Executive Summary:

The Mahatma Gandhi National Rural Employment Guarantee Act 2005 (MGNREGA) is a flagship program aimed at providing livelihood security to rural households in India. The primary goal is to enhance the livelihood security of the rural poor through generation of wage employment opportunities in works leading to the creation of durable assets. While the scheme has been instrumental in alleviating poverty and developing rural infrastructure, it continues to grapple with challenges such as delayed wage payment, insufficient fundings, and poor implementation. This policy brief highlights these critical issues and proposes actionable measures to enhance the effectiveness and impact of MGNREGA.

Background:

Launched in 2005, MGNREGA guarantees at least 100 days of guaranteed wage employment in a financial year to every rural household whose adult members willing to engage in unskilled manual work. In Addition to providing livelihood security, the scheme aims to establish a durable and productive rural asset base. Furthermore, it seeks to empower socially disadvantaged groups, particularly women, Schedule Caste (SCs), and Scheduled Tribes (STs), through the framework of right-bases legislation.

Key Features:

1. Gives legal guarantee of wage employment to the adult members of rural households who are willing to do unskilled manual labor subject to a maximum of 100 days per household.
2. Applicable for all villages in the district. Every rural household has the right to register under MGNREGA. The work shall be provided within 5 kms jurisdiction from the village
3. Job cards issued to every household registered under MGNREGA. Job cards issued within 15 days from the date of receipt of application for the job card registration
4. The registered job card holders can seek employment by giving a group / individual application. A minimum of 10 job seekers shall apply to sanction a new work under MGNREGA.
5. Employment provided by sanctioning one of the works under “Shelf of Works” as identified and prioritized by the village community within 15 days from the date of receipt of applications for providing employment under MGNREGA
6. State Govt. to pay 25% of minimum wage for the first 30 days as compensatory daily unemployment allowance on failure to provide employment for the families demanding the works under MGNREG Act, and ½ of wage for remaining period of the year
7. Wages are paid according to State Minimum Wage rate notified under Minimum Wages Act 1948. Equal payment for men and women and wages to be paid within a fortnight. 1/3 beneficiaries should be women.
8. 60:40 wage and material ratio have to be maintained for all works undertaken under NREGA. No contractors and machinery allowed.
9. Grievance redressal mechanism to be set up for ensuring a responsive implementation process. The office of the Ombudsman is vested with the powers in order to redress grievances under MGNREGA

Key Issues:

1.  Insufficient budget allocation: MGNREGA’s effectiveness depends on a consistent flow of funds to states, but frequent delays in “mother sanctions” from the Central government have disrupted work during peak seasons. Over 80% of funds are typically exhausted within the first six months, and claims of “record allocation” are misleading, as they include pending liabilities from the previous year. The allocated budget remains inadequate for proper on-ground implementation
2.  Regular payment delays:  MGNREGA wage payments often face delays even after Fund Transfer Orders (FTOs) are signed, as the Management Information System (MIS) does not account for these delays or calculate compensation. Despite Supreme Court orders and government directives, no mechanism has been implemented to address full wage delays or ensure timely compensation. Consequently, the government’s claim of 92% on-time payments is inaccurate, with ground realities revealing frequent delays.
3. Low wage rate: MGNREGA wage rates in 17 states are lower than the respective state minimum wages, despite legal rulings mandating parity with agricultural wage rates. These inadequate wages discourage workers from participating in the scheme, allowing contractors and middlemen to exploit the system locally.
4.  Too much centralization weakening local governance: The centralization of MGNREGA through a real-time MIS-based system and centralized payment mechanism has sidelined Panchayati Raj Institutions, leaving them powerless in implementation, monitoring, and grievance redressal. This over-centralization has eroded local accountability and depoliticized the scheme’s implementation, diminishing its effectiveness at the grassroots level.

Recommendations:

1. Uniform wage rate: Wage rates notified under MGNREGA range from Rs 193 to Rs 318 in different states/UTs. This fluctuation in wage rates across states/UTs is not justified. It is recommended to devise a mechanism for a unified wage rate across the country.
2. Increase in wages commensurate with inflation: The Standing Committee on MGNREGA highlighted that MGNREGA wages, which are not indexed to inflation, discourage beneficiaries, leading them to seek better-paying work or migrate to urban areas. Despite recommendations to index wages to the Consumer Price Index (CPI)-Rural, this has not been implemented, contributing to low participation in the scheme. The Standing Committee has urged the Ministry to review its position and increase wages to make them more competitive.
3. Social audits: Under MGNREGA, the Gram Sabha must conduct regular social audits of all projects taken up within the Gram Panchayat.
4. Increase in number of days of work: Under the scheme, state governments can ask for 50 days of work, in addition to the guaranteed 100 days, in case of exigencies arising from natural calamities. The scheme should be revamped to meet the challenges in the wake of COVID-19. It recommended increasing the guaranteed days of work under the scheme from 100 days to 150 days.
5. Appointment of ombudsperson: Under the Act, there should be an ombudsperson for each district who will receive grievances, conduct enquiries, and pass awards.

References:

Salient Features of MGNREGA Official website of State Rural Employment Society, Government of Meghalaya, India. (n.d.). https://megsres.nic.in/salient-features-mgnrega

Debmalya Nandy, & Debmalya Nandy. (2018, November 5). MGNREGA is failing: 10 reasons why. Down to Earth. https://www.downtoearth.org.in/economy/mgnrega-is-failing-10-reasons-why-62035

Mahatma Gandhi NREGA. (n.d.). https://nrega.nic.in/MGNREGA_new/Nrega_home.aspx