The Supreme Court of India has dismissed the Union Government’s plea challenging a directive from the Calcutta High Court, ordering a resumption of the Mahatma Gandhi National Rural Employment Guarantee Act scheme in the state from 1 August 2025. A bench of Justices Vikram Nath and Sandeep Mehta said it was “not convinced that the impugned order requires any interference”.
The High Court’s June 18 ruling had instructed implementation of the scheme in the state despite unresolved investigations into alleged irregularities, noting the Act does not envisage indefinite suspension of its benefits. It granted the Centre the power to impose safeguards, restrictions and conditionalities to guard against fraud while work under the scheme proceeds.
The scheme had been on hold in the state since March 2022, following assertions by the Union that widespread mis-appropriation of funds and non-compliance of directives warranted suspension.
By refusing to entertain the plea from the Centre, the Supreme Court has effectively paved the way for the programme’s revival under the terms mandated by the High Court. Experts note the judgment signals that welfare schemes backed by statute cannot remain suspended not because of ongoing probe but because of unresolved past irregularities.
The state government led by Mamata Banerjee hailed the decision as a verification of its claims that rural workers had been deprived of livelihood guarantee for years. Party general secretary Abhishek Banerjee described the ruling as a “historic victory for the people of Bengal”, and accused the Union’s political leadership of weaponising deprivation against the state.
From the Centre’s perspective, the stand has been that the state’s handling of past schemes lacked necessary safeguards; the government had sought a stay of the High Court’s order until all investigations and reconciliations of past disbursement anomalies were complete. Union solicitors argued that releasing fresh funds without fully wrapping up the probe would risk further leakage. The High Court accepted that the Centre retains powers to investigate but held that such power cannot be a reason to hold back the scheme indefinitely.
Implementation experts and labour groups say the next challenge lies in establishing robust procedural safeguards so that resumption does not simply restart the earlier cycle of irregularities. The High Court had emphasised use of direct wage transfers, audit trails, eligibility verification and monitoring frameworks. It also allowed the Union to impose “special conditions, restrictions and regulations … which have not been imposed in other states” to ensure integrity.
Labour organisations such as the Paschim Banga Khet Majdoor Samity welcomed the ruling and vowed to monitor ground-level roll-out. A state committee member, Anuradha Talwar, said the judgement would restore access to work and dignity for thousands of rural families who had remained without 100-day employment guarantees.
The political fallout of the judgement is significant. The state’s ruling party, Trinamool Congress, has used the decision to argue its case of federal imbalance, claiming the Union withheld funds to subdue its government. The opposition, however, maintains that the Union’s action was driven by accountability concerns and cautions that restarting the scheme without rigorous oversight risks repeating the same cycle of misuse.
Analysts note the decision may set precedent for similar welfare-scheme standoffs where central funds are withheld due to compliance issues, yet beneficiaries face prolonged exclusion. The key will be whether the agreed safeguards are effectively operationalised and whether the Union and the state collaborate to plug systemic leaks rather than revert to adversarial litigation.
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