NATIONAL RURAL EMPLOYMENT GUARANTEE ACT

1. Introduction

Evolving the design of the wage employment programmes to more effectively fight poverty, the
central government formulated the National Rural Employment Guarantee Act (NREGA, it is the
largest work guarantee programme in the world. It was passed unanimously in the Lok Sabha on
23 August 2005. As per an amendment to the Act, the words ‘Mahatma Gandhi’ were prefixed to
National Rural Employment Guarantee Act. MGNREGA provides employment to those who
demand it and it is a paradigm shift from earlier programmes. It aims at enhancing livelihood
security by providing at least one hundred days of guaranteed wage employment in a financial
year to every household whose adult members volunteer to do unskilled manual work. It also
aims at addressing causes of chronic poverty through the 'works' (projects) that are undertaken,
and thus ensuring sustainable development. There is also an emphasis on strengthening the
process of decentralisation through giving a significant role to Panchayati Raj Institutions (PRIs)
in planning and implementing these works.

The act covered 200 districts in its first phase,implemented on February 2, 2006 and was
extended to 130 additional districts in 2007-2008. All the remaining rural areas have been
notified with effect from April 1, 2008. At present it covers all districts of the country with the
exception of those that have a 100% urban population. The Ministry of Rural Development
(MRD), Govt of India, monitors the entire implementation of this scheme in association with
state governments. As of January 2, 2020, it has enabled the generation of 29.88 billion person
days of work at a total cost of Rs.5633 billion (2018-19) at the cost of Rs.189.5/person day.

2. Key Features of the Act

Under the law, any adult willing to do unskilled manual work at the minimum wage is entitled to
being employed on public works within 15 days of applying. If work is not provided within 15
days, he/she is entitled to an unemployment allowance.

● The Details of the Guarantee

a) Eligibility : Any person who is above the age of 18 and resides in rural areas is
entitled to apply for work.
b) Entitlement : Any applicant is entitled to work within 15 days, for as many days
as he/she has applied, subject to a limit of 100 days per household per year. At
Least one third beneficiaries have to be women.
c) Areas : The act applies to rural areas only and not urban areas.
d) Procedure for Application : The workers have to register with Gram Panchayat
and then have to apply for work. Registration is required once in five years,
applications for work have to be submitted each time work is required. After
 registration the Gram Panchayat issues a job card. Job cards maintain a record of
the number of days worked, the wages received and the unemployment allowance
received. Applications for work can be submitted to the Gram Panchayat or the
programme officer.
e) Distance : Work is to provided within a radius of 5 kilometres of the applicant’s
residence if possible and in any case within the block, if work is provided beyond
5 kilometres, travel allowance have to be paid
f) Wages : Workers are entitled to statutory minimum wage applicable to
agricultural labourers in the state unless and until the centra; government
“notifies” a different wage rate.
g) Timely Payment : Workers are to be paid weekly or in any case not later than a
fortnight. Payment of wages is to be directly made to the person concerned in the
presence of independent persons of the community on pre-announced dates.
h) Unemployment Allowance : If the work is not provided within 15 days,
applicants are entitled to an unemployment allowance : one fourth of the wage
rate for the first thirty days and one half hereafter
i) Worksite facilities : Labourers are entitled to various facilities at the worksite
such as clean drinking water, shade for periods of rest, emergency health care and
creche arrangements for young children

● The Employment Guarantee Scheme

a) Each state government had to put in place a rural Employment Guarantee
Scheme (REGS) within six months of the Act coming into force. While the act is
a national legislation the scheme is state specific. Each state is free to frame it’s
own Rural Employment Guarantee Scheme, it is subject to certain basic features
spelt out in schedule I. Each REGS is also supposed to follow the Operational
guidelines issued by the Ministry of Rural development

b) Permissible works : A list of permissible works is given in Schedule I of the act.

