Poverty Alleviation

and Employment
Generation
UNIT 2 MAHATMA GANDHI NATIONAL
Programmes RURAL EMPLOYMENT
GUARANTEE ACT
Structure
2.0 Aims and Objectives
2.1 Introduction
2.2 Schemes before MGNERGA
2.3 Background
2.4 The Employment Guarantee Act
2.5 Salient features of the Act.
2.6 Wage Rate
2.7 Transparency and Accountability
2.8 Administrative Set-up
2.9 Policy Innovation
2.10 Poverty Alleviation and MGNERGA
2.11 Challenges
2.12 Let Us Sum Up
2.13 Keywords
2.14 Suggested Readings and References

2.0 AIMS AND OBJECTIVES

After studying this Unit, you should be able to:

• identify the nature and trends of the poverty alleviation programmes in

India;
• understand the salient features and provisions of MNERGA;
• identify the role of MNERGA in poverty alleviation in rural areas; and
• identify the nature of administrative machinery involved and policy
innovations in the MGNERGA programme.

2.1 INTRODUCTION
Poverty alleviation remained a major challenge to the policymakers and
administration since independence. Generally, poverty is measured on two
objective criterions: one, the per capita income and second, per capita daily in
take of calories. Henry Bernstein (1992) has identified four dimensions of
poverty: (a) In accessibility to resources (b) Lack of livelihood strategies (c)
Feeling of insecurity and frustration (d) Inability to maintain and develop
social relations. As per National poverty estimates 2011-2012, 21.9% of the
total population lives below the poverty line. For rural areas, this percentage
24
is as high as 25.70% and for the urban are as, this ratio is 13.70%, which Mahatma Gandhi
National Rural
reflects the high incidences of poverty in the urban spaces in comparison to Employment
the rural areas. The World Bank report and Human development Report also Guarantee Act
seek attention in this direction, as this state of the affair not only devoid an
individual of the basic minimum standard of living, but also the basic
citizenry rights as one may not be capable of asserting their citizenry rights.
Against this backdrop, the Government of India, launched the National Rural
Employment Guarantee Act in 2005, which was re-christened as MNERGA
in the year 2009 with a guarantee of minimum of 100 days of employment in
a financial year to every such rural household whose adult members willingly
are in search for the job. More than 10 years later, MGNREGA has emerged
as the flagship programme of the Government of India. MGNREGA is both
an Act and a scheme that aims to provide livelihood security in the rural areas
by guaranteeing a minimum of 100 days of employment in a financial year to
every such rural household whose adult members willingly volunteer to do
unskilled manual work.

2.2 SCHEMES BEFORE MGNERGA

Since independence, many schemes were mooted to find a suitable option for
employment schemes in India's vast rural hinterland. The experiences of
these decades provided important lessons to the government. This included
the ‘Rural Manpower Programme’ which exposed the tribulations of financial
management, the ‘Crash Scheme for Rural Employment’ on planning for
outcomes, a ‘Pilot Intensive Rural Employment Programme’ of labour-
intensive works, the ‘Drought Prone Area Programme’ of integrated rural
development, ‘Marginal Farmers and Agricultural Labourers Scheme’ of
rural economic development, the ‘Food for Work Programme’ (FWP) of
holistic development and better coordination with the states, the ‘National
Rural Employment Programme’ (NREP) of community development, and the
‘Rural Landless Employment Guarantee Programme’ of focus on landless
households. The Planning Commission later approved the scheme and it was
adopted on a national scale.

In order to converge employment generation, infrastructure development, and

food security in rural areas, the government integrated NREP and the Rural
Landless Employment Guarantee Programme (RLEGP) into a new scheme
Jawahar Rojgar Yojana (JRY) on 1st April, 1989. The most significant change
was the decentralization of implementation by involving the local people
through Panchayati Raj Institutions (PRIs) and hence a decreasing role of
bureaucracy.

