National Rural Employment Guarantee Act, 2005

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 September 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 is hailed 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, NREGA can help in protecting the environment, empowering rural women, reducing rural-urban migration and fostering social equity, among others."
The law 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 most importantly the detailed measures to ensure transparency and accountability.
Past Scenario.
History.
Since 1960, 30 years were expended in struggling to find suitable employment schemes in India's vast rural hinterland. The experiences of these decades provided important lessons to the government. These included the ‘Rural Manpower Programme’ which exposed the tribulations of financial management, the ‘Crash Scheme for Rural Employment’ on planning for outcomes, a ‘Pilot Intensive Rural Employment Programme’ of labour-intensive works, the ‘Drought Prone Area Programme’ of integrated rural development, ‘Marginal Farmers and Agricultural Labourers Scheme’ of rural economic development, the ‘Food for Work Programme’ (FWP) of holistic development and better coordination with the states, the ‘National Rural Employment Programme’ (NREP) of community development, and the ‘Rural Landless Employment Guarantee Programme’ of focus on landless households. The Planning Commission later approved the scheme and it was adopted on national scale.
On 1 April 1989, to converge employment generation, infrastructure development and food security in rural areas, the government integrated NREP and RLEGP into a new scheme JRY. The most significant change was the decentralization of implementation by involving the local people through PRIs and hence a decreasing role of bureaucracy.
On 2 October 1993, the Employment Assurance Scheme (EAS) was initiated by the then Prime Minister P.V.Narasimha Rao to provide employment to agricultural hands during the lean agricultural season. P.V. Rao had started discussions on this act in the year 1991. The role of PRIs was reinforced with the local self-government at the district level called the ‘Zilla Parishad’ as the main implementing authority. Later, EAS was merged with SGRY in 2001.
On 1 April 1999, the JRY was revamped and renamed to JGSY with a similar objective. The role of PRIs was further reinforced with the local self-government at the village level called the ‘Village Panchayats’ as the sole implementing authority. In 2001, it was merged with SGRY.
In January 2001, the government introduced FWP(Food for Work Programme) similar to the one that was initiated in 1977. Once NREGA was enacted, the two were merged in 2006.
On 25 September 2001 to converge employment generation, infrastructure development and food security in rural areas, the government integrated EAS and JGSY into a new scheme SGRY. The role of PRIs was retained with the ‘Village Panchayats’ as the sole implementing authority. Yet again due to implementation issues, it was merged with Mahatma Gandhi NREGA in 2006.
The total government allocation to these precursors of Mahatma Gandhi NREGA had been about three-quarters of .
Overview.
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.
The law in action.
Independent Academic Research.
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 centres for casual work.
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 attempts to quantify the environmental and socio-economic benefits of works done through the NREGA 
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.
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.
Evaluation of the law by the government.
Ex-Prime Minister of India Manmohan Singh released an anthologys of research studies on the MGNREGA called "MGNREGA Sameeksha" in New Delhi on 14 July 2012, about a year before the CAG report. Aruna Roy and Nikhil Dey said that "the MGNREGA Sameeksha is a significant innovation to evaluate policy and delivery". The anthology draws on independent assessments of MGNREGA conducted by Indian Institutes of Management (IIMs), Indian Institutes of Technology (IITs) and others in collaboration with United Nations Development Programme (UNDP) published from 2008 to 2012. The Prime Minister said:
Minister of Rural Development Jairam Ramesh says in the 'MGNREGA Sameeksha':
Meanwhile, the social audits in two Indian states highlight the potential of the law if implemented effectively.
Further the Minister says:
Views of the critics of MGNREGA.
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.
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".
Save MGNREGA.
'Save MGNREGA' is a set of demands proposed during the joint meeting of the national leadership of CITU, AIAWU, AIDWA and AIKS in New Delhi. The agenda was to discuss the dilution of MGNREGA scheme by the new government. Following demands were proposed:
1. Government of India should increase the Central allocation for the scheme so that number of workdays can be increased to 200 and per day wage can be increased to Rs. 300.
2. Job card to be issued for everyone who demands job, failing which, after 15 days employment benefits should be given.
3. Minimum 150 days of work should be ensured to all card holders
4. Minimum wage act should be strictly implemented. Delay in wage payment should be resolved.
5. MGNREGA should be extended to urban areas.
6. Gram Sabhas should be strengthened to monitor proper implementation of the scheme and also to check corruption.
New 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 crore to be allocated to the MGNREGA as a part of 2017 Union budget of India.
Composition of Youth Workforce.
In 2013-14, the ratio of young workers among total MGNREGA workers was 13.64 per cent which came down to 7.73 percent in 2017-18 before rising to 9.1 percent in 2018-19 and 10.06 percent in 2019-20.The trend shows that a steady decline in the proportion of young workers, those between 18 and 30, under the Act has halted and has begun to rise in the wake of demonetisation and the rollout of GST. This has been projected by a section of analysts as a reflection of rural distress intensifying .
Controversies and criticisms.
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 age 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.
Corruption.
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 enroll 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.