They are concerned mainly with 1) water conservation and harvesting , 2)
Drought proofing 3) irrigation canals including micro and major works 4)
Provisions of irrigation facility to land owned by those belonging to SC and ST ,
beneficiaries of land reforms and beneficiaries of Indira Awas Yojna 5)
renovation of traditional water bodies 6) land development, 7) flood control and
protection works 8) rural connectivity to provide all weather access. However the
Schedule also allows “any other work which may be notified by the Central
government in consultation with the state government”. The act also states that
the State employment Guarantee Council has create a list of “preferred works”
based on their ability to create durable assets
c) Implementing agencies : At the state level the scheme is to be implemented by
the state government with funding from the central government. REGS works are
 to be executed by “implementing agencies” these include first and foremost, the
Gram Panchayats but implementing agencies may also include other Panchyati
Raj institutions, line departments such as the Public Works Department or Forest
Department and NGOs. The Gram Sabha is expected to monitor the work of the
gram panchayat along with prioritising the works and conducting regular social
audits. At the district level the supervision is to be done by the District
Coordinator. The scheme is to be coordinated at the block level by a
“programme officer”. However the Act allows any of his/her responsibilities to
be delegated to the Gram Panchayats.
d) Contractors : Private contractors are banned
e) Decentralised Planning : A shelf of projects are to be maintained by the
programme officer, based on the proposals from the implementing agencies. Each
gram panchayat is also supposed to prepare a shelf of works based on the
recommendation of the gram sabha
f) Transparency and Accountability : The act includes various provisions for
transparency and accountability such as regular audits by the Gram Sabhas,
mandatory disclosure of muster rolls, public accessibility of all REGS documents,
regular updating of job cards etc. Further provisions are included in the
operational guidelines of the Ministry of Rural development. The Right to
Information Act is also also an essential tool for ensuring transparency and the
operational guidelines state that the RTI has to be followed both in letter and spirit
in all matters relating to NREGA

3. Additional Provisions of the Act

a) Participation of Women : Priority has to be given to women in the allocation of work,
“in such a way that at least one-third of the beneficiaries shall be women”
b) Penalties : The act states that “whoever contravenes the provisions of this act shall on
conviction be liable to a find which may extend to one thousand rupees”
c) State Council: The implementation of the Act is to be monitored by a “State
Employment Guarantee Council
d) Cost Sharing : The Central Government has to pay for labour costs and 75% of the
material costs. State Governments have to pay the the unemployment allowance and 25%
of the material costs
e) Time Frame : The act is to come into force initially in 200 district and is to be extended
to whole of rural india within five years of the enactment
4. Benefits of the Act
The 2014 iteration of the World Development Report published by the World Bank refers to the
MGNREGA as a stellar example of rural development.
● As an employment Guarantee Act, it has helped protect rural households from
poverty and hunger. Studies have revealed that the MGNREGA initiative has
reduced poverty and prevented many from falling into poverty. MGNREGA has
created work, boosted incomes and consumption expenditure especially during the
lean season. Studies have revealed an enhanced health quotient, improved food and
nutrient intake as a consequence of the employment programme.
● According to the National Council of Applied Economic Research (NCAER), this
scheme has played a vital role in reducing poverty among the poor as well as the
socially weaker sections (Dalits, tribals and marginal farmers).
● It has increased the wage rate in rural areas and has strengthened the rural economy
through the creation of infrastructure assets.
● As a social protection measure, the inclusivity of MGNREGA both in terms of
economic and social groups has been exemplary. The poorer among the poor sections
of society have been more attracted to the employment scheme. The participation of
Scheduled Castes and Scheduled Tribes has also been consistently high since its
launch.
● The design and the wage rates of the scheme encourages participation of women in a
significant way. Majority of the workers in MGNREGA sites are women, accounting
for about 52 percent of the workers consistently since the launch of the programme.
● MGNREGA’s inclusivity goes beyond SC/ST and women to accommodate the
differently-abled as well as the elderly by allocating tasks to them according to their
abilities. Several states have used MGNREGA to provide work for the differently
abled and the elderly. In the initial years, only a few states had specific guidelines
in place, but soon many states followed. These include states such as Madhya
Pradesh, Rajasthan, Tripura, Telangana, Andhra Pradesh, Tamil Nadu, and West
Bengal.
● It has strengthened PRIs by involving them in the planning and monitoring of the
scheme.
● Helped employ the people affected by Demonetization and GST (Goods and
Services Tax).
● Has rightly enforced the ‘Right to work’
● Since agriculture and its allied activities make up about 65% of the scheme, the
sector was benefitted

