Module 30: MGNREGA

Module details Name

Subject Name Social Work Education

Principle Investigator Prof S Parasuraman and Prof Manish Jha
Paper Name Social Policy
Module Module 30. :MGNREGA
Paper Coordinator Dr. Sohini Sengupta
Content Writer Dr Sohini Sengupta and Sashwati Mishra
Content Reviewer Prof Madhushree Sekher
Rights-based programme, Salient features-MGNREGA,
Keywords
women and MGNREGA, social accountability
This module will help the student to learn about:

Learning Objectives 1. The scope, features and impact of MGNREGA

2. An overall critical review of the programme

Introduction: Scope of MGNREGA

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is a rights based
public works programme that guarantees 100 days of rural wage employment on demand by
community members. As one of the largest social protection programmes in the world it has great
potential to stem rural distress and works best in areas with higher levels of community
involvement and where effective accountability mechanisms are in place. This world’s largest
rights-based legislation is an outcome of a campaign to make right to work a fundamental right for
all citizens through a national level Employment Guarantee Act. The Act has generated more rural
employment in comparison to any rural development programmes or private initiative since
independence. Also many research studies have testified to the success of MGNREGA as an anti-
poverty and pro-growth programme for the rural economy (Sampath, G and Rukmini, S, 2015).

The uniqueness of MGNREGA is in its objectives and provisions. Unlike the earlier wage
employment programmes that were allocation-based, MGNREGA is demand-driven. This means
that the quantum and nature of work is dependent on the demand made by wage seekers and is not
dependent on the will of the implementing agency to provide work.

On February 2, 2006, the MGNREGA came into force and was launched in 200 select districts in
the first phase. In the second phase (2007-2008), it was extended to an additional 130 districts and
in the third phase, to 274 districts. From 2008, all rural areas in the country were covered under the
MGNREGA. The MGNREGA is a step towards right to work as a part of the fundamental right to
live with dignity. MNREGA is the largest public works programme in the world from among the 94
countries which administer similar programmes. 58 million people have benefited from MNREGA
in India. The programme that comes next to the scale of MGNREGA in the world is Ethiopia’s
Productive Safety Net Programme that reaches 7 million people (World Bank, 2015).

The Act institutionalises a rights based, self targeting, demand driven employment guarantee regime
wherein the State assures a minimum 100 days of work to all those who are willing and ready to
undertake manual unskilled work in rural areas of the country. This Act establishes the right to
gainful employment as a legal entitlement to be protected and upheld by the Constitution. The Act
in this crucial aspect draws a lot from previous employment guarantee programmes.

Key objectives of MGNREGA

The following are the key objectives of MGNREGA:

In one year, a minimum of 100 days of unskilled work guaranteed for every rural household
It gives security to the rural poor by providing wage employment along with creating assets in
the village
Strengthens the Panchayati Raj Institutions (PRIs)
Proactive inclusion and empowerment of poor, marginalized communities (SCs, STs, NT-
DNTs, women, people with disabilities)
Convergence with anti-poverty and livelihood initiatives
Increase natural resource-base of rural areas

Key Features of MGNREGA

The key features of MGNREGA are below:

100 days of employment for each rural household that has registered for employment
Employment Guarantee: rights-based framework
Payment of wages to be made within 15 days of completion of work
Equal wages to all without any gender bias
Work to be executed using manual labour
Contractors prohibited from executing work under MGNREGA
 Decentralised planning process
Time bound guarantee of work and wages
Failure to provide the work (within 15 days of application) to be compensated in the form of an
unemployment allowance
The labour budget is calculated for one financial year is equal to No of households X number of
days X minimum wage
At least 50% of the implementation by the Gram Panchayat
Wage Material Ratio at GP/block level/district level - 60:40
Wage-seekers have the right to lodge complaints and grievances and get redress

