Meyhar Kaur Walia
Policy Update
Background
Since independence, India’s polity and economy have progressively evolved with a strong focus on inclusive development and social welfare. A pivotal aspect of the country’s macroeconomic policies has been to accommodate the masses, especially the disadvantaged and marginalized groups, into the larger fold of the democratic process. Recognizing the critical need for livelihood security, particularly for casual laborers, India has introduced various work programs over the years. This commitment to social equity and economic resilience led to the enactment of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in 2005, a transformative initiative aimed at ensuring sustainable employment and poverty alleviation in rural areas.
Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is a paradigm shift from the previous wage employment schemes, as MGNREGA is an act that places an enforceable obligation on the state. The National Rural Employment Guarantee Act (NREGA) was passed by the Parliament in 2005 as a social and legal measure that guarantees the ‘right to work’. Renamed MGNREGA, the act came into force in February 2006, with the provision of guaranteeing 100 days of wage employment to rural unskilled labour. The act has its roots in the Maharashtra Employment Guarantee Scheme (MEGS), 1972, which was the first to recognise the importance of employment and the success of which paved the way for MGNREGA.
Functioning:
MGNREGA was launched in Anantapur, Andhra Pradesh and was implemented in a phased manner, with 130 districts added in 2007-08, reaching over 650 districts in the country. The act identifies Panchayati Raj Institutions as its key implementing body. It authorizes the gram sabha to recommend works to be taken up under the scheme. It holds the gram panchayat accountable for planning the works, registering households, issuing job cards, and monitoring at the village level.
The panchayat samiti and zilla parishad are responsible for supervision at the block and district levels, respectively. The state government establishes the State Employment Guarantee Council to advise on the scheme. The central government rural development ministry oversees its implementation and fund distribution, and it also sets up the Central Employment Guarantee Council to monitor the issues related to MGNREGA.
The act recognizes more than 260 projects, divided into four main categories. One of these areas includes public works related to natural resource management, which encompasses water conservation and water harvesting, provision of irrigation facilities, renovation of traditional water bodies, land development, flood control and protection works, and rural connectivity to provide all-weather access. The act also includes provisions for individual assets for vulnerable groups, common infrastructure for Deendayal Antyodaya Yojana- National Rural Livelihoods Mission (DAY-NRLM)- compliant Self-Help Groups, and rural infrastructure.
Characteristics of MGNREGA:
- Any willing adult worker with valid documents can register his/her name under the MGNREGA scheme at the local Panchayat office.
- The opportunity of the job shall be provided within 15 days from the date of application received, or else the applicant is entitled to an unemployment allowance, i.e., one-fourth of the minimum wage rate for the first 30 days and half of the minimum wage rate thereafter.
- Among those registered under MGNREGA, a minimum of one-third of beneficiaries must be women.
- Each state government has the authority to fix its own wage rate as per the minimum wage rate in a particular state.
- The payment of wages shall be made on a weekly basis, and it should not exceed a fortnightly period. If so, compensation for delayed payments is provided at a rate of 0.05% of the unpaid wages per day.
- The center pays 75% of material costs and some administrative costs, while 25% of material costs, unemployment allowances, and other administrative expenditures are shared by the concerned state government.
Performance:
- Person-days generated: In FY 2024-25, until 11th December 2024, a total of 196.30 crore person-days have been generated. The total person-days generated between FY 2006-07 to FY 2013-14 were 1660 crore, while FY 2014-15 to FY 2024-25 increased to 2923 crore, reflecting a 76.14% increase.
- Number of completed works: As of 11th December 2024 (FY 2024-25), 61.29 lakh works have been completed under MGNREGA. These works have included infrastructure projects like rural roads, irrigation systems, water conservation, and afforestation projects.
- Workers’ wages: Currently, 97% of Fund Transfer Orders (FTOs) are generated on time. Additionally, delay compensation rules have been notified so far in 27 states/UTs, with Rs 5.27 lakh paid as compensation for delays in FY 2024-25.
- Percentage of women out of total: 57.86% of the total person-days generated in FY 2024-25 (up till 11 December 2024) were accounted for by women, which is an increase of 2.97% from 56.19% as of 15 December 2022.
- Budget layout: During the FY 2013-14, the budget allocation was Rs 33,000 crore only at the budget estimate stage, which is Rs 86,000 crore during the current year 2024-25, being the highest since inception. Further, it is stated that in FY 2024-25, the average notified wage rate has increased by 7%.