On 2 October 1993, the Employment Assurance Scheme (EAS) was initiated

by the then Prime Minister P.V. Narasimha Rao to employ agricultural hands
during the lean agricultural season. P.V. Rao had started discussions on this
act in the year 1991. The role of PRIs was reinforced with the local self-
government at the district level called the ‘Zilla Parishad’ as the main
25
Poverty Alleviation implementing authority. Later, EAS was merged with Sampoorna Grameen
and Employment
Generation Rojgar Yojana (SGRY) in 2001.
Programmes
On 1 April 1999, the JRY was revamped and renamed a Jawahar Gram
Samridhi Yojana (JGSY) with similar objectives. The role of PRIs was
further reinforced with the local self-government at the village level called
the ‘Village Panchayats’ as the sole implementing authority. In 2001, it was
merged with SGRY. In the same year, the government introduced FWP
(Food for Work Programme) similar to the one that was initiated in 1977.
Once NREGA was enacted, the two were merged in 2006.

With a view to converge employment generation, infrastructure development,

and food security in rural areas, the government integrated EAS and JGSY
into a new scheme called SGRY on 25th September, 2001. The role of PRIs
was retained with the ‘Village Panchayats’ as the sole implementing
authority. Yet again due to implementation issues, it was merged with
Mahatma Gandhi NREGA in 2006. The total government allocation to these
precursors of Mahatma Gandhi NREGA had been about three-quarters of 1
trillion.

According to the Eleventh Five Year Plan (2007–12), the number of Indians
living on less than $1 a day, also known as Below Poverty Line (BPL), was
300 million that barely declined over the last three decades ranging from
1973 to 2004, although their proportion in the total population decreased
from 36 percent (1993–94) to 28 percent (2004–05), and the rural working-
class dependent on agriculture was unemployed for nearly 3 months per year.
The UPA Government had planned to increase the number of working days
from 100 to 150 before the 2014 Lok Sabha Elections in the country but
failed.

The NDA government has decided to provide employment for 150 days for
rain-hit areas. The registration process involves an application to the Gram
Panchayat and the issue of job cards. The wage employment must be
provided within 15 days of the date of application. The work entitlement of
‘120 days per household per year’ may be shared between different adult
members of the same household.

The legislation specifies the role of the state in ensuring transparency and
accountability through upholding the right to information and disclosing
information proactively, preparation of annual reports by the Central
Employment Guarantee Council for the Parliament and State Employment
Guarantee Councils for state legislatures, undertaking mandatory financial
audits by each district along with physical audit, taking action on audit
reports, developing a Citizen’s Charter, establishing vigilance and monitoring
committees, and developing a grievance redressal system. The Act
recommends the establishment of ‘Technical Resource Support Groups’ at
district, state, and central level and active use of Information Technology,
26
like the creation of a ‘Monitoring and Information System’ and an NREGA Mahatma Gandhi
National Rural
website, to assure quality in the implementation of NREGA through technical Employment
support. Guarantee Act

2.3 BACKGROUND
The demand for employment guarantee was made by almost all the political
parties in different years. However, it never got materialized as a scheme due
to one reason or another. In the late 1990s and early years of 2000, suicides
by the farmers in different parts of the country due to crop failure and debt
provided a spark to this demand and public interest litigation was filed by the
People’s Union for civil liberty (PUCL) in the Hon’ble supreme court.
Subsequently, several organizations of national and state-level come together
under the aegis of ‘the right to food campaign’ (RTF) and ‘Akal Sangharsh
Samiti’. It was in the first national convention of the RTF campaign in 2004,
that demand for ‘right to work’ was articulated. A draft of the Employment
Guarantee Act was initially prepared in the state of Rajasthan, however, that
can’t be materialized due to ‘paucity of funds’. In the year 2004, the
Congress party along with its allies (UPA) emerged victorious in the general
election, and in the formulation of the government, they also got support of
the Left parties. The coalition government set its agenda of functioning in the
form of the ‘National Common Minimum Programme’ (NCMP) and also an
advisory body in the form of the National Advisory Council (NAC), to
monitor the implementation of NCMP. The NAC included the person from
diverse fields including civil society, academics, activists, and the
commissioner of the Supreme Court. The NAC in its earlier days of working
proposed a draft of the NREG bill to PMO, which would finally traveled to
the Ministry of Rural Development (MoRD), where the final draft of the bill
was prepared. Even in the final draft prepared by MoRD, a few NAC
members and other civil society organizations made significant intervention.
After getting passed by the Lok Sabha and Rajya Sabha, the NREG got the
President’s assent on September 5, 2005, and was finally notified on 2nd
February 2006, to operationalize, initially in the 200 districts, as identified by
the Planning Commission and agreed to by the MoRD.

