[Burning Issue] MGNREGA: A Critical Analysis

MGNREGA: A Critical Analysis


  • The primary objective of MGNREGA was to enhance livelihood security in rural areas along with creating of durable assets such as building roads and canals.
  • The scheme was ranked as the world’s largest public works programme by the World Bank in 2015. The scheme provides a social security net for 15 per cent of our country’s population.

Importance of MGNREGA:

  • The objective of the Act is to enhance 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.
  • MGNREGA is to be implemented mainly by gram panchayats (GPs). The involvement of contractors is banned. Labour-intensive tasks like creating infrastructure for water harvesting, drought relief and flood control are preferred.
  • MGNREGA stands out in its worker-centric legislation and stated emphasis on transparency and accountability. Several potentially progressive measures such as a real-time management information system have been put in place.

Funding the implementation of MGNREGA:

The central Government bears the cost on the following:

  • The entire cost of wages of unskilled manual workers
  • 75% of the cost of material, wages of skilled and semi skilled workers
  • Administrated expanses as may be determined by the central government, which will include, inter alia, the salary and allowance of the programme officer and his supporting staff and work site faculties.
  • Expanses of the central employment Guarantee council

The state government bears the cost on followings:

  • 25% of the cost of material, wages of skilled and semi-skilled workers
  • Unemployment allowances payable in case the state government cannot provide wage employment on time.
  • Administrative expenses of the state employment guarantee council.

 The success of MGNREGA:

  • During Financial Year (FY) 2015-16, 235 crore Persondays were generated which was the highest compared to the previous ve years. During FY 2016-17 so far, 4.8 crore households were provided employment in 142.64 lakh works.
  • Out of the total employment, 56% have been generated for women. This is the highest ever participation of women since inception of the programme.
  • On an average, 25 to 30 lakh works were completed every year (till FY 2013-14). On the contrary, 51.3 lakh works have been completed so far in current FY 2016-17.
  • For the first time since inception of the programme, Consolidated Guidelines for Water Conservation were drafted. Mission Water Conservation – Planning and monitoring Framework for Natural Resource Management (NRM) related works under MGNREGA in convergence with Pradhan Mantri Krishi Sinchayee Yojan (PMKSY) and Integrated Watershed Management Programme (IWMP) has been prepared for scientific planning and execution of water management works with the use of latest technology is the focus area of the Ministry.
  • Geo-MGNREGA is a path breaking that uses space technology for geo-tagging all assets created under MGNREGA for improved planning, effective monitoring, enhanced visibility and greater transparency. The initiative was implemented in FY 2016-17, and so far, nearly 65 Lakh assets have been geo-tagged and made available in the public domain.

Present Concerns in MGNREGA:

  1. Insufficient budget allocation:
  • Increase in nominal budget but actual budget (after adjusting inflation) decreased over years.
  • Though allocated 55,000 crore, the actual value of budget allocation of 2018-19 is much lower than that of 2010-11.
  • In 2018, Rs 7,000 crore has been allocated from “Extra Budgetary Resources (EBR)”. Annual outlay remains same as 2017-18.

2. Recent Budget (2019-2020)

  • Interim finance minister Piyush Goyal announced in the Lok Sabha during his interim budget presentation on Friday that the government has allocated Rs 60,000 crore for the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA) for the financial year 2019-20.
  • However, data shows that the announced allocation is 1.8% less than what was given for the 2018-19 financial year.

3. Shift to Supply-driven programme:

  • The Centre through the arbitrary “Approved Labour Budget” has reduced the number of days of work and put a cap on funds through the National Electronic Fund Management System
  • According to Ne-FMS guidelines, states won’t be allowed to generate employment above the limits agreed by Approved labour Budget.
  • This has made the programme supply-driven

4. Poor wages rate:

  • Stagnation of wage rate due to delinking MGNREGA wage rates from Minimum Wages Act, 1948
  • MGNREGA wages are lower than minimum wages in most states
  • This could push marginalized section to take up vulnerable and hazardous jobs


5. Delay in wage payments:

  • As of 2016-17, total amount of wage pending is Rs. 11000 crore
  • In current financial year, 25% of Funds Transfer Order (FTOs) pertaining to wage payment from January to April is pending to be processed by Centre.

6. Gram Rozgar Sevak:

  • The gram rozgar sevak, the backbone of the entire scheme, who works part-time, living in the same village, does not get paid on time.
  • The technical assistants who make site visits are inadequate in number. The process of planning, which has to prepare works ready to use so that they can be on the shelf, so to speak, when demand arises, falls short.

7. Even though the scheme aims at providing 100 days of guaranteed employment, below 50 days of employment was actually provided on an average at an all-India level in FY 18. None of the states were able to provide full 100 days employment as mentioned in the scheme, as per extracts from the latest RBI annual report.

  • As per the official numbers available on the MGNREGA website, in FY18 average days of employment provided per household was 45.77 which was only 46 in FY17 and 40.17 days in FY15.
  • A recent study have found that data manipulation in the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is leading to gross violations in its implementation.

Key findings of the study

  • It was found that this year, the employment generated was about 33% lower than the registered work demand, and last year, about 30% lower.
  • After 99% of the original allocation got exhausted earlier this month, 250 Members of Parliament and citizens wrote to the Prime Minister, following which the Centre’s revised allocation now stands at a paltry ₹61,084 crore.
  • Despite this revision, 16 States still show a negative balance which shows the continued lack of funds.
  • Further, the Centre’s oft-repeated claims of the “highest ever allocation” are dubious and meaningless because if the allocation does not honour work demand, as is the case here, it is a violation of the Act.

Government’s manipulation of data causing more problem

  • Contrary to the Central government’s claims of there being more than 90% payments on time, the study found of more than 9 million transactions that only 21% payments were made on time in 2016-17.The trend continued in 2017-18.
  • Further, the Central government alone was causing an average delay of over 50 days in the disbursement of wages to labourers.
  • The mandate is to pay wages within 15 days else workers are entitled to a delay compensation.
  • While this delay by the Central government (called stage 2 delays) is captured in the system, it is intentionally suppressed to avoid paying delay compensation which is another violation of the Act.


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-utilised. For example, in 2010-11, 27.31% of the funds remained unutilised. The Committee recommends that the Department of Rural Development should analyse reasons for poor utilisation 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 mis-utilisation 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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5 years ago

Interesting article. But, there’s more to it. All the wages of MGNREGA are paid through Gram Dhak Sevaks (GDS) in postal department. Central govt paya about 8% as service charge to postal department. From this GDS employees who are supposedly called as part time employees with no benefits of health and salary less than 15000/month. They are made to make payments to all the people benefited under MGNREGA without any incentive or extra pay. How can such issues be addressed?

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