The demand for employment under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in July 2025 was quite low. About 16.6 million households demanded employment under the Scheme. This is the lowest demand seen in July in the last six years indicating an easing of rural stress. Nevertheless, the wage rate shot up by a smart 3.5 percent in July.
The demand for employment under the scheme is seasonal and therefore, it makes sense to compare the demand in similar months across years. Demand peaks in May and June when agricultural demand is the lowest. After that, demand falls quite sharply because labour gets absorbed into kharif agricultural operations. Correspondingly, the demand for employment under MGNREGS falls as these are only last resort jobs.
The demand for employment under MGNREGS in July 2025 was the lowest in any July since 2020. It is the lowest since the pandemic that led to a sharp increase in demand for employment under the scheme as vulnerable urbanites migrated back to the villages in search of safety during the pandemic.
The demand under the scheme at 16.6 million households in July 2025 is comparable to the demand during the month of July in the pre-pandemic years. In the six years 2014 through 2019, the average demand for MGNREGS employment in July was 15.5 million households with a range of 13.7 million at the lowest in 2014 and 17.6 million at the upper end in 2018.
The fall in this demand for last-resort jobs to pre-pandemic levels indicates a return of normalcy on the employment front in rural India.
Normalcy implies that about 16 million of an estimated 217 million rural households found it necessary to seek employment under the scheme. This implies about 7.7 percent of rural households have to seek MGNREGS employment. In July 2021, this proportion had peaked at about 15.5 percent.
The fall in demand for MGNREGS jobs in July comes after a fall in the peak months of May and June as well. Employment demand during these two months had also reverted to pre-pandemic levels.
Prima facie, therefore, it is apparent that the stress in rural employment caused by the Covid-induced lockdowns has finally abated after about six years.
The demand for employment under the scheme is expected to continue to fall in August. Partly this fall would be seasonal. But it is also likely because in 2025, monsoon rains have been copious, and sowing has been strong. Farm activities may therefore keep the demand for labour high. This is expected to reduce the pressure on MGNREGS. Employment could fall to about 15.5 million in the month.
Usually, the demand for MGNREGS jobs stabilises in September and October at levels just a shade below that in August. It is quite likely that the demand may stabilise at around 15 million during these months.
The proportion of households that are provided or rather those that avail employment under the MGNREGS are lower than those that demanded employment. Usually, about 87 percent of those that demand employment actually avail the employment offered. This ratio fell to 85.5 percent in July. This again, is likely a reflection of relatively low demand for employment under the scheme
The fall in demand for employment under MGNREGS aligns well with the fall in unemployment in rural India seen in CMIE’s Consumer Pyramids Household Survey (CPHS). The rural unemployment rate had fallen to 6.4 percent in July compared to 7.5 percent in 2023-24 and 2024-25 and 6.9 percent in the quarter ended June 2025. The fall in stress in rural labour markets is better reflected in the rising employment rate. This was 38.3 percent in 2024-25, 39.4 percent in the quarter ended June 2025 and 39.5 percent in July 2025.
While employment under MGNREGS has fallen both seasonally and non-seasonally, the wage rate offered under MGNREGS has risen. The average wage rate shot up to Rs.270 per day in July 2025. This was 5.9 percent higher than it was a year ago in July 2024. The average wage rate shot up by 3.5 percent from Rs.261 per day in June. Given that inflation has been quite benign in recent times, this implies a substantial real increase in rural wages under MGNREGS.
