Mahatma Gandhi Employment Guarantee Act 2005 (or, NREGA No 42, later renamed as the “Mahatma Gandhi National Rural Employment Guarantee Act” or MGNREGA), is an Indian labour law and social security measure that aims to guarantee the ‘right to work’. This act was passed in 23 August 2005 under the UPA government of Prime Minister Dr. Manmohan Singh.
It aims to enhance livelihood security in rural areas by providing at least 100 days of wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work. The act was first proposed in 1991 by P.V. Narasimha Rao. It was finally accepted in the parliament and commenced implementation in 625 districts of India. Based on this pilot experience, NREGA was scoped up to cover all the districts of India from 1 April 2008. The statute was praised by the government as “the largest and most ambitious social security and public works programme in the world”. In its World Development Report 2014, the World Bank termed it a “stellar example of rural development”.
The MGNREGA was initiated with the objective of “enhancing livelihood security in rural areas by providing at least 100 days of guaranteed wage employment in a financial year, to every household whose adult members volunteer to do unskilled manual work”. Another aim of MGNREGA is to create durable assets (such as roads, canals, ponds and wells). Employment is to be provided within 5 km of an applicant’s residence, and minimum wages are to be paid. If work is not provided within 15 days of applying, applicants are entitled to an unemployment allowance.
That is, if the government fails to provide employment, it has to provide certain unemployment allowances to those people. Thus, employment under MGNREGA is a legal entitlement. MGNREGA is to be implemented mainly by gram panchayats (GPs). The involvement of contractors is banned. Apart from providing economic security and creating rural assets, other things said to promote NREGA are that it can help in protecting the environment, empowering rural women, reducing rural-urban migration and fostering social equity, among others. The law stated it provides many safeguards to promote its effective management and implementation. The act explicitly mentions the principles and agencies for implementation, list of allowed works, financing pattern, monitoring and evaluation, and detailed measures to ensure transparency and accountability.
According to the Eleventh Five Year Plan (2007–12), the number of Indians living on less than $1 a day, called Below Poverty Line (BPL), was 300 million that barely declined over the last three decades ranging from 1973 to 2004, although their proportion in the total population decreased from 36 per cent (1993–94) to 28 percent (2004–05), and the rural working-class dependent on agriculture was unemployed for nearly 3 months per year.
The UPA Government had planned to increase the number of working days from 100 to 150 before the 2014 Lok Sabha Elections in the country but failed. The NDA government has decided to provide 150 days for rain hit areas. The registration process involves an application to the Gram Panchayat and issue of job cards. The wage employment must be provided within 15 days of the date of application. The work entitlement of ‘120 days per household per year’ may be shared between different adult members of the same household. The law also lists permissible works: water conservation and water harvesting; drought proofing including afforestation; irrigation works; restoration of traditional water bodies; land development; flood control; rural connectivity; and works notified by the government. The Act sets a minimum limit to the wage-material ratio as 60:40. The provision of accredited engineers, worksite facilities and a weekly report on worksites is also mandated by the Act. Furthermore, the Act sets a minimum limit to the wages, to be paid with gender equality, either on a time-rate basis or on a piece-rate basis. The states are required to evolve a set of norms for the measurement of works and schedule of rates. Unemployment allowance must be paid if the work is not provided within the statutory limit of 15 days. The law stipulates Gram Panchayats to have a single bank account for NREGA works which shall be subjected to public scrutiny. To promote transparency and accountability, the act mandates ‘monthly squaring of accounts. To ensure public accountability through public vigilance, the NREGA designates ‘social audits’ as key to its implementation.
