G.J.I.S.S.,Vol.

6(6):8-12 (November-December, 2017) ISSN: 2319-8834

A CRITICAL ANALYSIS OF THE MAHATMA GANDHI NATIONAL RURAL

EMPLOYMENT GUARANTEE ACT (MGNREGA)
Dheeraj R P
Student, National law School of India University, Bengaluru, Karnataka, India

Abstract
Mahatma Gandhi National Rural Employment Guarantee Scheme (MNREGS) was introduced in 2006 by the
Government of India, with an objective of improving the livelihood security of the rural poor by providing
guaranteed employment for 100 days. This paper analyses whether this scheme has been able to achieve the
objective and looks into the question whether this scheme has caused development of the rural poor. The author has
concluded the paper by suggesting appropriate changes which must be incorporated to achieve the object of the
scheme effectively.
Keywords: MGNREGA, MNREGA, Rural Development, Rural Employment.

Introduction
Development of the rural household is very crucial for the development of India as a whole by inclusive and
equitable growth and doing so would unlock the potential of the huge rural household that are presently in a state
where there is no access to basic amenities and they are deprived of their basic needs to survive in this world and to
come out of this situation, the Government of India launched its flagship scheme ‘Mahatma Gandhi National Rural
Employment Guarantee Scheme (MNREGS)’ through the Mahatma Gandhi National Rural Employment Guarantee
Act, 2005 (hereafter ‘MNREGA’) in 2006, which provides 100 days of guaranteed work in a year to the rural
household. It is acclaimed to be the largest public works employment project in the world. 1 This act gives the adult
members of the rural family a legal right to demand for employment for at least 100 days in a year in public work
projects. This project was initiated with an objective of “enhancing livelihood security in rural areas by providing
at least 100 days of guaranteed wage employment in a financial year, to every household whose adult members
volunteer to do unskilled manual work”.2 The person applying for the work under this scheme has to be provided
with employment within 15 days of application,3 if the employment is not provided with in the stipulated time that
person would be entitled to unemployment allowance.4 The ultimate objective of this project is reducing poverty in
rural areas. The first phase of the implementation of this act covered over 200 districts in 2006 and in 2007 it was
extended to 150 additional districts and 2008 onwards all the rural areas were covered.
The salient features of the Act –
1. Right to Work – the Act gives the adult members of the rural household who are willing to work do
unskilled manual work right to work, which is consistent with Article 41 of the Indian Constitution which
directs the state to secure all the citizens ‘right to work’.
2. Time Bound Employment Guarantee – The Act provides for 15 day time period for providing employment
to an applicant, if the applicant is not provided with a job, he is entitled to employment allowance.
3. Guaranteed Minimum 100 days of wage employment in a fiscal year, per household.
4. Decentralized planning – Gram Sabhas are the main actors in this initiative. They are given powers to
recommend works and 50% of the works recommended by gram sabhas are executed. The planning,
implementation and monitoring is done by the PRI’s.
5. Worksite Facilities – The worksites where the employment is provided under this scheme has various
facilities such as crèche, drinking water, shades and first aid kits.
6. Women Empowerment – At least one third of the total members employed must be women.
7. Transparency and accountability – The accounts involved are audited on a monthly basis to ensure
transparency and the grievance redressal mechanisms have been employed.
8. Labour intensive works – At least 60 percent of the works are labour intensive and 40% are material
intensive.

1
Madalena Honorati et al, The State of Social Safety Nets 2015, WORLD BANK.
2
Preamble, The Mahatma Gandhi National Rural Employment Guarantee Act, 2005.
3
Section 5, The Mahatma Gandhi National Rural Employment Guarantee Act, 2005.
4
Section 7, The Mahatma Gandhi National Rural Employment Guarantee Act, 2005.