2.4 THE EMPLOYMENT GUARANTEE ACT

Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)
was implemented and came into force on February 2, 2006. It was the first
act of its kind in the world wherein an economic safety net is provided to
around 2/3rd of the population through the right to work. The scale on which
it has been provided is just unprecedented, engaging around 1/10th of the
total world population. It was the second in a series of right-based policies
the Government of India rolled out in the past decade. The others are the
Right to Information (RTI) Act, the Right to Education (RTE) Act, the Right
to Food Act, etc. passed in 2005, 2009, and 2013 respectively.
27
Poverty Alleviation Mahatma Gandhi Employment Guarantee Act 2005 (or NREGA, later
and Employment
Generation renamed as the “Mahatma Gandhi National Rural Employment Guarantee
Programmes Act” or MGNREGA), is Indian labour law and social security measure that
aims to guarantee the “right to work'. It aims to enhance livelihood security in
the rural areas by providing at least 100 days of wage employment in a
financial year to every household whose adult members volunteer to do
unskilled manual work.

Initially, this act was implemented in the 200 districts. Subsequently, it was
extended to another 130 districts of the country. Based on this pilot
experience, NREGA was scaled up to cover all the districts of India from
1stApril 2008. The statute is hailed by the government as "the largest and
most ambitious social security and public works programme in the world".In
its World Development Report, 2014, the World Bank termed it a "stellar
example of rural development".

The MGNREGA was initiated with the 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”. Another aim of MGNREGA is to
create durable assets (such as roads, canals, ponds, and wells). Employment
is to be provided within 5 km of an applicant's residence, and minimum
wages are to be paid. If work is not provided within 15 days of applying,
applicants are entitled to an unemployment allowance. That is, if the
government fails to provide employment, it has to provide certain
unemployment allowance to those people. Thus, employment, as well as
unemployment allowance under MGNREGA, is a legal entitlement.

MGNREGA is to be implemented mainly by Gram Panchayats (GPs). The

involvement of contractors is banned. Apart from providing economic
security and creating rural assets, NREGA can help in protecting the
environment, empowering rural women, reducing rural-urban migration and
fostering social equity, among others."

The law provides many safeguards to promote effective management and

implementation. The act explicitly mentions the principles and agencies for
implementation, a list of allowed works, financing patterns, monitoring and
evaluation, and most importantly the detailed measures to ensure
transparency and accountability. Its major objectives are:

• Ensuring guaranteed wage employment in a financial year;

• Strengthening the livelihood resource base for the poor;
• Proactive ensuring social inclusion; and
• Strengthening of Panchayati Raj Institutions.

28
2.5 SALIENT FEATURES OF THE ACT Mahatma Gandhi
National Rural
Employment
• The act encompasses all the adult members of a rural household, who are Guarantee Act
willing to do unskilled manual work. S/he may apply for registration
either in writing or orally to the local Gram Panchayat (GP). The unit for
registration in this regard will be household.

• Under the Act, each household is entitled to 100 days of employment

every year. Forest Rights Act beneficiaries are entitled to 150 days of
employment. In states like Rajasthan, communities like the Sahariyas
have been given an entitlement of 200 days.

• A written/oral application seeking work is to be made to the GP or block

office, stating the time and duration for which work is sought. The GP
will issue a dated receipt of the written application for employment
against which the guarantee of providing employment within 15 days
operates.

