Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)

The MGNREGA was launched in 2006 in order to provide at least 100 days of guaranteed employment to rural households. It is the largest scheme run by the Ministry of Rural Development (MoRD). Data on key metrics such as wages, inflation, and consumption suggests that the truth lies somewhere in the middle. While MGNREGS can provide income security to its beneficiaries, its overall impact on the rural economy will be limited unless it is implemented with greater resources and greater care.

With rural distress deepening across India and private consumption growing anaemically, calls for ramping up the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), are growing louder ahead of the upcoming budget. Proponents of MGNREGS believe that it may be the only ammunition in the government’s arsenal to fight rural poverty. Critics, though, have labelled the scheme as leaky, wasteful and simply ineffective.

  • The monthly demand for rural jobs under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) has touched a new high at 3.95 crore until May 20, with analysts saying it will most likely cross 4 crores by the end of the month.
  • This is significantly higher than the month-wise demand this year, which was 2.48 crore in January, 2,92 crore in February, 2.70 crores in March and 1.77 crore in April, according to the Ministry of Rural Development data.
  • It is also much more than the monthly average demand of 2.3 crores in 2019-20.
  • The spike in May this year is indicative of the huge job losses all around, particularly in the informal sector, where lakhs of workers have suddenly become unemployed owing to the lockdown.
  • The high number of people seeking work under the MGNREGA is due to desperation.
  • Most of these workers have gone home and have no work hence they are seeking jobs under the scheme.
  • An analysis of the data shows there is a spike in demand for MGNREGA jobs in May-June when the sowing season for kharif crops is set into motion.
  • The data also shows that states which have seen reverse migration of workers have seen a sharp rise, most significantly in Uttar Pradesh. The total number of applications in UP was 17.4 lakh in March and 12.7 lakh in April. This jumped to 49.3 lakh until May 20.
  • The increasing demand for MGNREGA jobs only seems to confirm what many organisations have projected about unemployment.
  • According to the Centre for Monitoring Indian Economy (CMIE), rural unemployment rose from 8.49% in March 2020 to 22.67% on April 29, 2020.
  • MGNREGA works have demonstrably strong multiplier effects are yet another reason to improve its implementation.
  • It is a labour programme meant to strengthen participatory democracy through community works. It is a legislative mechanism to strengthen the constitutional principle of the right to life.
  • It has helped in increasing rural household income.
  • It has not only helped in increasing groundwater table in the last one decade, but also agriculture productivity, mainly cereals and vegetables and fodders.
  • The water conservation measures, including farm ponds and dug wells, have made a difference to the lives of the poor.
  • While the scheme was earlier focused on creation of community assets, in the last three years, individual assets have also been emphasised.
  • It has provided goat, poultry and cattle shed as per the need of poor households.
  • One national study found that MGNREGS has created valuable public goods which have augmented rural incomes.
  • Another national study found that, even after deficiencies in implementation, MGNREGS may have improved nutrition outcomes.
  • Even consumption has been shown to improve if MGNREGS is implemented well. A 2018 study of a better-implemented version of MGNREGS in Andhra Pradesh, where there was significantly less leakage or payment delays, estimated that MGNREGS increased income households’ earnings by 13% and decreased poverty by 17%
  • MGNREGS can smoothen food consumption of rural poor by providing them with an alternate source of income during the agricultural lean season.
  • According to a study conducted by New Delhi-based Institute of Economic Growth.
    • there has been an 11 per cent increase in rural household income,
    • 5 per cent increase in cereal productivity and
    • 32 per cent increase in vegetable productivity,
  • Rise in water table varies from 30 per cent in Muktsar to 95 per cent in Vizianagaram.
  • Sasur Khaderi-2, a tributary of the Yamuna River flowing through Teliyani block of Fatehpur district, 150 km south of Lucknow, was revived under MGNREGS. The 46 km-long stream originating in Thithoura Lake was encroached over time, resulting in its drying up. Its revival generated 205,000 person days of work and cost around Rs 4 crore.
  • Aadhar has been hastily implemented for the MGNREGA. Several MGNREGA payments have been rejected, diverted, or frozen as a consequence.
  • The delay in the payment of wages which is captured in the system is intentionally suppressed to avoid paying delay compensation.
  • There are numerous cases of MGNREGS payments getting diverted to Airtel wallets and ICICI bank accounts.
  • In a recently concluded survey on common service centres in Jharkhand for Aadhar-based payments, it was found that 42% of the biometric authentications failed in the first attempt, compelling them to come later.
  • the MGNREGA wage rates in 18 States have been kept lower than the States’ minimum agricultural wage rates.
  • In the last five years, the average person days of work generated per household under MGNREGA remained less than 50 across years
  • The scheme is running out of funds due to increased demand for work.
  • Droughts and floods in several States have led to an increased demand for work.
  • Data show disparity in MGNREGA wages across States.
  • Agricultural minimum wages exceed MGNREGA wages in almost all states.
  • The total MGNREGA expenditure reported by States has risen, but the year-on-year growth has fallen below 5%.
  • The act continues to fight widespread corruption and administrative negligence.
  • In some areas of certain states, MGNREGA work opens only during specific seasons and time.
  • Since April 2014, the work completion rate has been declining.
  • Jharkhand being one of the poorest states and having huge dependence on MGNREGA, has the lowest wage rates.
  • MGNREGA should be converged with other schemes of the government. For example, Green India initiative, Swachh Bharat Abhiyan etc.
  • There has been a delay in the completion of works under MGNREGA and inspection of projects has been irregular. Also, there is an issue of quality of work and asset creation under MGNREGA.
  • After the additional Rs 40000 crore allocated, the budget for 2020-21 is now above Rs 100k crore.
  • This is the highest allocation for MGNREGA in any year since the passage of the law. However, the allocation, which amounts to 47 % of the GDP continues to be much lower than the World Bank recommendations of 1.7 % for the optimal functioning of the program.
  • There is a need to strengthen the demand-driven aspects of MGNREGA through a focus on local level social audits, funding and tracking of outcomes.
  • State governments must ensure that public work gets started in every village. Workers turning up at the worksite should be provided work immediately, without much delay.
  • Local bodies must proactively reach out to returned and quarantined migrant workers and help those in need to get job cards.
  • In order to improve transparency and the accountability of Sarpanchs, it is recommended that MGNREGA projects be tracked right down to the village-level and not just the Gram Panchayat level as is the practice now.
  • The Supreme Court in the Swaraj Abhiyan vs. Union of India case stated that said that the delay caused in stage-2 was not taken into account for the purpose of payment of compensation.
  • Incorporation of ICT infrastructure at grassroots level, so that the data is available in public leading to better transparency and accountability.
  • Social audits, mandated by law under MGNREGA, should be strengthened to reduce the data suppression and under-representation of job demand.

It is in some of these contexts that strengthening an existing universal programme such as the MGNREGA would have been a prudent move instead of introducing a hasty targeted cash transfer programme. At a time of such acute distress, there is a need to the Central government to improve the existing universal infrastructure of the MGNREGA before plunging into a programme pretending to augment farmers’ income. MGNREGA is a bottom-up, people-centred, demand-driven, self-selecting and rights-based programme. Thus, MGNREGA remains crucial for integrated resource management and livelihoods generation perspective.