Social Accountability under MGNREGA

The Government of India commitment to accountability is visible in the set of framed rules and
regulations called “Audit of Scheme Rules 2011” under the sub-section (1) of section 24, of the
MGNREGA 2005. Under MGNREGA, it is mandatory to conduct social audit twice in a year in a
gram panchayat. This provision is integrated in the MGNREGA itself, making conduct of social
audit a responsibility of the Social Audit Unit. This process ensures participation and actual conduct
of the audit through a cadre of Village Resource Persons (VRPs) drawn from the village population
itself. MGNREGA, has scope and potential to ensure people’s participation in the true sense.
Another transparency measure under MNREGA is its comprehensive Management Information
System (MIS). This is among the largest data set in the world that is made available to the public.
The online portal contains real-time reports and records of almost close to 700000 villages in India,
work and payment details of 130 million households, 280 million workers and 8.4 million works.
Another measure towards transparency in public funds transfer and enhanced efficiency towards
payments of implementing agencies is the Electronic Fund Management System (e-FMS). The e-
FMS has enabled mapping of all the accounts in the gram panchayats on to the system. This leads to
all the transfers to be made electronically between the MGNREGA administrative structure and
beneficiaries. The e-FMS systems work on ‘zero balance’ and ‘direct pull’. This translates into all
the funds being automatically drawn a central account at the state level as and when expenditure is
incurred and filed electronically. The funds will be in one single account and would not be parked
in different account. This enables to real-time view the expenditure details and fund movement
(Adhikari, A and Sabhikihi, I, 2014).

MGNREGA is labour legislation which is globally recognised for its standardised transparency and
accountability norms. The Act has an inbuilt component of a) proactive disclosure; b) transparency
and accountability features such as worksite board, display at panchayats, vigilance and monitoring
committees and Ombudsman (the highest authority for addressing grievances); c) mandatory social
audit and d) right-based entitlements for the workers (with provisions for penalty in case of denial
of entitlements guaranteed under the Section 25 of the Act).

Current financial layout on MGNREGA

The financial allocation for MGNREGA increased from 30723 crore for the financial year 2012-13
to 48000 crore for the financial year 2016-17. Though this was only a slight increament over the
budget allocation Rs. 47,499 crore under MGNREGA in the financial year 2016-17. During the
financial year 2015-16, 235 crore person days were generated which was the highest compared to
the previous five years. In the financial year 2016-17 so far, 4.8 crore households were provided
employment in different 142.64 lakh works under MGNREGA. In the process 200 crore person-
days of employment was generated. Total expenditure in the programme since its inception has
been Rs. 3,76,546 crore. The expenditure for the financial year 2016-17 so far is Rs.51,902 crore,
marking the highest incurred expenditure so far in the programme. At the same time, is it imperative
that the present government demonstrate sustained commitment to MGNREGA and create more
working person-days and proactively (Government of India, MGNREGA website).

MGNREGA and Women

The Act has gender-related provisions such as equal wages for women and men for equal work;
priority of women in the allocation of work where at least 33 per cent of labourers should be
women; creche facilities at worksite to enable young mothers to work and emphasis on no gender
discrimination of any kind. 45% of the women working under MNREGA in 2011-12 were either
not working or were working on a family farm in 2004-05. Thus the MGNREGA gave them the
opportunity to earn cash income. Many government reports have stated that female-headed
households have greatly benefitted from MGNREGA. In many of these situations, it has been a
critical source of income and provided income to closer to 15 per cent of the household in some
states in India (Sampath, G and Rukmini, S, 2015). The percentage of participating women workers
with bank accounts has increased more than five-times from 9 per cent in 2004-05 to 49 per cent in
2011-12. 56 per cent person-days of work has been for women out of the 200 crore person-days of
employment for financial year 2016-17 so far. This is the highest participation of women since
inception of the programme. At the same time a deeper analysis of the claims of high participation
of women in MGNREGA indicates that women are excluded from the planning of works and
deprived of worksite facilities such as crèches (Desai, S, Vashishtha, P and Joshi, O, 2015;
Narayanan and Das, 2014).

A critical review of MGNREGA

MGNREGA attracts and benefit the rural poor in the country. In 2011-12, the programme reached
25 per cent of rural households in the country. Recently, the coverage of MNREGA has almost
tripled with it reaching 72% of rural households. Every year on an average 5 crore households
work under MGNREGA and largest quantum of the workers comprise of SC, ST, women and other
vulnerable sections in the rural economy. The programme has engaged the poorest of the rural
household and the effective implementation of the programme could bring down the poverty by 14
per cent. With the percentage of women workers steadily increasing, not only has programme
provided gainful employment to women, it also has had had significant positive impacts on rural
credit markets. There is marked by lowering of dependence on money lenders and the dependence
has decreased from 48% to 27% for participating households and from 38% to 21% in non-
participating households. This indicates that not only has the dependence dropped more sharply
among participating households, but before working under the MGNREGA, they were more
dependent on moneylenders in comparison to the non-participating households (Sabhikhi, 2016).

