Issues, challenges and prospects in MGNREGA

Context:· While West Bengal is currently in the spotlight due to alleged irregularities in the Mahatma Gandhi National Rural Employment Scheme (MGNREGS) implementation, resulting in funds being stopped by the Centre, the National Level Monitoring (NLM) reports available with the Union Ministry of Rural Development show irregularities in implementing the rural job guarantee scheme across several states.

Now the question arises, why do we cover this?

Because UPSC syllabus of GSII has these lines:

  • Government policies and interventions for development in various sectors and issues arising out of their design and implementation

Since MGNREGA is also one of the important schemes of the government, we need to cover it.

So the way we will approach this discussion is:

  • Past employment schemes in our country
  • Issues with these past wage employment programs:
  • Benefits
  • Issues with MGNREGA
  • Steps taken by the government in trying to resolve the issue:

We are going to cut the details about the feature of the scheme in this discussion because that has already been covered multiple times in our DNS

The extent of India’s poverty can never be overstated

  • The Global Multidimensional Poverty Index-2023: India still has more than 230 million people who are poor.
  • As per Tendulkar Committee this estimation is around 21.9% of the total population of the country.

And a major contributor towards this is lack of Employment opportunities in our country.  For which the governments have run various schemes from time to time, like:

Past employment schemes in our country

  • Integrated Rural Development Programme (IRDP):
  • Jawahar Rozgar Yojana/Jawahar Gram Samriddhi Yojana:
  • Sampoorna Gramin Rozgar Yojana (SGRY)

But these schemes were not very successful as they faced following Issues


  • Funds were not fully utilized
  • Untimely release
  • Inability of the states to raise the matching contributions

Lack of planning

  • Very low coverage area (less than 5% villages across country)
  • Allocation was disproportionately tilted towards capital acquisition
  • Serious flaws in project selection which had adverse impact on usability of the asset.

Lack of people’s participation

  • No involvement of people in planning and implementation
  • Limited role of Panchayats
    • Only minimally involved in implementation but totally out of planning stage 

Lack of inclusive ness

  • Participation of women was very low

Hence a need was felt for a total reform in the way we look at the employment schemes

Then came MGNREGA

It marked a paradigm shift

  • Provides assured employment for hundred days to rural household.
  • Uniqueness
    • Focus on the word “GUARANTEE”
    • This was the first time that employment was legally recognized as a right


1. Poverty and Unemployment Reduction:

a. Obviou

Direct payment

b. Not obvious

In many states, up to half of the MGNREGA income was spent on food, which improved health and nutrition — a critical factor in a country plagued by malnutrition.

  • Increase in agricultural wages and enhanced bargaining power of the rural poor.

2. Vulnerable section upliftment

a. Women Empowerment/ Gender bias in wage removed:

MGNREGA has been a critical source of income for female-headed households, providing as much as 15 percent of the household income in some states.

b. Backward classes

Since only the most needy sought work under this Act, it was an accurate self-targeting scheme, with a major proportion of the beneficiaries — much higher than their percentage in the general population — belonging to Scheduled Castes/Scheduled Tribes and other marginalized communities.

3. Migration reduction

There has been a drastic reduction in DISTRESS migration post MGNREGA from rural areas.

4. Asset creation benefits (Benefits for Economy)

Scheme has boosted agricultural productivity through development of wasteland/fallow land, and construction of post-harvest storage facilities and work sheds.

Additionally, the studies have revealed a significant reduction in water vulnerability index, agriculture vulnerability and livelihood vulnerability.

MGNREGA has also had a multiplier effect on the rural economy, with the additional purchasing power generated from it spent on items produced in the rural economy

The studies reveal that, far from being a wasteful expenditure, the works under the MGNREGA have helped create rural assets and infrastructure, ranging from anganwadis, toilets for individual households, crematoria, cyclone shelters, and playgrounds for children, to drought-proofing, flood protection and control, water conservation and harvesting, and rural road connectivity.

Hence it was meant to not only enhance the income of the people in short term by providing employment, but it also intended to create durable assets.