• After due verification of place of residence and age of the member/s

(only adult members are eligible for employment), the registered
household is issued a job card (JC). A job card forms the basis of
identification for demanding employment. A JC is to be issued within 15
days of registration. Each JC has a unique identification number. The
demand for employment in the GP or at block level has to be made
against the JC number. JCs are supposed to be updated with days of
work and payment made to the beneficiary as and when the work is
undertaken.

• If work is not provided within 15 days of the date from which demanded,
the state (as per the Act) will pay an unemployment allowance to the
beneficiary.

• Work will be provided within a 5 km radius of the village. In case work

is provided beyond 5 kms., extra wages of 10 percent are payable to meet
additional transportation and living expenses.

• The provision of the act makes it compulsory that at least one-third of

beneficiaries shall be women who have registered and requested work
under the scheme. At least 50 percent of the works in terms of cost are to
be executed by the GPs. Sixty percent of the costs incurred have to be on
agriculture-related works.

• The job provided under MNERGA carries a minimum wage rate as

determined by the respective state governments. Wages are to be paid
according to the Minimum Wages Act 1948 for an agricultural labourer
in the state unless the Centre notifies a wage rate which will not be less
than Rs. 60/- per day. Also, the wage rate will be same for men and
women. It will either be paid in cash or in-kind or both, provided that at
least one-fourth of the wages shall be paid in cash. 29
Poverty Alleviation • Payment of wages has to be done weekly and not beyond a fortnight in
and Employment
Generation any case. Payment of wages is mandatorily done through individual/joint
Programmes bank/post office beneficiary accounts. The MGNREG Act mandates that
the state must address a delay in payments for the works, if any.

• Plans and decisions regarding the nature and choice of works to be

undertaken in a financial year are to be decided in open assemblies of a
Gram Sabha (GS).Works can also be identified at the block and district
levels which have to be approved and assigned priority by the GS before
administrative approval can be given.

• The government of India bears 100 percent wage cost of unskilled

manual labour and 75 percent of material costs, including the wages of
skilled and semi-skilled workers and administrative costs at 6 percent of
the total expenditure. The State Government meets the rest of the
expenditure.

• To ensure that the workers benefit directly under the scheme, the Act
prohibits the use of contractors or machinery in the execution of the
works. The act mandates that in the total cost of works undertaken in a
Gram panchayat, the wage expenditure to material expenditure ratio
should be 60:40. Worksite facilities such as crèches, drinking water, and
shade have to be provided at all worksites.

2.6 WAGE RATE

MGNERGA recognizes employment as a legal right and through the process
of employment generation, it aims for generating a productive infrastructure
for poverty alleviation on a permanent basis. The MGNERG Act has two
provisions relating to the payment of wages. Section 6 (1) provides for the
Central government to notify the wage rate, and section 6 (2) allows for the
State government to notify the wage rate. Since 2006, both the provisions
have been used. Up till 2009, Section 6 (2) was under implementation
wherein the minimum wage was fixed by the State government as per Section
3 of the minimum wage Act 1948, for the agricultural labourer. This was
notified as to the MGNERGA wage rate in the respective states. From
January 2009, section 6 (1) has been applied and the Central government has
to revise and notify MGNERGA wage rates for all states every year.
Following this, from January 2011, the notified MGNERGA wage rate has
been indexed to the consumer Price index Agricultural labour (CPI-AL).
Thus, each annual revision of notified wage rates will be based on this index.

T.S. Papola (2005) is of the view that if MGNERGA has to prove effective in
the poverty reduction goals, then firstly wage rate should be enough that it
meets the daily needs of the beneficiary’s households. Secondly, the wage
rate under the act should be equal to or greater than the market wage rate. An
analysis of the prevailing wage rates in the different states shows that in
many states, especially in the poorer states, wages offered under MGNERGA
30
are quite lower than the prevailing market rates. Also, there exist significant Mahatma Gandhi
National Rural
differences among the wages rates for example as per Gazette notification, Employment
the minimum wage rate in Jharkhand and Bihar would be Rs. 168/- while for Guarantee Act
Haryana it is Rs. 281/-, and for Kerala Rs. 271/-. The low wage rate may lead
to the shifting of the labour force to the other sectors; however, this does not
seem appropriate in the context of states like Uttar Pradesh and Madhya
Pradesh where the statutory wage rate is higher than the market rate.