DOI: 10.24105/gjiss.6.6.1702 8
 9. Implementation – the state government is responsible for the effective implementation of this scheme.
Section 3 and 4 of this act creates an obligation on the state government to provide a minimum of 100 days
of guaranteed unskilled manual work to the rural household in a fiscal year.
10. Funding – 100% of the wages of the unskilled manual work and 75% of the material costs including the
wages of semi-skilled and skilled labourers are borne by the central government. 25% of the wages of the
semi-skilled and skilled labourers and 100% unemployment allowance is borne by the state government.
How providing employment of 100 days of unskilled manual work would alleviate the present situation of the
rural household is a question which must be looked into, but the government provides multiple hypothesised
mechanisms where the guaranteed employment in public work scheme like these will reduce poverty. Schemes like
the MNREGS provide minimum wages to those who work, which in turn increases the income of the rural people,
which will increase their purchasing power and will provide access to the basic amenities which they were deprived
off otherwise. To analyse whether the MNREGS caused development or not in the rural household, we must look
into the statistics which are available.

Analysis
Before analysing the MNREGS, we need to understand what poverty means and what does development of the
rural household mean.
Poverty can be defined as a situation where it forms a vicious circle of various factors like low income, poor
health, low calorie consumption, lack of education, lack of skills, employment, and job opportunities (not an
exhaustive list). World Bank has defined poverty as “pronounced deprivation in well-being” and also it has
emphasised that poverty has many other different aspects such as “low income, limited access to education and
health care, voicelessness, powerlessness, vulnerability, and exposure to risk”5which determine poverty.
Developmental Assistance Committee of the OECD defines poverty as “inability of the people to meet economic,
social and other standards of well-being.”6
What would the development of the rural household mean?
Development of the rural household may mean differently for different persons, for some it might be
development in terms of financial status, for some it might be development in terms of access to amenities such as
health care, education etc. But what the researcher in this paper is looking at the development in a different way.
Development of the rural household for the purposes of this paper would mean development in terms of income,
access to education, health care, job opportunities, access to basic amenities like clean water, shelter, clean and
sufficient food.
Whether MNREGS has been successful until now to bring about this development in the rural household is the
question which the researcher is seeking to answer in this paper (as per the data available to the researcher). The
researcher will be using the statistics and survey which was conducted by the International Crops Research Institute
for Semi-Arid Tropics (ICRISAT), Hyderabad and Gujarat Institute of Developmental Research (GIDR),
Ahmedabad in 2012-13.7
The MNREGA initiative has completed ten years and it’s the eleventh year in running now. The reach of this
initiative has been growing every year since its inception and it has provided nearly 90 crore rural house hold with
job cards since 2006 and out of those 90 crore household nearly 35% have demanded for employment and almost
98% of those who demanded for employment has been provided with one.8 From the year 2006-07 till 2014-15, on
an average 40 crore households have been provided with employment, averaging around 4.5 crores households
getting a job per annum, which is near to 30% of the rural household population in the country. 9
Six states namely Rajasthan, Tamil Nadu, Uttar Pradesh, West Bengal Andhra Pradesh and Madhya Pradesh
have provide employment to more than 4 crore household from the inception of this initiative till the last fiscal year
i.e., 2015-16. Karnataka, Assam, Bihar, Jharkhand, Odisha and Chhattisgarh, each state, has provided employment
to 2-3 crores households until now and all other states, each states individually, have provided employment to less
than 1.5 crores households until now. 10
It is very evident from the available data that the reach of the MNREGA programme has been tremendous
covering nearly 35% of the rural household every year. But another issue which is to be looked into is, how many
person days of employment has been generated on an average to the 35% of the rural household who has been
provided with the employment. The number of days of employment each household gets is very disappointing. On
an average, as per the data available till now, each rural household gets around only 40-55 days of work in contrast

5
World Bank (2001): Attacking Poverty. World Development Report 2000/01, Washington.
6
OECD (2001): The DAC Guidelines. "Poverty Reduction", Paris.
7
Rama Rao et al, Impact of National Rural Employment Guarantee Scheme in India on Rural Poverty and Food Security,
Current Agriculture Research Journal, 1(1), 2013.
8
Pramod Kumar, Impact of MGNREGA on Wage Rate, Food Security And Rural Urban Migration: A Consolidated Report,
Agriculture Development and Rural Transformation Centre, 2013.
9
Rao, supra note 8.
10
Valmiki Ramakrishna, Implementation of MGNREGA in Karnataka, 70(4), The Indian Journal of Political Science, 2015.

