Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) – Role During Pandemic

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The year 2020 saw an unprecedented return of migrant workers to rural India during the lockdown. This has increased the pressure on the already stressed rural employment scheme MGNREGS. However, 2020-21 budget allocation for MGNREGS is inadequate to meet the demand, as it is much lower than the revised estimates of FY21.


This topic of “Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) – Role During Pandemic” is important from the perspective of the UPSC IAS Examination, which falls under General Studies Portion.

What is MGNREGA?

  • Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005 provides legal guarantee for 100 days of employment during every financial year to adult members of any rural households who are willing to do public work-related unskilled manual works at the statutory minimum wage.
  • This Act also provides 150 days of work to the SC/STs during non-agricultural seasons.
  • Its entire implementation is monitored by the Ministry of Rural Development in association with the State Governments.
  • About one-third of the stipulated workforce under this scheme is reserved for women.
  • The employment under this scheme will be provided within a radius of 5 km. If it is above 5 km, extra wages will be paid by the government.
  • Within 15 days of applying or from the day the work is demanded, wage employment will be provided to the applicant.
  • The applicants should receive wages within fifteen days after the work is done.
  • In case the employment is not provided within 15 days of submitting the application or from the date when the work is sought, the individual has the right to get unemployment allowance.
  • Gram Sabha is the principal forum for the wage seekers to raise their voices and make demands.
  • Also, it is the Gram Sabha and the Gram Panchayat approve the works under MGNREGA and fix their priority.
  • This scheme focuses on the following aspects:
  1. Economic and social empowerment of women
  2. Providing “Green” and “decent” work for the beneficiaries
  3. Addressing climate change vulnerability and protecting farmers from such risks.
  4. Conservation of natural resources
  • Transparency and accountability are ensured by the mandatory Social Audit of MGNREGA.

Why is MGNREGA important?

  • MGNREGA is vital for addressing India’s current problems.
  • It boosts rural demand and ensure economic development of the rural population
  • It seeks to bridge the gap between the rich and the poor.
  • This Act aims to improve the purchasing power of the rural population by providing them primarily the semi-skilled or unskilled work, especially to those living below the poverty line.
  • This can help solve rural poverty, farmer suicides, unemployment crisis in rural areas etc.
  • Furthermore, it is a scheme that has the potential to undertake progressive measures like infrastructure development in rural India, improving agricultural productivity through labour-intensive, supportive projects related to water conservation, drought relief measures, flood control etc.
  • This Act is also highly significant because it allows for grass-root level development as it is implemented mainly by the Gram Panchayats (GPs). It does not allow the involvement of contractors so that the workers under this scheme are not exploited.
  • It also stands out in its worker-centric legislation with a high emphasis on transparency and accountability.
  • If the government supports this Act, then it can become the solution to the present-day problems like water scarcity, climate change etc.
  • It is demand-driven wage employment scheme that provides additional 50 days of unskilled wage employment during drought/natural calamities.
  • Section 3(4) of the Act allows states/Centre to provide additional days beyond the guaranteed period from their own funds.

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What are the present-day concerns in MGNREGA?

Implementation issues:

  • The Act continues to face widespread corruption and administrative negligence.
  • Technology-based, centralised, implementation has thrashed local accountabilities and has increased the leakages.
  • Studies and surveys regarding implementation of the MIS (Management Information System) have been found to be imperfect.

Insufficient budget allocation:

  • Over the past years, budget allocation has been lesser than the revised estimate.
  • The Centre had to allocate supplementary budgets for three straight years after original allocations were exhausted in the first few months of the respective financial years.
  • The supplementary allocations, however, are delayed and have slowed down work across the nation.
  • The work demands on MIS are far less than the actual needs and demands.

Denial of right to work:

  • Genuine work demands are not registered in most regions and dated receipts are not provided.
  • Moreover, the people also do not get work under MGNREGA despite being in need of it as adequate schemes are not opened by the local administration.
  • In some areas of certain states, MGNREGA work opens only during specific seasons and time.

Inadequate wages:

  • The efforts to provide dignified wages have been insufficient and the scheme hasn’t been receiving adequate resource allocation.
  • Agricultural minimum wages exceed MGNREGA wage in almost all states.
  • Workers across the nation have been demanding higher wages in accordance with the Seventh Pay Commission but to no avail.
  • Different committees constituted by the Centre vouched for higher MGNREGA wages, but they have been ignored.
  • The recent central committee for fixating of the national minimum wage had recommended that the national minimum wage should be fixed by Rs 375 per day.
  • However, the Centre had stated that the national minimum wage will not apply to MGNREGA and will be governed by its own law.
  • There are also instances of unlawful denial of payment of minimum wages to the workers.

Issues with Aadhaar:

  • The use of Aadhaar in payments arises once pay orders are sent to the Centre and wages are released centrally through electronic payment system via Aadhaar-based DBT.
  • Prior to the signing of the payment order, there are multiple reasons for the payments being delayed due to local administrative lapses.
  • Many genuine job cards have been deleted due to the hierarchal pressure in implementation of Direct Benefit Transfer while the “ghost beneficiaries” only constituted 1.4% of the total JC holding households as of 2016-17.
  • MGNREGA payments worth more than Rs. 1000 crore has been rejected citing “inactive Aadhaar” from 2015-16 to 2018-19.
  • Aadhaar does not provide a solution for these implementation and delivery flaws.

