About MGNREGA

 The Mahatma Gandhi National Rural Employment Guarantee Act

(MGNREGA), also known as Mahatma Gandhi National Rural
Employment Guarantee Scheme (MNREGS) is Indian legislation enacted
on August 25, 2005. The MGNREGA provides a legal guarantee for one
hundred days of employment in every financial year to adult members of
any rural household willing to do public work-related unskilled manual
work at the statutory minimum wage. The Ministry of Rural
Development (MRD), Govt of India is monitoring the entire
implementation of this scheme in association with state governments
 This act was introduced with an aim of improving the purchasing power
of the rural people, primarily semi or un-skilled work to people living
below poverty line in rural India. It attempts to bridge the gap between
the rich and poor in the country. Roughly one-third of the stipulated work
force must be women.
 Adult members of rural households submit their name, age and address
with photo to the Gram Panchayat. The Gram Panchayat registers
households after making enquiry and issues a job card. The job card
contains the details of adult member enrolled and his /her photo.
Registered person can submit an application for work in writing (for at
least fourteen days of continuous work) either to Panchayat or to
Programme Officer.
 The Panchayat/Programme officer will accept the valid application and
issue dated receipt of application, letter providing work will be sent to the
applicant and also displayed at Panchayat office. The employment will be
provided within a radius of 5 km: if it is above 5 km extra wage will be
paid.
AN ANALYSIS OF ITS DESIGN, OBJECTIVES & MODIFICATIONS

The Mahatma Gandhi National Rural Employment Guarantee Act

(MGNREGA) was approved by the parliament in its 2005 monsoon season on
September 5, 2005. It was within a year of the formation of the UPA-I
government at the centre and marked the beginning of the pre-election promise
fulfillment of the Congress led UPA-I government regarding measures to
strengthen rural India. It was implemented in a phase wise manner, with the first
200 most backward districts covered in Phase I beginning February 2, 2006.
The Phase II beginning on April 1, 2007 included 130 additional districts and
the final phase beginning on April 1, 2008 covered the remaining rural districts.
The Act currently covers all the 645 rural districts throughout India. It emerged
in a context wherein there was economic growth without distribution, poverty
and unemployment was increasing, and agriculture and rural economy was in
distress as Sharma (2010) points. of guaranteed wage employment in every
financial year to every household whose adult members volunteer to do
unskilled manual work and for matters connected therewith or incidental
thereto.”
MoRD (2014) outlines the other objectives of the act which include
creation of productive assets both of prescribed quality and durability through
the provided wage employment, strengthening the livelihood resource base of
the rural poor, a proactive ensuring of social inclusion of women, SCs and
STs and strengthening of the Panchayati Raj Institutions (PRIs). The PRIs
perform an active part in formulation, implementation and monitoring of the
scheme. MoRD (2012, 2010) also state the auxiliary objective of the act as
strengthening natural resource management (NRM) through works that address
causes of chronic poverty like drought, deforestation and soil erosion to ensure
sustainable development. Moreover,
strengthening of grassroot processes of democracy and infusion of
transparency and accountability in governance has been measured as process
outcomes. MoRD (2014) does not mention these auxiliary objectives and
process outcomes.
The Salient Design Features of MGNREGA outlined

For the achievement of the desired objectives, MGNREGA has several

design features which were missing in the erstwhile public works and
employment generation programmes.
India has a long history of public-works based employment guarantee
programs and its experiments with them dates back to the 80s. Some of them
are: National Rural Employment Programme (NREP), Rural Landless
Employment Guarantee Programme (RLEGP), Jawahar Rozgar Yojana
(JRY), Employment Assurance Scheme (EAS), Jawahar Gram Samridhi
Yojana (JGSY), Sampoorna Grameen Rozgar Yojana (SGRY) and National
Food for work programme (NFFWP) implemented in the period 1980-89,
1983-89, 1988-89, 1993-1999, 1999-2002, 2001-06 and 2004-06 respectively.
SGRY and NFFWP were merged to
NREGA in 2006. There were some common problems in the implementation
of all these programmes as Pankaj (2012) notes:
1. All of them were centralized schemes, formulated and implemented both
by the bureaucracy without any consultation an involvement of the community.
2. The second feature was their supply-driven nature and thus
employment was provided based on the needs of the government. Thus, the
needs of the people were kept at bay.
3. Poor mechanism for accountability and transparency with no provision for
social accounting and monitoring. It thus led to a lot of pilferage and wastage of
resources and cases of leakage and rampant corruption by the government
officials.
4. There was inadequate employment generation. Moreover, the
employment
generation was not seen in linkage with provision for minimum livelihood
security.
5. Income, minimum wages and worker‟s amenities were not part of
the entitlement thus not ensuring at least a minimum level of dignity to the
poor.
6. Low participation of women in the programmes.
7. Employment opportunities were not flexible to the worker‟s demand.