DOI: 10.24105/gjiss.6.6.1702 9
to the 100 days of guaranteed employment which has been provided in the statute.11 The present number is nearly
just half of what the statute guarantees. The preamble of the act states “An Act to provide for the enhancement of
livelihood security of the households in rural areas of the country by providing at least one hundred days of
guaranteed wage employment in every financial year…”12 The main objective of the act is to provide for at least
100 days of employment and not up to 100 days and the state governments and local authorities have failed to
achieve the objective of the act. This failure will have an adverse impact on the income earned by the rural
households. The effective implantation of the scheme is hit by this. Only around 4 crores of the households out of
the 40 crore household who had been provided with the employment, have completed the 100 days of employment.
At an average only 9% of the employed households completed the 100 days of employment from its inception till
now.13 This indicates the inefficiency of the programme in providing 100 days of guaranteed employment to the
rural household who all opted for the MNREGA initiative.
To determine the impact of the MNREGA on the income of the rural households, data collected by a sample
survey by Agriculture Development and Rural Transformation Centre, ISEC for their study has been used.The
average household size of a rural family participating in the MNREGA programme is 4.5-4.7 and the average
number of earners in each house hold is 2.2-2.6 and the literacy rate was less than 1/3rd. In comparison to the
households not participating in MNREGA, the average number of earners and literacy rate was much higher when
compared to the participants.14 The trends shown in the survey regarding the occupation of the households show
that the employment provided by the MNREGA programme is only small proportion of the aggregate employment.
The working man days of the rural households under the MNREGA scheme was only around 12 to 32 percent in
different parts of the country. It was less than 15% in many states including big states like Karnataka, West Bengal
etc. It was more than 25% only in two states Andhra Pradesh and Bihar.15 On an average, the MNREGA’s share in
total employment of the rural house hold is 18%. The highest share in total employment was of casual labour in
agriculture and non-agriculture, which constituted around 40% of the total employment.
The mandate under the MNREGA is only to provide at least 100 days of guaranteed employment per
household (which is rarely achieved) and in many cases there are more than one person working per household,
hence the MNREGA initiative guarantees only partial employment and households should depend on alternative
employments in different fields like agriculture sector or any other sector or casual labour work.
The wage rates under the MNREGA ranges from Rs. 80 per day to Rs. 150 per day, on an average the wage
rate provided under the MNREGA is Rs. 100. 16 In many states, the wage rate which was provided under the
MNREGA programme was less than the minimum stipulated was in the Minimum Wages Act, 1948. But however,
though the wages provided under MNREGA was lower than the Minimum Wages Act, it was more than the
prevailing wage rate which was given for the unskilled labour in agriculture and other activities.
The survey revealed that the MNREGA was successful in increasing their annual income by providing
guaranteed wage employment to rural households. More than 60% of the households participating in the survey
admitted that the wages from the MNREGA initiative has contributed to their annual income from the range of
Rs.5000 – Rs.10000 and nearly 8% of the household reported an increase of more than Rs.10000 in their annual
income of the family and the rest reported only up to Rs.5000 increase in their income. 17 Nearly 98% of the
household accepted that the wages earned by them through the MNREGA scheme has been beneficial to them and
it has provided them additional support to them.
According to Economics, it is well known that spending has multiplier effects and when the additional income
which the household gets is spent on buying goods, there is a demand created for many items and the production of
those commodities will create demand for supply of raw materials and labour. With vast coverage of the MNREGA
programme, it has become a lifeline for rural women.
The survey recorded the information regarding the wage utilization among the rural household with additional
money they got through MNREGA. It was found that the majority of the household opted for a better food basket
after the increase in their income, the second most prioritised was education of their children and health 18. It is
evident from the findings of the survey that the money is being used for improving the quality of the life and human
development related issues.

