Fund misappropriation in most states: Govt data

New Delhi The Centre has halted funds under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) for West Bengal since March 2022, citing “financial misappropriation”, even as data obtained from the Union ministry of rural development shows a majority of states reporting misappropriation of the federal scheme funds, but none of them has faced restrictions in the last three fiscal years as the eastern state has.

The ministry in its action taken report (ATR) on social audits across states — a statutory requirement under MGNREGA—said that as on March 29 this year, the total misappropriated amount across states in 2024-25 stood at ₹193.67 crore, of which ₹10.29 crore has been recovered, translating to a recovery rate of 5.32%. In terms of closure of misappropriation cases, only 10.58% or 15,854 cases out of the total 149,000 were resolved, according to the data available on the government’s MGNREGA website.

Among the states, Andhra Pradesh, which received ₹7,558.95 crore central funds under MGNREGA for 2024-25, has reported misappropriation of funds to the tune of ₹45.57 crore, with only ₹79.45 lakh (or 1.74%) being recovered. Similarly, Karnataka, which received ₹5,557.32 crore funds from the Centre, misappropriated ₹41.58 crore, with only ₹3.38 crore (or 8.14%) being recovered. Bihar reported ₹2.66 crore in misappropriation, with merely ₹6.08 lakh (or 2.29%) being recovered while receiving ₹6,723.31 crore funds from the Union government.

Most other states also reported misappropriation of MGNREGA funds in the ongoing financial year, with exceptions of Arunachal Pradesh and Goa, and the Union territories of Ladakh, Andaman & Nicobar, Dadra and Nagar Haveli and Daman and Diu, and Puducherry.

The release of funds to West Bengal has been stopped since March 9, 2022, with the rural development ministry alleging it was “due to non-compliance” by the state with the directives of the central government, mandated as per the provisions of the Act. In 2021-22, West Bengal received ₹7,507.80 crore in central funds under MGNREGA — a demand-driven scheme where 100 days of employment is provided to unskilled workers per rural household. The state has not received any funds since then.

“There seems to be no valid reason to stop the funds for West Bengal at a time when social audits have been flagging misappropriation amounts in almost all states,” an official from the ministry claimed, requesting anonymity.

Last week, the central government informed Parliament that “financial misappropriation” had happened in West Bengal and that MGNREGA work was awarded to contractors on a nomination basis.

“When it comes to West Bengal this has been a particular situation: when the central government had given money, multiple things went wrong,” minister of state (MoS) for rural development, Chandra Sekhar Pemmasani told the Lok Sabha on March 25. “We sent an auditor and there were a total of 44 works with irregularities, in which recoveries have been made in 34, and in the remaining 10 [recoveries are yet to be made].”

The minister informed the House that ₹2.39 crore has been recovered out of an estimated ₹5.37 crore that was misappropriated, with ₹3.02 crore still pending recovery — marking the first time the Centre has publicly addressed specific details about fund misappropriation in West Bengal.

In 2023-24, the total financial misappropriation stood at ₹169.75 crore across the country, with a slightly improved recovery rate of 12.33% or ₹20.93 crore, according to the social audit data reflected as of March 29, 2025. The closure rate of misappropriation cases was also notably higher—41,682 cases (or 33.19%) closed out of 125,602 reported cases. Similarly, data from 2022-23 showed a total misappropriation of funds to the tune of ₹160 crore and the recovery was ₹28.08 crore, marking a 17.55% recovery rate—the highest in the past three years.

The issue of Centre withholding MGNREGA funds for West Bengal has often been raised by chief minister Mamata Banerjee, who heads the ruling Trinamool Congress (TMC). Her party colleague and Lok Sabha MP Saugata Roy alleged the Centre stopped the funds without any justified cause.

“The issue has been said several times in the Lok Sabha and the Centre said there has been misappropriation of funds. But it has not produced any proof. This is utterly unjustified. Why is West Bengal being singled out?” Roy told HT.

Purbayan Chakraborty, a lawyer representing Paschim Banga Khet Majoor Samity, an independent trade union in the state, said: “If the Centre indeed halted MGNREGA funds to West Bengal solely due to the misappropriation of ₹5.37 crore, this action appears grossly disproportionate. Moreover, it is deeply troubling that while workers bear the brunt of these actions, the bureaucrats responsible for the implementation of the scheme remain unaccountable.”

The lawyer added: “Punishing the most vulnerable sections of society for administrative failures is neither just nor constructive.”