Relevance of MGNREGA

Relevance of MGNREGA

This is a guest blog written by Aneesh Karkhanis on an important subject of MGNREGA. He has briefly analyzed the pros and cons of the scheme and given his recommendations on the subject. 


“Mahatma Gandhi National Rural Employment Guarantee Act” (MGNREGA), is an Indian labour law and social security measure that aims to guarantee the ‘right to work’. 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 came into force on 2 February 2006 covering only the 200 poorest districts of the country and was expanded to cover all rural areas of the country from April 2008. This is the largest program of its nature for providing employment in rural areas anywhere in the world. 


In the short span of 10 years that the Act has been in existence, it has generated 19.86 billion person-days of employment benefitting 276 million workers, with more than half the jobs going to women workers and almost a third to members of scheduled castes and scheduled tribes. It played a vital role in the acceleration in wage rate growth after 2008, directly through upward pressure on wages and tightening of the supply of casual labour to the market and indirectly through the pressure on the state governments to increase minimum wages. However, the relevance of MGNREGA in rural areas goes beyond its success in creating public employment and its impact on wages. MGNREGA has a major hand in revitalizing the labour market in rural areas.


The UPA, which is credited with the legislation of the Act, was also responsible for the programme losing steam after 2010. There was a cutback in funds allotted for MGNREGA. As is true for all such schemes there has been rampant corruption. The assessed figure of ‘leakage’ (money not reaching the intended purpose) varies from 25% to 48%. There have been doubts about the utility of the assets created or work undertaken under the scheme. Delays in payment of wages under MGNREGA are well known and have deterred people from working under it. The role of the scheme in poverty is alleviation is a suspect.

Current Status

PM Modi was an open critic of MGNREGA. The current NDA government is persisting with the scheme because it does not want to be seen as anti poor, but also because a realization has dawned that the idea of MGNREGA is good and the problems have been in execution. However, in the last two budgets of the government has failed to increase the allotted funds for MGNREGA. There have been hardly any efforts to address the issues of delay in wage payments. With intended use of ‘Smart Cards’ leakage reduction is expected.

 Future of MGNREGA

The rebound in demand for work from MGNREGA is a clear indicator of the need of MGNREGA. More so in a situation of rural economic distress due to back-to-back droughts and declining agricultural incomes. The scheme is very much needed. The following needs to be done:

  • MGNREGA should be continued.
  • Use of modern technology to drastically reduce leakages.
  • Assets created should improve water conservation, irrigation and directly assist in farming and improving the rural economy.


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