the revised estimate for 2024-25, thanks to lower-than-expected spending. As the construction of houses under the government’s latest plan is expected to gain traction in the coming months, the outlay for the next fiscal is likely to be substantially higher than the revised estimate for 2024-25, he added.
In August last year, the cabinet had approved ₹3.06 lakh crore to build 30 million houses across the country over five years, 20 million of which would be built under the PMAY-G.
The target is over and above the 29.5 million rural houses that the government plans to complete under the scheme this fiscal since its inception in 2016. Against the earlier commitments, about 26.9 million houses have been built so far.
For rural roads, the government approved in September 2024 a ₹70,125 crore package spanning five years for the fourth and the latest phase of PMGSY by revamping the ongoing programme. It aims to build 62,500 km of rural roads in five years by connecting 25,000 habitations under the latest phase.
