MGNREGA: MG National Rural Employment Guarantee Act

The union government has allocated Rs. 72000 crores for Mahatma Gandhi National Rural Employment Guarantee Act, (MGNREGA) scheme in 2021-22. What is MGNREGA? What are the objectives and key features of this scheme? Read here to know more.

The Mahatma Gandhi National Rural Employment Guarantee Act was passed on 23rd August 2005 and it was officially launched on 2nd February 2006.

Do you know what was MGNREGA earlier called? It was known to be National Rural Employment Guarantee Act. Learn more about this topic.

What is MGNREGA?

• MGNREGA is a rural wage employment program in India.
• It provides for a legal guarantee of at least 100 days of unskilled wage employment in a financial year to rural households whose adult members are willing to engage in unskilled manual work at a predetermined minimum wage rate.
• The Ministry of Rural Development (MRD), Govt of India is monitoring the entire implementation of this scheme in association with state governments.

The objectives of the Act are:

1. To enhance the livelihood security of the rural poor by generating wage employment opportunities; and

2. To create a rural asset base which would enhance productive ways of employment, and augment and sustain a rural household income.

• Adults in rural households provide the Gram Panchayat with their name, age, address, and photo. Following inquiries, the Gram Panchayat registers homes and gives an employment card. The information about an enrolled adult member, including his or her picture, is on the job card. The registered person may write to the Panchayat or the Programme Officer to request employment (for at least fourteen days of continuous work).

• The Panchayat/Program officer will accept a legitimate application and issue a dated receipt of it. A letter outlining the applicant’s duties will be delivered to them as well as displayed in the Panchayat office. Within a 5 km radius of the job site, employment will be offered; if farther than that, extra pay will be given.

• On February 2, 2006, MGNREGA was first put into effect as the National Rural Employment Guarantee Act (NREGA) in 200 chosen backward districts of India. As of April 1, 2007, it was extended to an additional 130 districts. Later, beginning on April 1, 2008, coverage began for the remaining 285 districts. NREGA was renamed MGNREGA by the National Rural Employment Guarantee (Amendment) Act of 2009.

• The work is usually on projects to build durable assets like roads, canals, ponds and wells.

Key features of MGNREGA:

• Legal right to work: The Act gives adult members of rural households a legal right to employment, in contrast to past job guarantee programmes. The beneficiaries must include at least one-third of women.
• Wages: Unless the central government notifies of a pay rate, wages shall be paid by the wages stipulated for agricultural labourers in the state under the Minimum Wages Act of 1948. (this should not be less than Rs 60 per day). Currently, the federal government sets pay rates, which vary by state.
• Wage-material ratio: The Act stipulates a minimum wage-material ratio of 60:40. The average wage per day per person in 2016-17 was Rs 161.
• Decentralised planning: Gram Sabhas must recommend the projects to be carried out and must carry out at least 50% of them. Pris is largely in charge of organising, carrying out, and overseeing the projects that are done.
• Transparency and accountability: Wall writings, citizen information boards, management information systems, and social audits are all options for proactive disclosure. Gram Sabhas carry out social audits so that the locals may keep track of how the programme is being implemented.
• Funding: The federal government and the states split the cost of funding. Wages (for unskilled, semiskilled, and skilled labour), material costs, and administrative costs make up the three main categories of expenditures. 100% of the cost of unskilled labour, 75% of the cost of semi-skilled and skilled labour, 75% of the cost of supplies, and 6% of the cost of administrative expenses are covered by the central government.
• Time-bound guarantee of work and unemployment allowance: Employment must be provided within 15 days of being demanded failing which an ‘unemployment allowance’ must be given.
• Worksite facilities: All work sites should have facilities such as crèches, drinking water and first aid.

Also read: Postal History of India

Significance of MGNREGA:

Social

MGNREGA is the largest social security scheme in the world.

• Empowerment of vulnerable sections: Large-scale engagement of women, people from traditionally marginalised groups like Scheduled Castes and Scheduled Tribes (SCs/STs), and others. Women generate 47% of the total person-days, while SCs/STs contribute 51% of the total person-days.
• Poverty alleviation: The less poor have used it as a means to augment their income by working during slow agricultural seasons, while the poor have used it as a means of escaping poverty.
• Distress migration: MGNREGA has a highly positive impact on poor households with a drastic reduction in the distress migration
• Some studies even point to improved education for children in MGNREGA households.

Economical

• Employment generation: Since this program’s introduction in 2006, it has altered the rural labour market’s makeup. Rural households were given the chance to make a minimal income by receiving employment cards under this programme.
• Increasing wage rate: Increasing the wage rate in rural areas and thereby increasing the purchasing power in rural India
• Thrust to the rural economy: Strengthening the rural economy through the creation of infrastructure assets.
• Financial inclusion: Payments under the scheme today are mostly by way of direct transfer into beneficiary accounts — which in turn forced people to open 10 crore new bank or post office accounts. The scheme has indirectly enabled households to get freed from the clutches of local money lenders too.

Political

• Decentralisation: Strengthening PRIs by involving them in the planning and monitoring of the scheme.

