Pushing up deficits
States are staring at a higher outgo. If the new 60:40 formula for all costs had been applied in 2024-25, states would have faced an additional burden of around ₹31,000 crore, increasing the total state expenditure by around 0.54%. MGNREGS has been especially important during times of economic crisis, such as the covid-induced lockdowns of 2020 and 2021. In 2020-21, under the new fund-sharing arrangement, states would have faced an additional liability of around ₹40,000 crore, amounting to an increase of slightly over 1% of total expenditure.