The Human Development Report 2015 stated that the evaluation of the MGNREGA has indicated
that job creation accelerated from less than 1 billion working days among 20 million households in
MGNREGA's first year (2006-2007) of operation to 2.5 billion among 50 million households in
the financial year 2010- 2011. The impact estimation suggests that the GDP would increase 0.02–
0.03 per cent; the labour income would rise about 700 million rupees and the welfare of the poorest
households would increase up to 8 percent (United Nations Development Programme, 2015).

There are many challenges in implementing a large scale right-based programme such as
MGNREGA. The programme has also suffered because lack of support from the present central
government. The data shows a clear decline in the work provided under the MGNREGA. The
number of households that received the legally guaranteed 100 days of work fell from 51.73 lakhs
in 2012-13 to 46.73 lakh in 2013-14. This further plummeted to 23.24 lakh in 2014-15. Some of the
challenges to deliver the impact is due to delays in wage payments, improper planning at the GP
Level, poor maintenance of records, fund constraints, quality, durability and usefulness of assets,
inadequate capacities of implementing functionaries, need for increase awareness about the
programme and people’s participation in the same. Many economists are apprehensive about the
programme’s ineffectiveness and unintended consequences, including labour shortages. The
severest critics of the programmes have labelled MGNREGA as ineffective, wasteful and anti-poor
by fuelling inflation. They have stated over and over again that the scale of funding of MGNREGA
could be more beneficial if diverted to skill development; the assets created through the programme
are inefficient and of poor quality and promoting private investment and economic growth is the
only way to address rural poverty and distress. These criticisms need a deeper analysis and often the
elite in the society and ruling class is unhappy with MGNREGA as it has the potential to alter the
power balance between the agricultural landlords and rural landless worker. The rural landless
labour through MGNREGA has access to relatively secured livelihood with a fixed wage rate
(which is than being paid by labour contractors and landlords in villages). With increased rural
income, the rural poor is not running to the cities to join the reservoir of cheap labour and live
undignified lives in slums and on pavements of the hostile cities. The programme when effectively
implemented has reduced distress migration, increased bargaining power of the rural poor and
increased the labour costs.

Contrary to this scepticism and false claims, the Ministry of Rural Development report titled
‘Report to the People on MGNREGA, 2014’ acknowledges that the scheme increased agricultural
productivity through development of wasteland/fallow land, and construction of post-harvest
storage facilities and work sheds. The report further states that the works under MGNREGA on
regenerating the rural ecosystem has “aided workers in moving from wage employment to
sustainable employment”. The programme has provided supplementary income which has
contributed to enhanced rural entrepreneurship. More than half the part of the income generated
from MGNREGA by the workers was spent on food in many states. This in turn positively
impacted the health and the nutrition of the rural community. The majority of the worker population
comprised of weaker sections such as SC/ST and others. In the financial years 2009-10 and 2011-
12, the work allocation was faster than other years and instances of wage delays minimum, the
reports stresses that “for the first time in nearly 25 years, growth in rural spending outpaced urban
consumption in the two years between 2009-10 and 2011-12”. The study conducted by Indian
Institute of Science, Bangalore on MGNREGA, clearly states that the programme has “contributed
to improved ground water levels, increased water availability for irrigation, increased area
irrigated by ground and surface water sources, and increased availability of drinking water for
humans and livestock”. The strongest supporters of MGNREGA and activists demanding the right
to work under MGNREGA have enough evidence to see the programme as a panacea for agrarian
distress and rural poverty. The programme has created rural assets and infrastructure such as flood
protection, water conservation, rural road connectivity, playground, drought-proofing structures,
toilets, aganwadi and many others.

The MGNREGA is not just an employment guarantee initiative. It recognizes that people are part of
the development agenda. It is a development intervention that seeks to build sustainable and durable
assets in order to strengthen the livelihood resource base of the rural poor in the country ensuring
their proactive participation. It is one of its kind right-based public works programme that
encompasses empowering citizens, building state capacity, managing a complex structure of high
scale and generating sustainable livelihood. The programme needs sustained policy and increased
financial support to yield better results.