The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is an Indian job guarantee scheme, enacted by legislation on August 25, 2005. The scheme provides a legal guarantee for one hundred days of employment in every financial year to adult members of any rural household willing to do public work-related unskilled manual work at the statutory minimum wage of 120 (US$2.28) per day in 2009 prices.[1] The Central government outlay for scheme is 40,000 crore (US$7.6 billion) in FY 2010–11.[2]
This act was introduced with an aim of improving the purchasing power of the rural people, primarily semi or un-skilled work to people living in rural India, whether or not they are below the poverty line. Around one-third of the stipulated work force is women. The law was initially called the National Rural Employment Guarantee Act (NREGA) but was renamed on 2 October 2009.[3]
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This act was brought about by the UPA coalition government supported by the left parties. The promise of this project is considered by many to be one of the major reasons for the re-election of the UPA in the Indian general election, 2009 .
Dr. Jean Drèze, a Belgian born economist, at the Delhi School of Economics, has been a major influence on this project.[4] A variety of peoples movements and organisations actively campaigned for this act.[5]
The act directs state governments to implement MGNREGA "schemes". Under the MGNREGA the Central Government meets the cost towards the payment of wage, 3/4 of material cost and some percentage of administrative cost. State Governments meet the cost of unemployment allowance, 1/4 of material cost and administrative cost of State council. Since the State Governments pay the unemployment allowance, they are heavily incentivized to offer employment to workers.
However, it is up to the State Government to decide the amount of unemployment allowance, subject to the stipulation that it not be less than 1/4 the minimum wage for the first 30 days, and not less than 1/2 the minimum wage thereafter. 100 days of employment (or unemployment allowance) per household must be provided to able and willing workers every financial year.
Note: The original version of the Act was passed with Rs 60/ day as the minimum wage that needs to be paid under NREGA. However, a lot of states in India already have wage regulations with minimum wages set at more than 100 (US$1.9) per day. NREGA's minimum wage has since been changed to 120 (US$2.28) per day.
MNREGA was launched on February 2, 2006 from Anantapur in Andhra Pradesh and initially covered 200 "poorest" districts of the country. The Act was implemented in phased manner – 130 districts were added in 2007–08. With its spread over 625 districts across the country, the flagship program of the UPA Government has the potential to increase the purchasing power of rural poor, reduce distress migration and to create useful assets in rural India. Also, it can foster social and gender equality as 23% workers under the scheme are Scheduled Castes, 17% Scheduled Tribes and 50% women. In 2010–11, 41 million households were employed on NREGA worksites.
MGNREGA started with an initial outlay of $2.5bn(Rs 11300cr) in year 2006–07.The funding has considerably been increased as shown in the table below:
| Year | Total Outlay(TO) | Wage Expenditure(Percent of TO) |
|---|---|---|
| 2006–07 | $2.5bn | 66 |
| 2007–08 | $2.6bn | 68 |
| 2008–09 | $6.6bn | 67 |
| 2009–10 | $8.68bn | 70 |
| 2010–11 | $8.91bn | 71 |
The Comptroller and Auditor General (CAG) of India, in its performance audit of the implementation of MGNREGA has found "significant deficiencies" in the implementation of the act. The plan was launched in February 2006 in 200 districts and eventually extended to cover 593 districts. 44,940,870 rural households were provided jobs under NREGA during 2008–09, with a national average of 48 working days per household.[6] In recent times, nrega workers have faced problems due to delays in payment of wages, some of which have been pending for months.[7]
Employment under NREGAS in 2010
Indian Minister of State for Rural Development Pradeep Jain said in a written reply to a question in Rajya Sabha on Tuesday that As of 30 June, a total of 179,43,189 families in the country have been provided employment under MGNREGS.[8]
The MGNREGA achieves twin objectives of rural development and employment. The MGNREGA stipulates that works must be targeted towards a set of specific rural development activities such as: water conservation and harvesting, afforestation, rural connectivity, flood control and protection such as construction and repair of embankments, etc. Digging of new tanks/ponds, percolation tanks and construction of small check dams are also given importance. The employers are given work such as land leveling, tree plantation, etc. First a proposal is given by the Panchayat to the Block Office and then the Block Office decides whether the work should be sanctioned.In Rangareddy district manchal mandal the dry land horticulture and plantation of trees on the bunds of the fields taken up under MGVN programme is taken up in a big way.
Many criticisms have been levelled at the programme, which has been argued to be no more effective than other poverty reduction programmes in India, with key exceptions such as Rajasthan.[9]
The first criticism is financial. The MGNREGA is one of the largest initiatives of its kind in the world.[9] The national budget for the financial year 2006–2007 was Rs 113 billion (about US$2.5bn and almost 0.3% of GDP) and now fully operational, it costs Rs. 391 billion in financial year 2009–2010.[9] Funding was argued by Jean Dreze and others to be possible through improved tax administration and reforms, yet the tax-GDP ratio has actually been falling.[9] There are fears the programme will end up costing 5% of GDP.[9]
Another important criticism is that the public works schemes' completed product (e.g. water conservation, land development, afforestation, provision of irrigation systems, construction of roads, or flood control) is vulnerable to being taken by over wealthier sections of society.[9] A monitoring study of NREGA in Madhya Pradesh showed the types of activities undertaken were more or less standardised across villages, suggesting little local consultation.[9]
Further concerns include the fact that local government corruption leads to the exclusion of specific sections of society.[9] Local governments have also been found to claim more people have received job cards than people who actual work in order to generate more funds than needed, to be then embezzled by local officials.[9] Bribes as high Rs 50 are paid in order to receive the job cards.[9]
A multi-crore fraud has also been suspected where many people has been issued the NREGA card who is either employed with another Government Job and who are not even aware that they have a Job Card. The productivity of laborers involved under NREGA is considered to be lower because of the fact that laborers consider it as a better alternative to working under major projects. There is criticism from construction companies that NREGA has affected the availability of labor as laborers prefer to working under NREGA to working under construction projects. [10]
It is also widely criticized that NREGS has contributed to farm labour shortage. In July 2011, the government has advised the states to suspend the NREGS programme during peak farming periods.[11]
The National Advisory Committee(NAC) advocated the government for NREGA wages linkage with statutory minimum wages which is under Minimum wages act as NREGA workers get only Rs100 per day.[12]