11
Pramod, supra note 9.
12
Preamble, The Mahatma Gandhi National Rural Employment Guarantee Act, 2005.
13
Pramod, supra note 9.
14
Pramod, supra note 9.
15
Pramod, supra note 9.
16
R.K.A Subramanya, Social Protection of the Workers in the Unorganized Sector, Indian Journal of Industrial Relations, 48(3),
2013.
17
Raghav Gaiha, Does the Employment Guarantee Scheme Benefit the Rural Poor in India? Some Recent Evidence, 45(6),
University of California Press, 2015.
18
Anil Ganeriwala, An Impact Assessment Study of usefulness and sustainability of the assets created under MGNREGA in
Sikkim, IRMA, 2010.

DOI: 10.24105/gjiss.6.6.1702 10
 Utilization Pattern No. of families Percentage (%)
Good Food 141 81
Children’s Education 126 72
Health related Expenditure 112 64
Household Things 61 35
Buying things for agriculture 49 28
Renovation of the house 25 14
Irrigation work 14 8
Paid back debts 11 6.3
New insurance policy 7 4

The additional income earned by the rural household through MNREGA has significantly increased the
purchasing power of the rural people, and the rural household has been spending the additional income effectively
by spending for better quality of life and human development related issues, which is a positive sign for a better
society and betterment of the people. The MNREGS programme also provides an incentive of additional bargaining
power for rural households to demand for better wages in the open market. Women opting in to the MNREGA
programme is also another positive impact, where it provides women with their own economic independence and
freedom and empowering them and the MNREGA does not discriminate between a man and a woman in terms of
wages, the wages of both man and woman are same, and this also provided a boost in confidence for women. 19
The impact of the MNREGA programme can viewed in terms of the extent to which it has come to have
bearing on the state’s position in the Human Development Index (HDI). Evidences suggest that MNREGA has
created a positive impact on the four major indicators of the HDI namely – Income Generation, Economic self-
reliance, empowerment of women (inclusive of gender mainstreaming) and the quality of life.20

Conclusion
The MNREGA programme has enabled the rural household to increase their purchasing power, lead a quality
and heathy life with all the basic facilities and provide education to their children and several other benefits. The
MNREGA has enabled the rural household by the additional income to go an extra mile and spend for a better
quality of life. Generally when the income increases it has a huge impact on the expenditure of the family, this
evident from the survey data which shows 89% of the households have electricity connections, 45% of them have
televisions, nearly 40% have access to mobile phones,21 this is the bright part of the story, but unfortunately, this
positive impact of MNREGA is not enough to alleviate the rural household, as 83% of the household had no LPG
connections and 80% had no access to toilet facilities in their dwellings. Therefore, we have to go a long way to
alleviate the quality of the life of the rural people. Thus, the MNREGA programme has definitely brought about
development in the rural household and it has enabled them to access many facilities and enhance the quality of the
life, but this development is limited, MNREGA has not developed the rural households completely and it is not
possible for MNREGA individually to develop the rural household completely. This complete development can
only happen when the central and state governments introduce policies and initiatives which will cause growth and
development of the rural household.

Suggestions for Changes in the MGNREGA

The objective of the MNREGA is to enhance the livelihood security of the rural people by providing 100 days
of guaranteed employment but it is evident from the statistics that the 100 days of guaranteed employment is not
being provided by the state governments and the average number of employment days is very less, when compared
to the statutory provision (100). If the state governments take adequate measures to ensure that the 100 days of
guaranteed employment is provided to the rural household, it will lead to additional income to the rural household,
which will bear a positive impact on their development.
New provision for providing free lunch for the workers at the worksite must be included into the legislation,
doing this will enhance the food security of the rural household and it will save the additional cost which was
incurred for their lunch, therefore leading to additional income at their disposal, and increased purchasing power.

