because they are grunts damn you!
In Covenant society, Grunts are the bottom of the totem pole. They are regarded as near-cannon fodder by other species. In battle they weren't even armed until the Grunt Rebellion in 2462; just sent out to say, "Here I am! I'm a Covie! Shoot me!" So it makes a lot of sense that they are given poor weapons, given their lowly position.
EDIT: this is not really true (that they have poor weapons), the grunts sometimes wield fuel rod cannons, and any weapon is powerful when put in the right hands, I'd take a needler over a Assault rifle any day.