Issues with MGNREGA (ARC)

Shift towards universalization and entitlements

  • Guaranteeing reach
    • Becomes difficult because of legal guarantee and seasonality of unemployment (explain agro cycle)
    • This becomes even more difficult because there is no selection criterion of beneficiaries (only BPL)
  • Hence successful implementation requires understanding of
    • region specific labour demand
    • seasonal variation in labour demand
    • This has been lacking
  • Guaranteeing outcome
    • Two outcomes are expected from MGNREGA
      • Sustainable livelihood for poor
      • Creation of durable assets
  • Ensuring Convergence
    • Multiple flagships run parallelly which have almost the similar target group and aim
      • For Example: PMAY asset + Employment
    • This creates duplicity of efforts
    • There is a need for a holistic integrated development plan at the local level.

Funding by the union and execution by the state government

  • Fund flow
    • The implementation of MGNREGA is mainly done on the funds transfers from the center which requires a great deal of two way communication from local level (demand flow) to centre (fund flow)
  • Conflict 
    • Since the funding agency and executing agencies are different, this leads blurring of accountability.
    • There is a need to delineate the accountability through institutional mechanism. 

Centrality of local governments

  • Panchayati Raj Institutions have been given the responsibility of
    • planning
    • implementation
    • Social auditing
  • However, given the track record and capacity levels of the PRIs across the county, there is a need for capacity building.

Administrative and Intuitional arrangements

  • Leakages
    • Have become a common feature in MGNREGA
    • There have been large scale association of contractors and fabrication of muster rolls.
  • Transparency
    • In most cases there is lack of transparency in the way
      • Beneficiaries are identified
      • Identification of work
      • Preparation of estimates
    • There is also lack of community participation in any stage which perpetuates the opacity.

Issues related to wages

Two different rates and their clash:

  • While the minimum wages are fixed by the states, NREGA wages are fixed by Central Government; this creates a conflict because these wages are below minimum wages in many states.
  • So, states demand that central government should fix the wages above their minimum wages. But since, any such increase would put financial pressure on the centre; this has become a centre-state tussle for last few years.

Wrong Anchor

  • The Centre has linked the wage rates to CPI-Agri Labour. However, it is thought that this index does not provide a comprehensive picture of inflation in rural areas.

Delay in wage payments

  • Supreme Court has slammed the government many times for not giving compensation to workers for delayed payment of wages under MGNREGA even during the current drought.

Reduces the availability of agricultural and industrial labour

  • The MGNREGA has altered the power balance between the landless poor and their employers (agricultural landlords, labour contractors), making it less loaded in favour of the latter; two, by raising rural incomes, it has decreased distress migration to the cities, thereby reducing the numbers of the reserve army of labour, and increasing the cost of labour.
    • For ex: Prevented migration of cheap agricultural labour to Punjab, Haryana and thus, inflation in agricultural produce. Shortage of construction workers in metro cities.

Quality of assets:

  • the assets created by MGNREGA works are of poor quality; that the money would be better spent on skill-development; that promoting economic growth and private investment is the only way to battle rural poverty, etc.
  • Most of the assets made are not durable and thus donot reflect properly on our GDP growth.

Social audits not being conducted.

  • CAG submitted report on MGNREGS Social Audit Rules, 2011, according to which: 
    • Only 51% of the gram panchayats were covered for social audit across the 25 states.

Steps taken by the government in trying to resolve the issue:

  • Transparency in Implementation
    • Management Information system
    • Social Audit
    • Dist. Level ombudsman
    • Transparency in execution of work (uploading three photographs)
    • Proactive disclosure

Initiatives of the Government to strengthen the implementation:

  • Professional staff at gram panchayat level
  • MGNREGA audits of scheme rules

Focus on IAP districts

  • To lay special focus on backward areas.
  • Addition of 30 new works (Watershed, Irrigation and Flood management works, Agricultural and Livestock related works, Fisheries, Rural Drinking water and Sanitation related works)
  • NREGAsoft:
    • Link the scheme with Skill India to prevent recurring of MNREGA activities in same areas.
    • Allow migration for people and MNREGA benefits can be linked all across India using Aadhar
  • Geo Tagging
    • Geo-tagging can help track the location and development status of, say, a pond or a bridge, funded by MGNREGA and located in any of India’s 6 lakh villages. 

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