MNREGA: TRANSFORMING RURAL EMPLOYMENT IN INDIA – ACHIEVEMENTS, CHALLENGES, AND THE WAY FORWARD

What is the MNREGA?

The largest employment generation program in the world, MNREGA (the Mahatma Gandhi National Rural Employee Guarantee Act)[1] guarantees every rural adult 100 days of employment every year. Wages are disbursed no later than one night after the performed work, and workers are entitled to compensation for delays in payment and unemployment allowance if work cannot be provided within fifteen days. At a time when employment and poverty statistics remain a significant concern for India, the Act ensures that workers are legally entitled to employment. The MNREGA is an ‘Employer of Last Resort’ program ‘at a basic wage for those who cannot otherwise find work.’ (Wray, 2007)

MNREGA aims to support vulnerable groups by providing employment, reducing poverty, boosting the market wage rate, and alleviating the need for rural-urban migration.

What the MNREGA has accomplished

Inclusion of women and minorities

Despite a thirty-year decline in India’s female labour force participation rate, women consistently make up over half of MNREGA workers. In 2020-21, 53% of MNREGA workers were women - an increase of 36 percentage points over the last fifteen years.

Over the last ten years, more than 35% of MNREGA workers have been from marginalized communities including Scheduled Caste (SC) and Scheduled Tribe (ST) households. Days of employment provided to SC and ST households has been ‘greater than their proportion in the population’ in all states except Jharkhand, Tamil Nadu and Uttarakhand in 2019-20 (Narayan, 2022). MNREGA offers a stable, viable source of employment to marginalized castes with high rates of landlessness: the India Human Development Survey II estimates a 38% reduction in poverty in Dalit homes and a 28% reduction in poverty in Adivasi homes as a result of the MNREGA.

Narayan writes that ‘NREGA is one of the few government avenues’ where women receive the same wages as men (Narayan, 2022). Since MNREGA sites are within 5 km of their houses and provide childcare, women find the prospect more manageable with other household duties.

Agricultural labor markets

At the time of the introduction of the MNREGA, agricultural labor markets were ‘characterized by surplus labour, low wages, high male-female wage differentials, and non-implementation of statutory minimum wages’ (Reddy et al. 260). The advent of the NREGA in 2005 created a more competitive labor market, pushing agricultural wages higher and reducing the wage male-female wage differential.  The reduction of labor surplus has improved wages in non-agricultural markets as states adapted and provided MNREGA work in off-seasons so that agricultural workers could work year-round. Relatedly, reports show MNREGA’s impact in decreased distress migration to cities. (Reddy et al., 2014).

Where the MNREGA could improve

Lack of sufficient opportunities

The India Human Development Survey II indicated that nearly 70% of poor households ‘were unable to receive any NREGA employment between 2004–2005 and 2011–2012,’ a large failing for a scheme designed to provide accessible employment. There remains a significant shortfall, with increased demand and a reduced budget.

Low wages, delayed payments

In 17 of 21 states, reported MNREGA wages are less than minimum wages, severely impacting the viability of MNREGA jobs. Compounding this are administrative issues leading to extended and chronic delays in payment of wages. In 2017–2018, 57% of wages were not paid on time and in 2019–2020, Rs 10,000 crore ($1.3 billion) were pending as wages, material and administrative costs due to inadequate budgets, according to the Critical Evaluation by the Standing Committee on Rural Development and Panchayati Raj (SCRDPR) in 2022.

Corruption

Well-known roadblocks of MNREGA efficacy are leakages and biased job provisions. One Shankar and Gaiha’s 2013 study identified political affiliation as an important factor in the MNREGA hiring process. Das’s 2015 study focusing on West Bengal ‘found that politically active households with  supporters of the local ruling party were more likely to receive the benefits of the MGNREGA.’

How the MNREGA can reach its potential

SCRDPR’s 2022 Critical Evaluation of Mahatma Gandhi National Rural Employment Guarantee Act  noted a consistent shortfall in budget, bureaucratic bottlenecks; high levels of unspent balances; delayed wages; and low real wages. The Committee’s recommendations to the government include:

• budget allocation proportional to the needs of each state
• smoother and more coordinated action between the Center and State
• inflation-linked and uniform country-wide wages[2] to match increasing costs of living
• increase in the number of days of MNREGA employment
• more robust monitoring mechanisms and stricter adherence to social audits.

The MNREGA has been studied so extensively that it would not be hard for India’s central government to create a roadmap and implement changes for the better. The government must act concertedly to increase MNREGA’s transparency and accountability mechanisms, and adequately support the states’ implementation. With high youth unemployment and climate shocks  causing further distress in rural landscapes, MNREGA’s programs remain vital.

[1]MNREGA, MGNREGA and NREGA refer to the same Act. NREGA was amended in 2007 to become MNREGA/MGNREGA.

[2]The practicality of a uniform country-wide wage is slightly ambiguous, given the differences in minimum wages and costs of living across states.

Mahathi Gottumukkala is a student of the Global Human Development Program (Class of 2025) at the Georgetown University in Washington.