Do we need WiFi Dongle to install Scratch on EV3
No. Bluetooth on the computer you are using is necessary but you don't need a wifi dongle for either your computer or the ev3. If you are using the EV3+Scratch extension on scratchx.org, all you need is the scratch x plugin and a computer with Bluetooth (or a bluetooth dongle).

Here is a good article about how to set everything up.