The most detailed part of the Act (chapter 10 and 11) deals with transparency and accountability that lays out role of the state, the public vigilance and, above all, the social audits. For evaluation of outcomes, the law also requires management of data and maintenance of records, like registers related to employment, job cards, assets, muster rolls and complaints, by the implementing agencies at the village, block and state level. The legislation specifies the role of the state in ensuring transparency and accountability through upholding the right to information and disclosing information proactively, preparation of annual reports by the Central Employment Guarantee Council for the Parliament and State Employment Guarantee Councils for state legislatures, undertaking mandatory financial audits by each district along with physical audit, taking action on audit reports, developing a Citizen’s Charter, establishing vigilance and monitoring committees, and developing a grievance redressal system. The Act recommends establishment of ‘Technical Resource Support Groups’ at district, state and central level and active use of Information Technology, like creation of a ‘Monitoring and Information System (MIS)’ and a NREGA website, to assure quality in implementation of NREGA through technical support. The law allows convergence of NREGA with other programmes. As NREGA intends to create ‘additional’ employment, the convergence should not affect employment provided by other programmes.
CONSTITUTIONAL APPLICABILITY TO THE ACT
The Act aims to follow the Directive Principles of State Policy enunciated in Part IV of the Constitution of India. The law by providing a ‘right to work’ is consistent with Article 41 that directs the State to secure to all citizens the right to work. The statute also seeks to protect the environment through rural works which is consistent with Article 48A that directs the State to protect the environment. In accordance with the Article 21 of the Constitution of India that guarantees the right to life with dignity to every citizen of India, this act imparts dignity to the rural people through an assurance of livelihood security. The Fundamental Right enshrined in Article 16 of the Constitution of India guarantees equality of opportunity in matters of public employment and prevents the State from discriminating against anyone in matters of employment on the grounds only of religion, race, caste, sex, descent, place of birth, place of residence or any of them. NREGA also follows Article 46 that requires the State to promote the interests of and work for the economic uplift of the scheduled castes and scheduled tribes and protect them from discrimination and exploitation. Article 40 mandates the State to organize village panchayats and endow them with such powers and authority as may be necessary to enable them to function as units of self-government. Conferring the primary responsibility of implementation on Gram Panchayats, the Act adheres to this constitutional principle. Also, the process of decentralization initiated by 73rd Amendment to the Constitution of India that granted a constitutional status to the Panchayats is further reinforced by the Mahatma Gandhi NREGA that endowed these rural self-government institutions with authority to implement the law.
MOTIVE OF THE ACT
Academic research has focused on many dimensions of the NREGA: economic security, self-targeting, women’s empowerment, asset creation, corruption, how the scheme impacts agricultural wages. An early overall assessment in the north Indian states suggested that NREGA was “making a difference to the lives of the rural poor, slowly but surely.”
Self-targeting evidence suggests that though there is a lot of unmet demand for work. Another fundamental objective of NREGA was to improve the bargaining power of labour who often faced exploitative market conditions. Several studies have found that agricultural wages have increased significantly, especially for women, since the inception of the scheme. This indicates that overall wage levels have increased due to the act, however, further research highlights that the key benefit of the scheme lies in the reduction of wage volatility. This highlights that NREGA may be an effective insurance scheme. Ongoing research efforts try to evaluate the overall welfare effects of the scheme; a particular focus has been to understand whether the scheme has reduced migration into urban centers for casual work. Women employed under NREGA for de-silting a tank .
Another important aspect of NREGA is the potential for women’s empowerment by providing opportunities for paid work, as well as mechanisms to ensure equal pay for equal work. One third of all employment is reserved for women, and there is a provision for equal wages to men and women, provision for child care facilities at the worksite – these are three important provisions for women in the Act. More recent studies have suggested that women’s participation has remained high, though there are inter-state variations. One study in border villages of Rajasthan, Madhya Pradesh and Gujarat studied the effect on short term migration and child welfare. and found that among children who do not migrate, grade completed is higher. The study found that demand for NREGA work is higher, even though migrant wages are higher. Over the last decade, it has been observed that more than half the NREGA funds have been spent on water related projects. This was very much needed because water bodies have been shrinking, especially in rural India. India became a water deficient nation 5 years ago, and every year since then, the water level has shrunk further. Though over Rs. 20,000 crores under MGNREGA has been spent each year during the last decade on developing rural water bodies, wells, aquifers, catchment areas, etc., these were not permanent assets.
