This time the central government can focus on the development of farmers and rural areas in the budget 2026-27. According to reports, the government is set to further strengthen its focus on rural areas with double-digit increases for major schemes in the upcoming budget of 2026-27.
In this financial year, a budget of Rs 1.88 lakh crore has been fixed for the Ministry of Rural Development, which is about 8% more than last year. People said that under a new law, about 11% more money can be given for the Rural Employment Guarantee Scheme in 2026-27 than the revised estimate of the current year. At the same time, there is a possibility of even greater increase in the schemes of rural housing and rural roads.
Current budget for rural areas
In the current financial year, the government had budgeted Rs 86,000 crore for Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), Rs 54,832 crore for Pradhan Mantri Awas Yojana-Gramin (PMAY-G) and Rs 19,000 crore for Pradhan Mantri Gram Sadak Yojana (PMGSY). Overall, the share of these three schemes was about 85% of the total budget of the Ministry of Rural Development this year.
high multiplier effect
Vikas Bharat Guarantee for Employment and Livelihood Mission (Rural) i.e. VB-G RAM G scheme, which is estimated to cost more than Rs 95,000 crore in 2026-27, is proposed to replace MGNREGS. The Rural Development Ministry has demanded a good increase in the budget for the next financial year. Next year, the budget of important schemes may see a double-digit increase compared to this year’s revised estimates.
Under these schemes, more spending in rural areas will create permanent assets in the hinterland, which will accelerate economic development and also support rural demand. Schemes like rural housing and roads have greater economic benefits, while employment guarantee schemes increase the income of unskilled rural labourers.
How will the rural budget be?
According to the report, due to lower than expected expenditure, there will be a significant cut in the budget of PMAY-G and PMGSY in the revised estimates of the current financial year. The Cabinet had approved Rs 3.06 lakh crore to build 3 crore new houses across the country in five years by 2024. Of these, 2 crore houses are to be built in rural areas under PMAY-G.
In this financial year, construction of houses in the new phase has been affected due to the longer time taken in identifying eligible beneficiaries through the new survey. The Rural Development Ministry had set a target of completing 3.51 million houses this year, but so far only 1.8 million houses have been built. The construction work is expected to gain momentum in the coming months, as the list of beneficiaries has almost been finalized. Additional funds will be required for this.
Talking about rural roads, the expenditure under the scheme this financial year has been less than expected because it took more time to prepare the list of villages to be included in the new phase. Making changes to the existing scheme in September 2024, the government had approved a five-year package of Rs 70,125 crore for the fourth and new phase of PMGSY.
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