Mahatma Gandhi National Rural Employment Guarantee Act, 2005

August 3, 2023

GS Paper II Indian Polity and Governance

Context:

The Parliamentary standing committee has called for addressing wage disparity under Mahatma Gandhi National Rural Employment Guarantee Act, 2005 (MGNREGA).

About MGNREGA:

MGNREGA was enacted in 2005 as a social welfare program by the Ministry of Rural development.
Objective: To guarantee 100 days of employment in every financial year to adult members of any rural household willing to do public work-related unskilled manual work.

Why was MGNREGA launched?

To improve the purchasing power of the rural people, primarily semi or unskilled work to people living below poverty line in rural India.
It attempts to bridge the gap between the rich and poor in the country.

Key Features:

Legal Right to Work: The Act grants a legal right to employment for adult members of rural households, with at least one-third of beneficiaries being women.
Wage Provision: Wages must be paid according to the wages specified for agricultural laborers in the state under the Minimum Wages Act, 1948, unless the central government notifies a wage rate (this should not be less than Rs 60 per day).
Time bound guarantee of work and unemployment allowance: Employment must be provided with 15 days of being demanded failing which an ‘unemployment allowance’ must be given.
Decentralized Planning: Gram sabhas must recommend the works that are to be undertaken and at least 50% of the works must be executed by them.
- Panchayati Raj Institutions are primarily responsible for planning, implementation and monitoring of the works that are undertaken.
Work Site Facilities: All work sites should have facilities such as crèches, drinking water and first aid.
Funding: Funding is shared between the centre and the states.
- The central government bears 100% of the cost of unskilled labour, 75% of the cost of semi-skilled and skilled labour, 75% of the cost of materials and 6% of the administrative costs.
Transparency and accountability: Social audits are conducted by gram sabhas to enable the community to monitor the implementation of the scheme.
Appointment of ombudsperson: Under the Act, there should be an ombudsperson for each district who will receive grievances, conduct enquiries, and pass awards.

What is Social Audit?

Social Audit is the critical stock taking of any programme or scheme by the community with active involvement of the primary stakeholders.
It includes an audit of the quality of works being executed at different levels along with the details of disbursements made, the number of laborers employed and materials used.

.What types of works are taken up under MGNREGA ?

Water conservation and water harvesting structures to augment and improve groundwater like underground dykes, earthen dams.
Renovation of traditional water bodies including desilting of irrigation tanks and other water bodies
Improving livelihoods through horticulture, sericulture, plantation, and farm forestry
Providing all-weather rural road connectivity to unconnected villages and to connect identified rural production centers to the existing pucca road network.

Key Achievements of MGNREGA:

Under MGNREGA a total of 11.37 Crore households availed employment and a total of 289.24 crore person-days employment has been generated (till 15th December, 2022).
During the first COVID-19 lockdown in 2020, it provided a critical lifeline for a record 11 crore workers.
Studies gave empirical evidence that wages earned under MGNREGA helped compensate for somewhere between 20% to 80% of the income loss incurred because of the lockdown.
About 8.55 crore households demanded MGNREGA work in 2020-21, followed by 8.05 crore in 2021-22, compared to a total of 6.16 core households asking for work in the pre-pandemic year 2019-20.

Significance of MGNREGA:

Transparency: Under the MGNREGA, 99% wage seekers are receiving their wage directly into their Bank/Post Office accounts. It is a big step towards transparency and timely release of wages.
Demand Driven Programme: Unlike the earlier wage employment programmes that were allocation-based, MGNREGA is demand driven and resource transfer from Centre to States is based on the demand for employment in each State.
Upskilling Workers: Under MGNREGA, the project “UNNATI” intends to upgrade the skill-base of the workers, and thereby improve their livelihoods.
- As on 15th December 2022, 27,383 candidates have been trained.

Challenges:

Fabrication of Job Cards:There are several issues related to the existence of fake job cards, the inclusion of fictitious names, missing entries and delays in making entries in job cards.
Increase in wages commensurate with inflation: The nominal wages under MGNREGA discourage beneficiaries and propel them to either seek more remunerative work or migrate to urban areas.
- This is reflected by the fact that while 755 lakh households were provided employment in 2020-21, only 72 lakh households completed 100 days of employment.
Delay in Payment by Centre: As per data released by the Centre, owed ₹4,700 crore in MGNREGA wages to 18 States as of December 14, 2022.
Non Payment of unemployment allowances: Most states do not pay an unemployment allowance when work is not given on demand.
Reduced Share in Union Budget: Government reduced allocation by 30% for the scheme in the Union Budget, from 2.14% of overall outlay in FY23 to 1.33% in FY24.
Red Tapism: There is much evidence that Aadhaar based payments have neither reduced corruption nor reduced wage payment delays while creating hurdles for officials and workers during implementation.
Ineffective Role of Panchayati Raj Institutions: With very little autonomy, gram panchayats are not able to implement this act in an effective and efficient manner.
Large Number of Incomplete works: There has been a delay in the completion of works. Also, there is an issue of quality of work and asset creation under MGNREGA.

Way Forward:

Enhance Budgetary Allocation: The Standing Committee on Rural Development and Panchayati Raj in 2022 had recommended increased budgetary allocation and increased person-days to MGNREGA.
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.
Strengthening Panchayati Raj Institutions: Gram panchayats need to be provided with adequate resources, powers, and responsibilities to sanction works, provide work on demand, and authorize wage payments to ensure there are no delays in payments.
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.
Utilization of funds: The Department of Rural Development should analyze reasons for poor utilization of funds and take steps to improve the same.
- For example, in 2010-11, 27.31% of the funds remained unutilised.
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 under MGNREGA.
Uniform wage rate: Wage rates notified under MGNREGA range from Rs 193 to Rs 318 in different states/UTs. The wages should be unified across the country.

Parliamentary Standing Committee over MGNREGA:

Observation:

Disparity of wages and non-increase in wages commensurately with inflation is perhaps the most discouraging aspect for laborers to undertake MGNREGA works.

Recommendations:

The panel reiterated an earlier recommendation to explore the possibility of making the wages paid under the scheme uniform across the country.
It also raised the issues of the pendency of payments to states and the slashing of the budget for MGNREGS for the current financial year.
- For example: Till 25 January 2023, the pending liability of the central government was Rs 6,231 crore for wages and Rs 7,616 crore for material components under the scheme.