There have not been too many detailed studies on asset creation. A few studies focusing on the potential for asset creation under NREGA suggest that (a) the potential is substantial; (b) in some places, it is being realized, and (c) lack of staff, especially technical staff, rather than lack of material are to blame for poor realization of this potential. Others have pointed out that water harvesting and soil conservation works promoted through NREGA “could have high positive results on environment security and biodiversity and environment conservation” A study conducted by researchers at the Indian Institute of Science and other collaborators found that activities related to natural resource management under the MGNREGA can capture 249 metric tons of carbon dioxide equivalent by 2030. India has placed emphasis on MGNREGA as a contributor to carbon sequestration in its Third Biennial Update Report submitted to the United Nations Framework Convention on Climate Change in 2021. Corruption in government programmes has remained a serious concern, and NREGA has been no exception. According to recent estimates, wage corruption in NREGA has declined from about 50% in 2007-8 to between 4-30% in 2009-10. Much of this improvement is attributable to the move to pay NREGA wages through bank and post office accounts. Some of the success in battling corruption can also be attributed to the strong provisions for community monitoring. Others find that “the overall social audit effects on reducing easy-to-detect malpractices was mostly absent”. A few papers also study the link between electoral gains and implementation of NREGA. One studies the effect in Andhra Pradesh – the authors find that “while politics may influence programme expenditure in some places and to a small extent, this is not universally true and does not undermine the effective targeting and good work of the scheme at large.” The two other studies focus on these links in Rajasthan and West Bengal. Several local case studies are also being conducted to identify the regional impacts of NREGA.
ASSESSMENT OF THE ACT BY THE CONSTITUTIONAL AUDITOR
The second performance audit by the Comptroller and Auditor General (CAG) of India covered 3,848-gram panchayats (GPs) in 28 states and 4 union territories (UTs) from April 2007 to March 2012. This comprehensive survey by the CAG documents lapses in implementation of the act.
The main problems identified in the audit included: a fall in the level of employment, low rates of completion of works (only 30.3 per cent of planned works had been completed), poor planning (in one-third of Gram Panchayats, the planning process mandated by the act had not been followed), lack of public awareness partly due to poor information, education and communication IEC) by the state governments, shortage of staff (e.g., Gram Rozgar Sewaks had not been appointed in some states) and so on. Notwithstanding the statutory requirement of notification, yet five states had not even notified the eight-years-old scheme.
The comprehensive assessment of the performance of the law by the constitutional auditor revealed serious lapses arising mainly due to lack of public awareness, mismanagement and institutional incapacity. The CAG also suggested some corrective measures.
Even though the mass social audits have a statutory mandate of Section 17 (As outlined in Chapter 11 of the NREGA Operational Guidelines), only seven states have the institutional capacity to facilitate the social audits as per prescribed norms. Although the Central Council is mandated to establish a central evaluation and monitoring system as per the NREGA Operational Guidelines, even after six years it is yet to fulfil the NREGA directive. Further, the CAG audit reports discrepancies in the maintenance of prescribed basic records in up to half of the gram panchayats (GPs) which inhibits the critical evaluation of the NREGA outcomes. The unreliability of Management Information System (MIS), due to significant disparity between the data in the MIS and the actual official documents, is also reported.