MGNREGA marks a significant departure to these supply driven work-

based employment policies and makes a transition to right-based demand driven
policy as Sharma (2011, 2010) argues. MGNREGA has its inspiration from the
Maharastra Employment Guarantee Scheme (MEGS), which has marked its
inception as a drought relief measure in the years 1972-73 and later got
converted into a legal guarantee programme in the year 1975. The MEGS has
several distinctive policy design features and was first of its kind policy based
on entitlement based approach and a demand-driven work based employment
policies. Although there were mixed evidences (Datar, 1990; Dev, 1995;
Patel,2006; Vatsa, 2006) on its success, MEGS was lauded for its entitlement
based and demand-driven approach. MNREGA draws heavily on MEGS for its
objectives, design and implementation structure. Some of the salient 7 features
of MNREGA over its predecessors, as outlined in Pankaj (2012) & Sharma
(2010, 2011) are as follows:

1. Unlike its predecessors, which had their beginnings in executive orders

MNREGA is an act of the parliament and thus has both legal superiority as well
as constitutional approval.
2. It is irrevocable and can be dismissed only by another act of parliament.
3. It is not only a work-based employment programme but also integrates the
agenda of providing minimum livelihood security to rural households and
other development objectives.
4. The basic thrust is entitlement and thus the act provides provisions for
minimum wages, appropriate worksite facilities and ensuring of female
participation (at least one-third of the workforce).
5. It is a first of its kind experiment on partial decentralized planning,
implementation and monitoring of program through the Panchayati Raj
Institutions (PRIs) across states.
Key facts that users should know about MNREGA

1. MGNREGA guarantees hundred days of wage employment in a financial

year, to a rural household whose adult members volunteer to do unskilled
manual work.
2. Individual beneficiary oriented works can be taken up on the cards of
Scheduled Castes and Scheduled Tribes, small or marginal farmers or
beneficiaries of land reforms or beneficiaries under the Indira Awaas
Yojana of the Government of India.
3. Within 15 days of submitting the application or from the day work is
demanded, wage employment will be provided to the applicant.
4. Right to get unemployment allowance in case employment is not
provided within fifteen days of submitting the application or from the
date when work is sought.
5. Receipt of wages within fifteen days of work done.
6. Variety of permissible works which can be taken up by the Gram
Panchayaths.
7. MGNREGA focuses on the economic and social empowerment of
women.
8. MGNREGA provides “Green” and “Decent” work.
9. Social Audit of MGNREGA works is mandatory, which lends to
accountability and transparency.
10.MGNREGA works address the climate change vulnerability and protect
the farmers from such risks and conserve natural resources.
11.The Gram Sabha is the principal forum for wage seekers to raise their
voices and make demands. It is the Gram Sabha and the Gram Panchayat
which approves the shelf of works under MGNREGA and fix their
priority.
Implementation Status

 The scheme was introduced in 200 districts during financial year 2006-07
and 130 districts during the financial year 2007-08
 In April 2008 NREGA expanded to entire rural area of the country
covering 34 States and Union Territories, 614 Districts, 6,096 Blocks and
2.65 lakhs Gram Panchayat.
 The scheme now covers 648 Districts, 6,849 Blocks and 2,50,441 Gram
Panchayats in the financial year 2015-16.