Challenges:
The Standing Committee on Rural Development and Panchayati Raj presented its report on ‘Critical Evaluation of Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)’ on February 8, 2022. The challenges they observed were:
- Uniform wage rate: Wage rates notified under MGNREGA range from Rs 193 to Rs 318 in different states/UTs. The committee regarded this fluctuation as unjustified.
- Wage increase with inflation: The committee noticed that low wages discourage workers, with only 72 lakh out of 755 lakh households completing 100 days of work in FY 2020-21.
- Unemployment allowance: The committee noted that only Rs 12,000 and Rs 3000 were paid as unemployment allowance in 2019-20 and 2020-21, respectively, urging better implementation.
Additional challenges:
- Participation in MGNREGA over the past six months from April to September in FY 2024-25, compared to the same period in 2023-24, indicates a gradual disengagement from the program by an 8% reduction in active workers.
- According to Libtech’s India Report, more than eight crore workers were removed from the MGNREGA registry during FY 2022-23 and FY 2023-24. There is a net deletion of 39 lakh workers from April to September 2024. Several news reports have highlighted the plight of genuine workers who were wrongfully removed from Job cards.
- In January 2023, the Ministry of Rural Development mandated the implementation of Aadhaar Based Payment System (ABPS), and to be eligible, workers must meet certain conditions, including linking their Aadhaar card to a Job card, bank account to be Aadhaar-seeded, etc. Since January 2024, ABPS has been mandatory; however, regardless of deadlines, 27.4% of all MGNREGA workers and 4.2% of active workers are ineligible for ABPS.
Way Forward:
MGNREGA aimed to build critical assets in rural areas, particularly in flood management, drought-proofing, and the empowerment of the poorest and most marginalized communities, while also strengthening rural livelihoods and reducing seasonal migration to urban areas. A key highlight of the scheme was the important role it assigned to the Panchayati Raj Institutions, and with an accountable structure, the program has been continuously improved by the states.
New initiatives have been undertaken under MGNREGA, including the construction/renovation of 25.951 Amrit Sarovars as of 15 December 2022. The launch of the Jaldoot app in September 2022 for measuring the water level in a gram panchayat. The system of social audit has been strengthened by establishing Social Audit Units in 27 states and 1 UT. Online applications and portals, including a Geographic Information System (GIS) based planning and Geo-tagging through Yuktdhara portal for infrastructure development.
Looking ahead, MGNREGA is set to play a pivotal role in shaping rural employment landscapes. It needs to ensure that the created jobs contribute to sustainable community development. With the growing economy and the demand for employment, the number of days of employment could be increased. For adjustments with inflation, periodic wage revisions should be implemented to maintain the purchasing power. The government needs to increase awareness of the digitalization of the system, address Aadhaar-related payment issues, and provide alternative payment mechanisms in the initial process.
There’s a huge potential for the expansion of the MGNREGA scheme, especially in regions that have been underserved. The involvement of panchayats and community groups is instrumental in the execution of the scheme’s projects on the ground by identifying local needs and grievances. It’s crucial to ensure that the benefits reach those who need them the most. Although MGNREGA is unlikely to succeed without sustained political commitment and public pressure, its enactment has been a remarkable achievement.
References:
- Year End Review 2024: Achievement of the Department of Rural Development. (n.d.). https://pib.gov.in/PressReleasePage.aspx?PRID=2088996
- Total person days generated between FY 2006-07 to FY 2013-14 were 1660 crore, whereas, the total person days between FY 2014-15 to FY 2024-25 has been 2923 crore. (n.d.). https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2068646
- Year-End Review -2022: Ministry of Rural Development. (n.d.). https://pib.gov.in/PressReleasePage.aspx?PRID=1887438
- Committee reports. (n.d.). PRS Legislative Research. https://prsindia.org/policy/report-summaries/critical-evaluation-of-mgnrega
- LibTech India. (2024). MGNREGA Implementation in India: Insights and Trends, April-Sept 2024. https://libtech.in/wp-content/uploads/2024/10/India_Apr-Sep_2024.pdf
- Debnath, K., & Goswami, S. (2019). The Politico-Economic impact of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in rural India. In RAY: International Journal of Multidisciplinary Studies, RAY: International Journal of Multidisciplinary Studies: Vol. IV (Issue 2, pp. 36–58). https://chakdahacollege.ac.in/Journal/19/Pdf/Latest/oct19/10-4(2)-36-58.pdf
Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.
About the Contributor: Meyhar Kaur Walia is a Research Intern at IMPRI and is pursuing her undergraduate degree in Political Science from Delhi University.
Acknowledgement: The author expresses sincere gratitude to all those who provided guidance, with special thanks to Dr Arjun Kumar and Ma’am Aasthaba Jadeja.
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