To increase public awareness, the intensification of the Information, Education and Communication (IEC) activities is recommended. To improve management of outcomes, it recommended proper maintenance of records at the gram panchayat (GP) level. Further the Central Council is recommended to establish a central evaluation and monitoring system for “a national level, comprehensive and independent evaluation of the scheme”. The CAG also recommends a timely payment of unemployment allowance to the rural poor and a wage material ratio of 60:40 in the NREGA works. Moreover, for effective financial management, the CAG recommends proper maintenance of accounts, in a uniform format, on a monthly basis and also enforcing the statutory guidelines to ensure transparency in the disposal of funds. For capacity building, the CAG recommends an increase in staff hiring to fill the large number of vacancies. For the first time, the CAG also included a survey of more than 38,000 NREGA beneficiaries. An earlier evaluation of the NREGA by the CAG was criticized for its methodology.
The critics claim that the scheme leads to wastefulness and contributes to fiscal deficit of the Government of India. Critics argue that employment should be seen as a privilege rather than a right. Further more can be the reasons leading to fall of MANREGA;
Ridiculously low wage rate
Currently, MGNREGA wage rates of 17 states are less than the corresponding state minimum wages. Various judgements have upheld that the MGNREGA wage rate cannot be less than the minimum agricultural wage rate of the state. The ridiculously low wage rates have resulted in lack of interest among workers in working for MGNREGA schemes, making way for contractors and middle men to take control, locally.
Insufficient budget allocation
MGNREGA’s success at the ground level is subject to proper and uninterrupted fund flow to the states. Thrice in the last year and once this year, funds have dried up in states due to lack of “mother sanctions” from the Central government which hampers the work in peak season. Almost every year, more than 80 per cent of funds get exhausted within the first six months. Thus, the government’s claim of “record allocation” does not hold true in real terms. It has rather decreased as pending liabilities of the last year are also included in the current budget. Moreover, the fund allocation is insufficient to ensure proper implementation on the ground.
Regular payment delays
The Union Ministry of Rural Development considers wages paid once the FTO (Fund Transfer Order) is signed by the second signatory. However, delays take place even in the processing of signed FTOs, for which the Management Information System (MIS) does not calculate compensation. Despite the order of the Supreme Court and initiatives and GO (Government Order) by the Union Ministry of Finance, no provision has yet been worked out in the MIS for calculation of full wage delays and payment of compensation for the same. Hence, the government’s claims of 92 per cent on-time payments generation are misguided. Even a hasty survey on ground will show that payments are regularly delayed.
A major criticism of the MGNREGA is that a lot of money disbursed by the government gets siphoned off by middlemen, thus leaving a number of MGNREGA workers either with unpaid wages or less than standard wages. In Mahuadand, Jharkhand, most of the people who had worked under the MGNREGA did not get paid, while some either got paid less than stipulated or were given 5 kg of rice by private contractors instead. Another criticism of NREGA is that it is making agriculture less profitable. Landholders often oppose it on these grounds. The big farmer’s point of view can be summed up as follows: landless labourers are lazy and they don’t want to work on farms as they can get money without doing anything at NREGA worksites; farmers may have to sell their land, thereby laying foundation for the corporate farming. Economists like Jagdish Bhagwati and Arvind Panagariya have described NREGA as “an inefficient instrument of shifting income to the poor” – the general notion being that it takes five rupees to transfer one rupee to NREGA workers. Economists including Surjit Bhalla have termed it as unsuccessful suggesting that schemes such as the NREGA need to be junked, saying that any scheme with 85 percent leakages can’t be proclaimed to be “working successfully”. The workers points of view can be summed up as: labourers do not get more than Rs. 80 in the private agricultural labour market, there is no farm work for several months; few old ages people who are jobless for at least 8 months a year; when farm work is available, they go there first; farmers employ only young and strong persons to work in their farms and reject the others and hence many go jobless most of the time.