Relationship between Mahatma Gandhi NREGA and Mahatma Gandhi NREGS

Mahatma Gandhi NREGA Mahatma Gandhi NREGS

The Mahatma Gandhi National The Mahatma Gandhi National

Rural Employment Guarantee Rural Employment Guarantee
Act (Mahatma Gandhi NREGA) Scheme (Mahatma Gandhi
is the foundation for the Mahatma NREGS), created as directed in
Gandhi National Rural Mahatma Gandhi NREGA and the
Employment Guarantee Scheme means to implement the Act so
Mahatma Gandhi NREGS) and that the guarantee comes into
provides guaranteed employment effect.
The Central Government specified The State Governments have to
the features and conditions for incorporate all features of
guaranteed employment in Mahatma Gandhi NREGA in the
Mahatma Gandhi NREGA 2005 State Mahatma Gandhi NREGS as
mentioned in Schedule –I and
condition of employment as
mentioned in Schedule-II of
Mahatma Gandhi NREGA

The Central Government has The State Governments have

powers to make rules and to powers to make rules and amend
amend Mahatma Gandhi NREGA the concerned State scheme

Mahatma Gandhi NREGA has Mahatma Gandhi NREGS of a

been notified through the Gazette State has been notified through the
of India Extraordinary notification Official Gazette of concerned
and is National legislation State

Mahatma Gandhi NREGA was

notified on 7th September 05
Activities covered under MGNREGA

Permissible activities as stipulated in Para 1 of Schedule-I of Mahatma Gandhi

NREGA are as under:

 Union Rural Development Ministry has notified works under

MGNREGA, majority of which are related to agricultural and allied
activities, besides the works that will facilitate rural sanitation projects in
a major way.
 The works have been divided into 10 broad categories like Watershed,
Irrigation and Flood management works, Agricultural and Livestock
related works, Fisheries and works in coastal areas and the Rural
Drinking water and Sanitation related works.
 Briefing the MGNREGA 2.0 (the second generation reforms for the rural
job scheme) the priority of the works will be decided by the Gram
Panchayats in meetings of the Gram Sabhas and the Ward Sabhas.
 The Rural development also informed that the 30 new works being added
in the Schedule 1 will also help the
 Rural sanitation projects, as for the first time toilet building, soak pits and
solid and liquid waste management have been included under
MGNREGA. Though the overall 60:40 ratio of labour and material
component will be maintained at the Gram Panchayat level but there will
be some flexibility in the ratio for certain works based on the practical
requirements.
 Construction of AWC building has been included as an approved activity
under the MGNREG Act. „Guidelines for construction of Anganwadi
Centres‟ under MGNREGS have been issued jointly by Secretary, WCD
and Secretary, Ministry of Rural Development, on 13th August, 2015.
Under MGNREGS, expenditure up to Rs.5 lakh per AWC building for
 construction will be allowed. Expenditure beyond Rs. 5 lakh per AWC
including finishing, flooring, painting, plumbing, electrification, wood
work, etc. will be met from the ICDS funds.

CATEGORY OF AS PER AS PER SCHEDULE-1, MGNREGA, WORKS

SCHEDULE-1, PERMITTED UNDER MGNREGA
MGNREGA,

1 2

I. Category, A:PUBLIC  Water conservation and water harvesting

WORKS RELATING structures to augment and improve groundwater
TO NATURAL like underground dykes, earthen dams, stop
RESOURCES dams, check dams with special focus on
MANAGEMENT recharging ground water including drinking
water sources
 Watershed management works such as contour
trenches, terracing, contour bunds, boulder checks,
gabion structures and spring shed development
resulting in a comprehensive treatment of a
watershed;
 Micro and minor irrigation works and creation,
renovation and maintenance of irrigation canals
and drains;
 Renovation of traditional water bodies including
desilting of irrigation tanks and other water bodies;
(s) Afforestation, tree plantation and horticulture in
common and forest lands, road margins, canal
 bunds, tank foreshores and coastal belts duly
providing right to usufruct to the households
covered in Paragraph 5; and
 Land development works in common land.

