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Performance of Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)

GS Paper 2

Syllabus: Government Programme and Policies


Source: The Wire, TH


Context: The Centre has mandated the payment of all wages under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) through an Aadhaar-based payment system (ABPS), starting from Jan 1st, 20024.

  • Exceptions: The government may consider exemptions for Gram Panchayats facing technical or Aadhaar-related issues.
  • Aim of the move: The move aims to curb corruption, ensure prompt payments, and reduce rejections, affecting more than 1100 government schemes and programs.


What is MGNREGA?

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is a rural employment program in India that aims to provide guaranteed wage employment to rural households. The scheme has been implemented in India since 2005 and has been credited with providing a safety net for rural households, particularly during times of economic hardship.


What is ABPS?

Aadhaar-based payment system (ABPS) (it has been in use since 2017). ABPS utilizes the worker’s 12-digit Aadhaar number as their financial address, requiring linkage to job cards, bank accounts, and the National Payments Corporation of India (NCPI) database. Some notable programs where ABPS is mandatory include Pradhan Mantri Ujjwala Yojana, Pradhan Mantri Awas Yojna, Pradhan Mantri Fasal Bima Yojana, and Atal Pension Yojana.


The situation of stagnant growth in Rural India:

Stagnant rural wage growth has posed a challenge to the recovery because it has been the result of unemployment among the rural population resulting in significant demand reduction in the rural area.

Fig- Rural wage growth and economic recovery



  • Providing a safety net for rural households: providing 100 days of guaranteed work, has ensured a minimum level of income for rural households, particularly during periods of hardship.
    • Ex- COVID- wages earned under the Act helped compensate somewhere between 20% and 80% of the income loss incurred because of the lockdown- study by Ajim Premji Institute.
  • Improving rural livelihoods: The program has helped provide a source of additional income. This has helped to increase the overall standard of living in rural areas.
  • Creating employment opportunities: MGNREGA has helped reduce unemployment and underemployment in rural areas. 7 million households were employed under MGNREGS, while a total of 2.89 billion person-days of employment were generated in 2022- Ministry of Rural Development.
  • Development of agriculture Activities such as the construction of bunds, terracing, and the improvement of irrigation systems have helped increase agricultural income.
  • Improving rural infrastructure: MGNREGA has been used to finance a wide range of public works activities, including the creation of rural roads, water bodies, and rural housing.
  • Supporting rural health systems: MGNREGA has led to the construction of health facilities and sanitation systems in rural areas. Ex- construction of toilets.
  • Providing food security: MGNREGA was used for the construction of community kitchens and food storage facilities in rural areas. This helped to ensure that rural households had access to food during the pandemic.
  • Reducing migration: MGNREGA has helped to reduce migration from rural to urban areas by providing employment opportunities in rural areas. This has helped to keep families together.


According to the National Council of Applied Economic Research (NCAER), MGNREGA has played a vital role in reducing poverty among the poor as well as the socially weaker sections such as Dalits, tribals and marginal farmers.


Issues with MGNREGA: 

  1. Limited Coverage (not in the urban areas)
  2. Lack of adequate funding, bureaucratic delays, corruption
  3. Low Wages
  4. Lack of Skilled Jobs
  5. Limited Impact on Poverty Reduction Workers not receiving timely payment and the quality of work is subpar.
  6. Despite multiple deadline extensions, over 34% of registered job card holders and over 12% of active workers remain ineligible for ABPS as of December 27 (2023).
  7. The push for ABPS eligibility has led to the deletion of over 7 crore job cards in the past 21 months, causing concerns about denial of the right to work.
  8. Activists call for the revocation of mandatory ABPS implementation and the reinstatement of deleted workers with due compensation. The government argues that ABPS will enhance efficiency and reduce payment rejections.


Measures needed to improve the performance of MGNREGA

  • Increased allocation of funds: To fully realize the potential of MGNREGA, it is important to allocate sufficient funds to the scheme. In the 2023-24 budget, Rs.60,000 was allocated towards MGNREGA, which after payment of existing liabilities can provide only 17 days of work-study by PAEG.
  • Better targeting of beneficiaries: The current targeting mechanism for MGNREGA beneficiaries needs to be improved to ensure that the benefits of the scheme reach the most vulnerable and marginalized groups in society, including women, Dalits, and Adivasis.
  • Improved monitoring and evaluation: through Social audits to enforce greater accountability.
  • Increase MGNREGA wage rates– to at least the state minimum wage or ₹375 per day as recommended by the Anoop Satpathy Committee and index with CPI‑R.
  • Strengthening the role of gram panchayats: they should be provided with adequate resources (advanced funds), powers, and responsibilities to sanction works, provide work on demand, and authorise wage payments to ensure there are no delays in payments.
  • Increased participation of women: The participation of women in MGNREGA needs to be increased to ensure that the scheme provides equal opportunities for both men and women and that women are able to access the benefits of the scheme.
  • Linking with other development programs: to ensure that the scheme contributes to the overall development of rural areas. Ex-National Bamboo Mission, Rashtriya Krishi Vikas Yojana.
  • Awareness generation– displaying a ​‘Know Your Rights (KYR) concerning MGNREGA in public places, usage of ombudsman app for grievance redressal.



MGNREGA was regarded as a stellar example of rural development by the World Development Report of 2014. While the MNREGA has noble goals and has provided some employment opportunities to rural workers, it has faced several limitations that have prevented it from achieving its full potential as a poverty reduction program.


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