Challenges of MGNREGA:

Economical

• Ridiculously low wage rate: MGNREGA wage rates are now lower than the matching state/UT minimum wages in 34 of 35 states and union territories. The MGNREGA wage rate cannot be less than the state’s minimum agricultural wage rate, according to several rulings. Because workers aren’t interested in working for MGNREGA programmes due to the absurdly low pay rates, contractors and intermediaries are now in control locally.
• Inadequate budgetary allocation: Researchers determined that the scheme should have received an allocation of Rs 76,131 crore, which was less than the actual amount, to satisfy the registered work requirement in 2017–18. Similar to practically every year, the first six months see more than 80% of the funds depleted.
• Inflation: As agricultural labourers’ pay has multiplied, forcing farmers to seek higher prices for their food grains through Minimum Support Prices, the MGNREGA initiative to reduce poverty has come at the expense of skyrocketing food prices (MSPs).
• Affected labour market: Rural agricultural labourer wages are pushing farmers to mechanise their operations, which is proving to be more cost-effective.
• Impact on urban sectors: MGNREGA also has implications for the increase of urban wages in sectors like infrastructure and real estate, which depend on migrant workers from rural areas. This increases the costs of real estate and infrastructure projects.
• The banking puzzle: The rural banks are highly de-capacitated in terms of staff and infrastructure and thus always remain hugely crowded.

Administrative challenges

• Fabrication of job cards: The availability of fraudulent job cards, the use of fictitious identities, missing data, and delays in entering information into employment cards are only a few of the problems.
• Demand-supply mismatch in work allocation: Researchers have discovered a growing disparity between the supply and demand for labour. According to a 2017–18 research of 3,500 panchayats, the employment that was offered was 32% less than the need for labour that was created.
• Delay in payment of wages: The majority of states have not fulfilled the MGNREGA requirement to pay wages within 15 days. Additionally, workers are not reimbursed for late wage payments. Wage payments are frequently delayed for weeks or even months without providing any sort of compensation.
• Non-payment of unemployment allowances: When the job is not readily available, the majority of states do not provide unemployment benefits. The failure to provide dated receipts for the requested work hinders employees from requesting unemployment benefits.
• Ineffectiveness of local bodies: Since Panchayat Samitis hasn’t been met in months, work approval has been put off. In 2015–16, only 10% of the 4.8 crore households were able to fully benefit from 100 days of labour.
• Workers penalised for administrative lapses: The ministry withholds wages from employees of states that fail to comply with administrative obligations within the allotted time frame (such as submitting the audited fund statements from the previous financial year, utilisation certificates, bank reconciliation certificates, etc.).

Political

• Asymmetry: The ability of the states to predict labour demand and then submit a plan articulating the same is what determines the flow of resources to certain states. The programme may be regressive because of the reduced resource flow in the poorer states due to their inability to plan. Thus, there is a chance that programmes like MGNREGA, which depend on the ability of the states to implement them, will lead to a budgetary imbalance.
• Corruption: Muster rolls are inflated and middlemen pocket the difference. As a result, a large amount of money is siphoned-off by them.

Social

• Behavioural implications: People who are employed under MGNREGA are developing the habit of getting paid for doing nothing, which could have major repercussions for India’s human prowess and outlook. This is because most of the labour done under MGNREGA is not well planned and is frequently perfunctory.
• Impact on skilled occupations: Many specialised professions, such as handloom weavers and rural craftsmen, are losing their workforce to MGNREGA, which causes a loss of expertise in that particular field. Thus, even though employment guarantee programmes like MGNREGA offer higher incomes and have little to no effect on skill development, they are losing the distinctive abilities that have been accumulated through generations.

Way forward

• Wage: Each state’s minimum wage should be adhered to, and the CPI-Rural index should be used to index pay rather than the previous Consumer Price Index for Agricultural Laborers (CPI-AL). Similarly, wages must be updated yearly.
• Training of functionaries: Training and capacity building of elected representatives and other functionaries of PRIs must be done regularly as it will facilitate their involvement in the implementation of MGNREGA.
• Context-specific projects: States have different needs for development because they are at different stages of socioeconomic development. Therefore, it should be permitted for state governments to carry out projects that are appropriate for their location. Under MGNREGA, a greater emphasis should be placed on skilled and semi-skilled jobs.
• Social audits: Social audits must mandatorily be held every six months. The performance of MGNREGA is better in states with effective social audit mechanisms.
• Regular monitoring: The Ministry of Rural Development sends out National Level Monitors (NLMs) to conduct routine and targeted MGNREGA monitoring and to investigate accusations of improper use of money, among other things. By their recommendations, states should implement appropriate procedures and enhance the frequency of NLM monitoring.
• Regulation of job cards: It should be made illegal to possess job cards with elected PRI representatives and MGNREGA officials, as well as to not register employment-related information in job cards.
• Convergence: A greater emphasis on convergence with other schemes such as the PMKSY, National Rural Livelihoods Mission, National Rural Health Mission, etc.

Article Written by: Remya