II.Category,  Improving productivity of lands of households

B:COMMUNITY ASSETS specified in Paragraph 5 through land development
OR INDIVIDUAL and by providing suitable infrastructure for
ASSETS irrigation including dug wells, farm ponds and
other water harvesting structures;
 Improving livelihoods through horticulture,
sericulture, plantation, and farm forestry,
 Development of fallow or waste lands of
households to bring it under cultivation;
 Creating infrastructure for promotion of livestock
such as, poultry shelter, goat shelter, piggery
shelter, cattle shelter and fodder troughs for cattle;
and
 Creating infrastructure for promotion of fisheries
such as, fish drying yards, storage facilities, and
promotion of fisheries in seasonal water bodies on
public land;

III.Category, C: (I)Works for promoting agricultural productivity by

COMMON creating durable infrastructure required for bio-fertilizers
INFRASTRUCTURE and post-harvest facilities including pucca storage
INCLUDING FOR NRLM facilities for agricultural produce;
COMPLIANT SELF
HELP GROUPS

( (vi)Construction of Food Grain Storage Structures for

implementing the provisions of The National Food
Security Act 2013 (20 of 2013);

Online Public Grievances Redressal System

 You can help people to lodge complaints and grievances on MNREGA

related issues faced in your locality, through Online-Public Grievances
Redressal System available in the MGNREGA website

 Click the following link (directs to MGNREGA website), select your

state and follow the instructions to lodge the complaint.