5. Limitations of the Act

● Delay in Payment of wages: Most states have failed to disburse wages within 15 days
as mandated by MGNREGA. In addition, workers are not compensated for a delay in
payment of wages.This has turned the scheme into a supply-based programme and
subsequently, workers had begun to lose interest in working under it. The past few
financial years have opened with a large balance of wage arrears- nearly Rs. 10,000
crores in 2019–20.
● Non-payment of unemployment allowance: There are a huge number of
unemployment allowances being shown in the MIS currently.
● Low wage rate: Currently, MGNREGA wage rates of 17 states are less than the
corresponding state minimum wages. Various judgements have upheld that the
MGNREGA wage rate cannot be less than the minimum agricultural wage rate of the
state.
● Inadequate Financing: This year’s allocation is the highest allocation for MGNREGA
in any year since the passage of the law. However, the allocation amounts to 0.47% of
the GDP continues to be much lower than the World Bank recommendations of 1.7% of
GDP for the optimal functioning of the programme. Due to lack of funds, state
governments find it difficult to meet the demand for employment.
● Workers penalised for administrative lapses: The ministry withholds wage payments
for workers of states that do not meet administrative requirements within the stipulated
time period
● The banking puzzle: The rural banks are highly de-capacitated in terms of staff and
infrastructure and thus always remain hugely crowded. The workers normally have to
visit the banks more than once to withdraw their wages. Often, the workers do not get
their wages during times of need due to the hassle and the cost involved in getting
wages from the bank.
● Faulty MIS data: The increase in corruption and weakening accountability has roots
in the excessive dependence of implementation of MGNREGA on technology (real-
time MIS being one of them). There is a growing pile of evidence on how real-time
MIS has made MGNREGA less transparent for workers, reduced accountability of
frontline functionaries and aided in centralisation of the programme.
● Large Number of Incomplete works: There has been a delay in the completion of
works under MGNREGA and inspection of projects has been irregular. Also, there is an
issue of quality of work and asset creation under MGNREGA.
● Lack of Manpower : Another issue is the deficiency of adequate administrative and
technical manpower at the Block and Grama Panchayat (GP) Levels, especially at the
level of programme officer, technical assistants, and Employment Guarantee Assistant
Level etc. The lack of manpower has adversely affected the preparation of plans,
scrutiny, approval, monitoring and measurement of works, and maintenance of the
stipulated records at the block and GP level.
● 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
● Discrimination : Cases of discrimination against women and people from backward
groups are reported from several regions of the countryIt has been reported that in some
regions only a few job cards are issued when the applicants are women, or there are
delays in the issue of cards. Women are sometimes told that manual labour under the
MGNREGA is not meant for women and they could not participate in ongoing works as
it entailed digging and removing soil. In some states, the powerful groups among the
work force get large number of job card

6. Conclusion : (make your own) (some points to help you)

● In such MGNREGA has provided a unique opportunity to people from rural

India to earn their own income without any discrimination of caste or gender.
The most remarkable feature of MGNREGA is that it pays women the same as
men, something that was virtually unimaginable in Rural India.
● Despite an acute funds crunch faced by the Mahatma Gandhi National Rural
Employment Guarantee Act (MGNREGA) scheme, the budgetary allocation for
the 2020-2021 financial year (FY) has only been increased marginally, from Rs
60,000 crore to Rs 61,500 crore. This increase, however, when compared with
the revised estimate of FY 2019-20, is actually 9.1% less.
● On 17 May, Union Finance Minister Nirmala Sitharaman announced an allocation
of an additional INR 400 billion for the scheme as a part of the INR 20,000 billion
economic stimulus package announced under the government’s “Atma Nirbhar”
(self-sufficient) campaign
● For the last few years, rural distress has been visible across India. There has
been a sharp rise in the number of people dependent on the rural employment
scheme for their sustenance. The Centre, right now, is on the verge of running
out of funds to run the scheme.
● The need of the hour is for the Government to place MGNREGA at the heart of
its strategy to tackle this economic emergency. The Economic Survey of 2019-
20 suggested that MGNREGA offers an early warning signal to detect rural
distress. It is time the Government started treating it as an instrument to alleviate
the consequences of rural distress.
● Large scale social security programmes like MGNREGA are subjected to
several stumbling blocks. Government and NGOs must study the impact of
MGNREGA in rural areas so as to ensure that this massive anti-poverty scheme
is not getting diluted from its actual path and to see that the disparity in terms of
socio-economic condition among people in rural and urban areas is reduced to
considerable extent.