19
Ashok Pankaj and Rukmini Tankha, Empowerment Effects of the NREGS on Women Workers: A Study in Four States, 45(30),
Economic and Political Weekly, 2010.
20
Rudra N. Mishra et al, Impact of National Rural Employment Guarantee Scheme in India on Rural Poverty and Food Security,
presented at Impact of National Rural Employment Guarantee Scheme in India on Rural Poverty and Food Security, 2014.
21
Dr. Suman Pamecha and Indu Sharma, Socio-Economic Impact of Mgnrega - A Study
Undertaken among Beneficiaries of 20 Villages of Dungarpur District of Rajasthan, 5(1), International Journal of Scientific and
Research Publications, 2015.

DOI: 10.24105/gjiss.6.6.1702 11
Bibliography
1. Anil Ganeriwala, An Impact Assessment Study of usefulness and sustainability of the assets created under MGNREGA
in Sikkim, IRMA, 2010.
2. Ashok Pankaj and Rukmini Tankha, Empowerment Effects of the NREGS on Women Workers: A Study in Four States,
45(30), ECONOMIC AND POLITICAL WEEKLY, 2010.
3. Dr. Suman Pamecha and Indu Sharma, Socio-Economic Impact of Mgnrega - A Study
4. Pramod Kumar, Impact of MGNREGA on Wage Rate, Food Security And Rural Urban Migration: A Consolidated
Report, AGRICULTURE DEVELOPMENT AND RURAL TRANSFORMATION CENTRE, 2013.
5. R.K.A Subramanya, Social Protection of the Workers in the Unorganized Sector, INDIAN JOURNAL OF INDUSTRIAL
RELATIONS, 48(3), 2013.
6. RAGHAV GAIHA, Does the Employment Guarantee Scheme Benefit the Rural Poor in India? Some Recent Evidence,
45(6), UNIVERSITY OF CALIFORNIA PRESS, 2015.
7. Rama Rao et al, Impact of National Rural Employment Guarantee Scheme in India on Rural Poverty and Food
Security, CURRENT AGRICULTURE RESEARCH JOURNAL, 1(1), 2013.
8. Rudra N. Mishra et al, Impact of National Rural Employment Guarantee Scheme in India on Rural Poverty and Food
Security, presented at Impact of National Rural Employment Guarantee Scheme in India on Rural Poverty and Food
Security, 2014.
Undertaken among Beneficiaries of 20 Villages of Dungarpur District of Rajasthan, 5(1), INTERNATIONAL J OURNAL OF
SCIENTIFIC AND RESEARCH PUBLICATIONS, 2015.
9. Usha Rani Ahuja et al, Impact of MGNREGA on Rural Employment and Migration: A Study in Agriculturally-
backward and Agriculturally-advanced Districts of Haryana, 24, AGRICULTURE ECONOMICS RESEARCH REVIEW, 2011.
10. Valmiki Ramakrishna, Implementation of MGNREGA in Karnataka, 70(4), THE INDIAN JOURNAL OF POLITICAL
SCIENCE, 2009.
11. Vishnu Bhagwan, NREGA: A Swot Analysis, THE INDIAN J OURNAL OF POLITICAL SCIENCE, 70(1), 2009.
12. Yamini Aiyar and Salimah Samji, Improving the Effectiveness of National Rural Employment Guarantee Act, 41(4),
2006.
13. Yanyan Liu, Heterogeneous Pro-Poor Targeting in the National Rural Employment Guarantee Scheme,48(10),
ECONOMICS AND POLITICAL WEEKLY, 48(10), 2013.

DOI: 10.24105/gjiss.6.6.1702 12