 Online Public Grievances Redressal System

 DISCUSSION & CONCLUSION
 The Positive impacts of MGNREGA
 There have been several intended as well as unintended impacts of the
MGNREGA program
 on the economy both at the regional level as well as at the national level.
There have been
 regional variations in the impact as well with the act proving a boon for
states of Bihar and
 Jharkhand, two of the most backward states of the country while having
negative impacts on
 agricultural economy of states like Punjab which depend a lot on migrant
labourers for their
 peak agricultural seasons. At the national level, on one hand it can
be seen as a full
 employment strategy and on the other a huge burden on the fiscal
expenditure. Mann &
 Pande (2012) & Ghosh (2009) however argue that it has served as an
effective instrument
 for distribution and reduction of income disparity.
 This section examines the impact of MGNREGA on rural areas and the
local economy. It
 discusses impact of the scheme on rural wages, aspects of community
assets creation and
 challenges in making it productive, agrarian economy, impact on
women employment,
 distress migration etc. Sinha & Mukherjee (2010, 2013) finds out
positive impact of
 MGNREGA on the income of the poor. JPMorgan (2011) validates the
same by showing a
 significant increase in rural wages post-MGNREGA. Shah and Jose
(2009) discuss aspects
 of asset creation both in terms of opportunities and challenges.
They note that the
 enhancement of wages with coupling of productive asset creation is a
common path taken
 by employment programs both in India and outside. Their argument is
that increase in wages
 coupled with capital enhancement in the rural economy can boost up both
demand as well
 as productive capacities having positive impacts on poverty reduction
as well as overall
 economic growth of the country. This is especially true for a
country like India where
 agriculture provides livelihood to most population. They conclude that
while MGNREGA has
 the potential of increasing the productive capacities of the rural economy,
there needs to be
 sync between planned economic growth and MGNREGA to have positive
impact on local
 economy. Basu (2013) argues that there is a tradeoff between the
policy objectives of
 increased worker‟s welfare and increased agricultural productivity.
He further points that
 setting the Employment guarantee scheme (EGS) wage greater than the
lean period wage
 will lead to permanent contract for the workers thus increasing their
welfare as well as farm
 productivity simultaneously. Haque (2012) studies the relationship
between MGNREGA and
 agricultural productivity. He posits a positive impact of the program
on agricultural
 productivity. He points out that this has been due to large amount of
irrigation, water-
 harvesting and land-development works undertaken under MGNREGA.
There have been
 effects on cost of production, crop productivity and cropping pattern. He
also points a rise in
 cost of production because of increase in wages, an effect of
MGNREGA. Reddy (2012)
 25
 finds out that the effect of MGNREGA on small-marginal farmers has
been dismal. He points
 that MGNREGA has a highly positive impact on poor households with a
drastic reduction in
 the distress migration and further argues that there is no reason for being
apprehensive
 about its negative impacts on migration to economically dynamic areas as
Farrington et al.
 (2007) point since the migration for works with higher wages and
opportunities for skill
 development remains unaffected. Pankaj & Tankha (2012) find out that
the MGNREGA has
 also implications for correcting gender skewness by removing gender-
discriminatory wages
 prevalent in rural India‟s labour market prior to MGNREGA.
Kelkar (2009) also find
 evidences for the ability of MGNREGA in enhancing gender agency and
productivity. IDYWC
 (2010) conclude that MGNREGA has significant positive implications
for improving rural
 livelihood and sustainable asset creation.
 This part comments on the inter-state variations in the impacts of
MGNREGA. Pankaj (2008)
 in his study on impact assessment of MGNREGA on the states of Bihar
and Jharkhand
 notes that the two states are ideal candidates for the scheme. This is
because of existence
 of high rural poverty, non-existence of occupational diversity in rural
households, poor rural
 infrastructure and a high-incidence of distress migration. The socio-
economic realities of the
 rural households in these states suggest a need for a wage-
employment program like
 MGNREGA. The existence of MGNREGA can also have implications
for inter-state variation
 in average per capita income and poverty. Pankaj (2008) argues that
though the program is
 highly suitable for these states, the lack of awareness, low literacy levels,
absence of social
 mobilization and weak presence of Civil Society Organizations (CSOs),
the program remains
 largely supply-driven and its proper implementation a concern. However,
there are positive
 impacts of the program on livelihood of beneficiary households both in
terms of reduction of
 debt and seasonal distress migration. Joshi et al. (2008) on their study of
Rajasthan note
 that MGNREGA has positive impacts on distress migration, purchasing
power augmentation
 and debt decline of rural households, rural connectivity,
environmental conditions,
 agricultural production etc. Pankaj (2012) reveals that Rajasthan has
been a leading
 performer in MGNREGA implementation. There are some instances of
regulatory capture of
 the program though. Galab & Revathi (2012) in their study of
MGNREGA in Andhra Pradesh
 note similar positive trends in impact. Pankaj (2012) argues that the
MGNREGA does not
 suit the needs of agriculturally developed states like Punjab and Haryana.
There is negative
 implication of MGNREGA on the agrarian economy of the state which
depends a lot on
 migrant labourers during its peak agriculture season. But, there is
reduction in supply of both
 migrant workers and even local workers due to existence of
MGNREGA. This has
 implications for increase in wage rates of labourers thus reducing
agricultural profits. This
 has led to farmers being tempted to employ their land for non-agricultural
purposes. Ghuman
 26
 & Dua (2012) with their study on the impact of MGNREGA on declining
agrarian economy of
 Punjab, suggest a region or state-specific approach for MGNREGA.
 The impact of a large-scale policy like MGNREGA is a matter of
pertinent debate. There is a
 significant budget outlay for the scheme in the range of Rs. 35000 crores
every year from
 2009 onwards after the full expansion of the scheme to all rural
districts. The main
 contention is that whether it remains only an income transfer scheme,
which makes such a
 huge sum an expenditure as against it also develops into an asset creation
mechanism,
 which leads to an investment in rural asset creation. There is also
possibility of schemes like
 MGNREGA contingent upon states capacity to implement, to create
fiscal imbalance.
 Chakraborty (2007) finds that MGNREGA induced fiscal expansion
does lead to fiscal
 imbalances. He further argues that since the flow of resources to
individual states is
 dependent on the ability of the states to forecast labour demand and
subsequently submit a
 plan outlining the same. The poorer states with their incapacities to plan
can have lower flow
 of resources making the program regressive. Hirway (2008) argues that
MNREGA can serve
 as a full employment strategy to facilitate a labour-intensive growth path
for a country like
 India. But, the contention to this would be how government ex-ante can
be able to do an
 exact sector-wise demand assessment of labour and also set the labour
prices at a fixed
 value. She further suggests skill training and maintenance of public assets
and services as
 permissible works in MGNREGA. Hirway et al. (2008) with their
multiplier analysis infer that
 MGNREGA can make a significant positive impact on the economy. It
can eradicate poverty
 at the bottom and can generate assets to improve the livelihood of
people. It is also an
 effective instrument for inclusion of women in the productive work force
of an economy.
 Thus, MGNREGA can serve as an instrument for poverty reduction
and growth with
 distribution through employment generation and making unemployed
people part of the
 productive workforce, if properly implemented. The impact of
MGNREGA on inclusion is a
 little agreeable but on growth is more than questionable. But, is there only
a positive side to
 the MGNREGA story. The answer is a no. It has induced some
unintended systemic impacts
 on the Indian economy which can have some negative discernible
consequences.


