MNREGA - A Case Study of its Impacts



MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act, 2005) is a flagship program or an employment scheme introduced by the UPA Government. To enable the rural unemployed households to claim for unskilled labour of at least 100 days per year at a wage decided by various states. This scheme holds much importance under the Constitution of India.


The Directive Principles of State Policy enshrined in Part IV of the Constitution reflects that India is a welfare state. Thus, the state is responsible for ensuring the welfare, security, prosperity, and benefit of the people of India. This responsibility includes the economic and social well-being of the citizens, giving them opportunities for improving their standard of living.


The legislation of MNREGA in 2005 reaffirmed India's position as a welfare state whereby the state undertakes a system to protect the general well-being of its citizens. It covers the entire country except for districts that have a 100% urban population. The objectives of MNREGA at the time of commencement were to provide social protection to the most vulnerable people living in rural India, improve the purchasing power of semi or unskilled rural people, and strengthen decentralised planning through anti-poverty and livelihood initiatives.


The assessment of the working of MNREGA stipulates the need for the evaluation of the rural population in India. Amit Basole, in his article published in the Economic and Political Weekly titled 'What Does the Rural Economy Need?', writes about the employment crisis in India. According to this article, the problem of employment in India is often studied through the lens of urban areas. The accurate conclusions can only be drawn when this crisis is studied in rural areas of India as well. It is an equally alarming issue affecting the overall development in India.


Basole lists problems associated with the agricultural sector, which is still the most dominant sector in India. Consequently, India's farming sector issues have led to a significant shift of the working class in the rural population away from this sector. His research concludes that 70% of agricultural households do not earn enough to support consumption levels. In reaction to this, MGNREGA emerged as a significant source of non-farm employment in rural India. The direct consequence of this scheme was the diversification of livelihoods in rural India.


Ankita Aggarwal writes in her article titled 'The Political Project of MGNREGA' that this welfare scheme employs about 50 million households every year, which approximately amounts to a quarter of the total rural population.


MGNREGA is considered a rights-based approach to development in rural India "through entitling workers to on-demand access to work." It creates obligations on the government to deliver work, failing which it becomes liable to compensate workers through unemployment allowance.


The legislation of MGNREGA provides a framework for decentralised planning and implementation of this scheme. Sometimes referred to as the governance rights, MGNREGA facilitates these rights because of the universal eligibility to seek employment under this scheme, creating special-purpose institutions and allowing citizens to hold government functionaries accountable directly.


Despite the viability of this scheme, it has faced multiple drawbacks since its inception. The central and state governments allocate the funds to be paid to the MGNREGA scheme. Each year a specific allocation is made for MGNREGA in the union budget, and the Center allocates funds as per the demand. However, in 2014-15 the central government treated the initial allocation of INR 34000 Cr. as a cap on NREGA expenditure. As a result, when funds dried up towards the end of that financial year, workers were denied work without compensation.


The allocation for NREGA in the fiscal year 2019-20 was INR 60,000 Cr. Priscilla Jebaray, in The Hindu, wrote that the centre was on the verge of running out of funds for MGNREGA. By the end of the year, 15 states were facing the MGNREGA fund crunch. According to the scheme's financial statement on 27th January 2020, Rajasthan had the highest negative net balance, followed by UP.


Lack of accountability is another problem faced by this scheme. Workers are often unable to get work because of delays in sanctioning plans or allocating work. Failure of the government to impose penalties on these officials also contributes to this lack of transparency. Despite the introduction of many accountability provisions and transparency policies, corruption continues to affect MGNREGA. For instance, in 2014, in Jharkhand, fake names were added in a road construction work, and entries were inflated for workers. Based on this data, wages were credited.


The NDA government, in many ways, Modi-fied this scheme. An online Management Information System (MIS) was introduced, containing details of workers under MGNREGA, the number of tasks sanctioned, payments made, etc.


However, it became a tool for centralising MGNREGA, which attracted a lot of criticism since the very objective of NREGA was to create decentralised job opportunities. It has led to excessive control over this scheme and prevents the state governments from efficiently executing their capabilities.


NREGA is undoubtedly landmark legislation in the Indian polity, aiming to ensure social security, employment guarantee, rural upliftment, etc. However, several challenges remain unsolved. The first step towards improving is that the government considers it a policy to address social welfare issues in rural India and resolves these issues for India's overall social and economic development.


These policy resolutions need to undertake all necessary incentives that ensure the emancipation of the primary stakeholders - unemployed people. NREGA must also envisage its goals across all genders and make it an inclusive policy where people are the primary beneficiaries.

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