NREGA has been criticized for leakages and corruption in its implementation. It has been alleged that individuals have received benefits and work payments for work that they have not done, or have done only on paper. In some situations, beneficiaries were allegedly not sufficiently poor to enrol in the program to begin with. Furthermore, Finance Minister Arun Jaitley committed the central government to spending INR 6000 crores on MNREGA in order to provide an impetus to the scheme. Although in 2014-15, only 28% of the payments were made on time to workers. Following allegations of corruption in the scheme, the NDA government ordered a re-evaluation of MNREGA in 2015 and allocated ₹60,000 crore to the program in the 2019-2020 Interim Budget
VIEWS OF THE PROPONENTS OF MGNREGA
Proponents of the scheme enumerate number of benefits. For example, Rejaul Karim Laskar, an ideologue of the Congress party- the largest constituent of the UPA Government which introduced the scheme, claims that the scheme has multifarious benefits including “reduction in poverty, reduction in migration, women empowerment, improvement of productivity of agricultural land and regeneration of water resources.
AMMENDMENTS PROPOSED THEREUNDER
Amendments Proposed in 2014
Union Rural Development Minister, Nitin Gadkari, proposed to limit MGNREGA programmes within tribal and poor areas. He also proposed to change the labour: material ratio from 60:40 to 51:49. As per the new proposal, the programme will be implemented in 2,500 backward blocks coming under Intensive Participatory Planning Exercise. These blocks are identified per the Planning Commission Estimate of 2013 and a Backwardness Index prepared by Planning Commission using 2011 census. This backwardness index consists of following five parameters – percentage of households primarily depended on agriculture, female literacy rates, households without access to electricity, households without access to drinking water and sanitation within the premises and households without access to banking facilities.
Both proposals came in for sharp criticism. A number of economists with diverse views opposed the idea of restricting or “focussing” implementation in a few districts or blocks. In the November 2014 cabinet expansion, Birender Singh replaced Nitin Gadkari as rural development minister. Among the first statements made by the new minister was an assurance that NREGA would continue in all districts. Around the same time, however, NREGA budget saw a sharp cut and in the name of ‘focusing’ on a few blocks the programme has been limited to those blocks.
New Amendments Proposed in 2017
Finance Minister Arun Jaitley announced Rs. 48,000 crores to be allocated to the MGNREGA as a part of 2017 Union budget of India.
The Standing Committee on Rural Development made the following recommendations, based on its findings:
Regulation of job cards: Offences such as not recording employment related information in job cards and unlawful possession of job cards with elected PRI representatives and MGNREGA functionaries should be made punishable under the Act.
Participation of women: Since the income of female workers typically raises the standard of living of their households to a greater extent than their male counterparts, the participation of women must be increased.
Participation of people with disabilities: Special works (projects) must be identified for people with disabilities and special job cards must be issued and personnel must be employed to ensure their participation.
Utilization of funds: The Committee found that a large amount of funds allocated for MGNREGA have remained un-utilized. For example, in 2010-11, 27.31% of the funds remained unutilized. The Committee recommends that the Department of Rural Development should analyze reasons for poor utilization of funds and take steps to improve the same. In addition, it should initiate action against officers found guilty of misappropriating funds under MGNREGA.
Context specific projects and convergence: Since states are at various stages of socio-economic development, they have varied requirements for development. Therefore, state governments should be allowed to undertake works that are pertinent to their context. There should be more emphasis on skilled and semi-skilled work under MGNREGA. In addition, the Committee recommends a greater emphasis on convergence with other schemes such as the National Rural Livelihoods Mission, National Rural Health Mission, etc.
Payment of unemployment allowance: Dated receipts for demanded work should be issued so that workers can claim unemployment allowance. Funds for unemployment allowance should be met by the central government.
Regular monitoring: National Level Monitors (NLMs) are deployed by the Ministry of Rural Development for regular and special monitoring of MGNREGA and to enquire into complaints regarding misutilization of funds, etc. The Committee recommends that the frequency of monitoring by NLMs should increase and appropriate measures should be taken by states based on their recommendations. Additionally, social audits must mandatorily be held every six months. The Committee observes that the performance of MGNREGA is better in states with effective social audit mechanisms.
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.
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