 4.2. The Negative impacts of MGNREGA

 The MGNREGA though has some useful contribution with regards to
reduction of rural
 poverty and income inequalities but it has also induced some unintended
impacts due to
 affecting the economy in a systemic manner and thus has stressed some
trends which can
 have some adverse long-term consequences for the economy of India.
Firstly, the reduction
 in poverty through MGNREGA has come at a cost of soaring food prices
as the agricultural
 laborers wages have increased several folds and that have forced farmers
to demand more
 for their food grains by way of Minimum Support Prices (MSPs).
Secondly, higher
 27


 agricultural laborer wages in rural areas are leading farmers to take

a move towards
 mechanization of farms which is proving to be cheaper. Thus,
sugarcane and oilseeds
 farmers among others are moving towards harvesting through
mechanized means which can
 have negative implications for labour requirement in the agriculture
sector. This overtime can
 lead to almost no demand of labour in rural areas thus making
MGNREGA only a non-
 contributory income transfer program or a „social safety net‟ for the poor.
Thirdly, a program
 like MGNREGA also has behavioural implications for the people covered
under it. Since,
 mostly the work done under MGNREGA is not well planned and
many a times it is
 perfunctory, the people who are getting employment under MGNREGA
are getting into a
 habit of getting paid for not working, which can have serious implications
for India‟s human
 prowess and outlook. Fourthly, many skilled occupations like
handloom weavers, rural
 artisans etc. are losing their workers to MGNREGA, which is leading to a
loss of skill in that
 particular profession. Thus unique skills acquired over generations are
being lost due to the
 existence of an employment guarantee program like MGNREGA which
offers more wages,
 although its impact on skill development is almost nil. Fifthly,
MGNREGA also has
 implications for increase of urban wages in sectors like infrastructure and
real state, which
 depend on migrant workers from rural areas. This increases the costs of
real state and
 infrastructure projects. Sixthly, the rising food inflation (which can
be an unintended
 consequence of MGNREGA through the Minimum Support Price (MSP)
route due to rise in
 farm wages) is pushing people pulled out of the vicious cycle of poverty
being pushed back
 again. So, even the claim that it has positive impact on removing rural
poverty can be a
 wrong one. The reason for that being the indicators for poverty reduction
being monitored
 might be the total nominal income and not the total real income and it
might be the case that
 the nominal incomes have been raised but not the real income due to
inflationary pressures.
 Seventhly, the flow of resources to individual states is dependent on the
ability of the states
 to forecast labour demand and subsequently submit a plan outlining the
same. The poorer
 states with their incapacities to plan can have lower flow of resources
making the program
 regressive. Thus, there is also possibility of schemes like MGNREGA
contingent upon states
 capacity to implement, to create fiscal imbalance. Eighthly, there have
been instances of
 large scale corruption in MGNREGA. Considering the large scale of the
program, it can have
 serious implications for the economy of the country due to wastage of
such a huge amount
 of resources. Ninthly, Li& Sekhri (2013) find out that MGNREGA
though intends to increase
 the rural household income thus enabling them to allocate more resources
towards quality
 provisioning of education but fails to do so by providing perverse
incentives. They find out
 that the program induces young children to either substitute in home
production or withdraw
 from school. Moreover, it also increases private school enrollment
and decreases
 government school enrollment. This is one more unintended consequence
of the program.
 28


 Thus, it is clear that the program is not a silver lining but have several
clouts associated with
it.