All you wanted to know about MGNREGA

MUTHUKUMAR K | Updated on January 12, 2018



Budget 2017 announced an allocation of ₹48,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme. While this is the highest allocation ever to be made under the scheme, it is just ₹501 crore more than the actual spending for 2016-17.

What is it?

MGNREGA is the largest social security scheme in the world — guaranteeing 100 days of unskilled manual work to all rural households in India. Last year, about 235 crore person-days of work were generated under the scheme. The MGNREG Act actually gives rural households the right to work — making it obligatory for the State to give them work on demand. Household could actually sue them for not doing so — at least on paper. The work is usually on projects to build durable assets like roads, canals, ponds and wells. In reality, there are quite a lot of rules on how the money may be spent. The Act stipulates a minimum wage-material ratio of 60:40. The average wage per day per person in 2016-17 was ₹161.

Why is it important?

One in four persons lives below the poverty line in rural India. Ever since the launch of this scheme in 2006, it has changed the nature of the rural labour market. It gave an opportunity to rural households to earn minimum income by getting job cards under this scheme. There are 12 crore job cards as of today. While the poor have used it to climb out of poverty, the not-so-poor used it as a measure to supplement their income by working during lean agriculture periods.

Moreover, the scheme is inclusive — with higher participation of women and SC and ST individuals. Today, about one in two jobs created under the scheme is for women and about 40 per cent for SC/ST. For many women, it is a first-time earning opportunity as well as a chance at empowerment. Interestingly, the scheme has indirectly enabled households to get freed from the clutches of local money lenders too. 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 newly opened accounts have aided access to bank credit. Some studies even point to improved education for children in MGNREGA households.

Why should I care?

Why shouldn’t you? MGNREGA creates livelihood opportunities for our fellow citizens and sets a minimum wage threshold for low income earners, even in the cities. But with such high allocation to this scheme, one valid question is if the Government is getting the bang for its buck. The scheme forces the Government to offer work, but so far does not measure productivity or durability of the work done. One of the complaints is about the slow pace of work. While there is incentive for workers to turn out as much as is needed to earn the wage rate, there is no incentive to expedite it, or finish the task on time.

There are administrative glitches too. Panchayat Samitis don’t meet for months — resulting in work sanctioning getting delayed. Only 10 per cent of 4.8 crore households managed to fully benefit with 100 days of work in 2015-16.

The bigger question is: Could sustainable rural jobs have been created by skilling the rural households or by allocation to the neglected animal husbandry sector?

The bottomline

A parliamentary panel can vet the programme and decide on its long-term efficacy.

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Published on February 13, 2017

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