Payment delays in MGNREGA:

  • Definition of the MGNREGA payments is complex. The government has divided the payment process into two stages:
  1. Stage I is considered to be the set of processes until the local authorities functionaries sign electronically generated pay order.
  2. Stage II is when the Centre credits wages into the accounts.
  • The MIS in MGNREGA does not account for the stage II delays and shows misleading figures of on-time payments.
  • So, while ideally a delay can be calculated if wages are not credited to workers’ accounts in 15 days, the delay on part of the Centre is not really accounted.
  • The Union Government was directed by the Supreme Court to show delays in both stages in the official website.
  • The Centre, however, recently included a report “Stage II tracking” on the website, which does not show the delay but only provides pending transaction data. This information is already revealed by several other reports.


How did MGNREGA help during the COVID-19?

  • MGNREGA not only prevented rural to urban migration but also provided employment opportunities to migrant labourers who returned to their villages due to the pandemic lockdown.
  • There is an increase in demand for jobs under this scheme as well as a rise in spending by the government.
  • The maximum demand for MGNREGA work came from UP, Rajasthan, MP, Bihar, Jharkhand and Odisha, which have large number of migrant returnees.
  • There was also a rise in the number of households utilising this scheme.
  • A total of 02 crore households and 10.25 crore individuals benefited from this scheme amid the pandemic. This is the highest in last four years.
  • The average per day wage rate for unskilled work under this scheme increased by 10% from Rs.182 in 2019-20 to Rs.200 for 2020-21.
  • Thus, it is evident that this scheme came as a boon amid the pandemic-induced economic crisis.

What is the budget allocation for MGNREGA amid COVID-19?

  • The Central government had released 90,111.99 crore under the scheme for the current fiscal year.
  • As of January 2021, Rs.86,933 crore was spent and 313 crore man-days were generated under MGNREGA for 2020-21.
  • The budgetary estimate for 2020-21 was Rs.61,500 crore.
  • The budget allocation for 2021-22 for this scheme is 73,000 crore. This is 34.52% less than the Revised Estimate of Rs.1.11 lakh crore for 2020-21.

Is the 2020-21 budget allocation for MGNREGS sufficient?

  • Amid the on-going crisis, total person days generated had touched 4 billion. The budget has provided for only 2.7-2.8 billion days.
  • This reduces the number of person days in 2021-22.
  • This will lead to limited scope for employment and indefinite delays in wage payments.
  • The reduced funding would also mean increased pending liabilities. 15 states have already overspent their budget on this scheme. This in turn leads to demand suppression and refusal to provide work.
  • This results in decline in rural demand and growth.
  • However, the budgetary allocation does not affect the real expenditure as this scheme is demand-driven and the government is legally bound to guarantee 100 days of employment.

What can be the way forward?

  • It is evident that the jobs under MGNREGS can only be revived through:
  1. Adequate allocation of Budget funds
  2. Timely payment for workers
  3. Complete decentralisation of the implementation
  4. Improving entitlements (wages, compensations and worksite facilities)
  • Allocation for a year should include pending liabilities of previous years.
  • It should also respect the idea of the decentralised planning processes through Gram Sabhas across the country and allow adequate fund allotment as per labour budgets provided by each Gram Panchayats.
  • The government should come up with only one delay-payment report that accounts for the entire time taken and delays during the closure of muster roll and wages credited to workers’ accounts.
  • Also, the MGNREGA payment procedures should be simplified to ensure transparency and accountability.
  • Better coordination must be ensured among various government departments involved.
  • Better mechanism must be provided to allot and measure work.
  • Gender gap in wages under this scheme must be addressed. In this scheme, women earn 22.24% less than their male counterparts.
  • This inequality can be addressed by expanding the scheme further.
  • MGNREGA has been implemented for more than a decade now. It is necessary to understand its performance through output indicators like the number of workers, person days of work generated, quantum of assets completed etc.
  • The data collected can be used to compare inter-state and inter-district differences in performance.
  • In addition, MGNREGA must encompass provision for safe working conditions for the beneficiaries, like temperature checks, masks, hand washing facilities, proper hydration etc.
  • The MGNREGA’s potential in the post pandemic world relies on:
  1. Implementation capacity of local administration
  2. Capacity of village panchayat
  3. Quality asset creation to boost local agrarian economy
  • The increased demand for MGNREGA underscores the dire situation in the rural India.
  • Generating rural employment and increasing credit accessibility is a need of the hour.
  • Schemes like MGNREGA and PM-KISAN (direct cash transfer to farmers) need sufficient budget allocation for addressing the rural crisis. Both these schemes saw lesser budget allocation for 2021-22.


MGNREGA is playing a critical role in providing economic security for the rural population amid the COVID-19 crisis. Therefore, the government must take steps to ensure that it is made use of to its fullest extent to address the current economic problems and bringing the economy back on track.

Practice question for mains:

Critically examine the potential of Mahatma Gandhi National Rural Employment Guarantee Act’s potential in reviving the Indian economy in the post-COVID era. (250 words)

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The critical analysis is missing the positive aspects of the MNREGA and latest government interventions to improve the performance of the scheme. For example activities like geotagging, linkage with Aadhar and implementation of DBT could be given as example. Also analysis could have included the idea behind the low allocation of the funds compare to earlier year which is that government is focusing more on the skilled labour, which is also need of the hour. Also the suggestion to include some additional skilled labour jobs ( government has converged the SBM with MNREGA for toilet construction) under MNREGA could be… Read more »

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