Monitoring and transparency in payment are some of the notable features

which make the implementation of this Act successful. Records of grass-root
levels are available on the NREGA portal created under the MoRD website.
Effective use of the ICT has been made for social audit of the scheme and
redressal of grievances of the beneficiaries. Also, the direct transfer to the
beneficiaries prevents multi-level leakage of funds and corruption at different
levels.

2.7 TRANSPARENCY AND ACCOUNTABILITY

Transparency and accountability in the programme are ensured through:

• A social audit, to scrutinize all the records and works under the scheme,
is to be conducted once in six months in every Gram Panchayat. The
social audit is to be conducted in the manner prescribed in the Mahatma
Gandhi National Rural Employment Guarantee Audit of Schemes Rules,
2011.
• Every district shall have an ombudsman who is mandated to receive
complaints, verify them and pass awards that are to be complied with by
the administration.
• There shall be proactive disclosure of all the information regarding
implementation using the web portal.

Through these provisions, MNERGA establishes a strong social security net

for the marginalized sections by providing them a source of employment in
their local conditions and without migration of any nature. The act creates an
employment network with a decentralized planning structure which will
definitely help in addressing the causes of chronic poverty like drought, soil
erosion, and deforestation by creating sustainable assets in the rural
ecosphere. Hence, the Mahatma Gandhi National Rural Employment
Guarantee Act fosters the conditions for lessening inequality and inclusive
growth through participative democracy and by empowering the rural
economy.

2.8 ADMINISTRATIVE SET-UP

The administrative structure for the MGNERGA is very simple and it works
in a linear direction as it does not involve different ministries with near
overlapping responsibilities. Ministry of Rural Development (MoRD) is the
31
Poverty Alleviation nodal ministry and a Central Employment Guarantee Council monitors and
and Employment
Generation evaluates the implementation of MGNERGA. This council has been created
Programmes under Section 10 of MGNERGA and the Minister in-charge of rural
development happens to be its chairman. This council is responsible for
advising the Central government on MGNERGA related matters and for
maintenance and evaluating the implementation of the Act. Also, it prepares
the annual reports for the implementation for submission to the Parliament.
At the state level, the establishment of the Employment guarantee council
(SEGC) was provided in the Act. The SEGC will advise the state government
on the matters concerning the schemes pertaining to the rural economy and
implementation of the scheme and programme in the state. At the district
level, the paraphilia of the Panchayati Raj institution (PRIs) plays a pivotal
role especially in the determination of the work to be undertaken under
MGNERGA, and receiving of application and allocation of work all is
determined at the district level or below. The state government distributes the
funds to the local implementation bodies at the district, block, and panchayat
levels and provides necessary technical and administrative support. At the
state level, project planning is carried out by village panchayat and civil
society organizations including women self-help groups (SHGs) approved by
the engineers at the block and district level. The district administration
releases funds to the Panchayats SHGs for the wage payment and material
expenditure. Also, MoRD is in collaboration with the U.K department of
development (DFID) and the German Development Agency (GIZ) to enhance
the livelihood and environmental benefits from the infrastructure projects and
make both the infrastructure and communities benefitting from it more
climate-resilient.

2.9 POLICY INNOVATION

The success of the world's largest employment guarantee programme despite
the several operational challenges become possible only due to the flexible
normative framework. The act involves PRIs as the key institution to
formulate, implement, and monitor the plan as per local requirements and
specificity. The decentralized management and operationalization make its
feasibility at the pan-India level, Secondly, the awareness among the rural
masses about the schemes has been created through social mobilization. The
worksite innovation of the programme including time and motion studies as
well as worksite facilities for the worker is one of the laudable policy
innovations of the act. Further, although the scheme targets the employment
generations in the rural area, but equal is to the focus on sustainable
development through the activities and regeneration of natural resources.
Also, the availability of the data in the public domain and the efficient use of
the ICT tools in this regard made this scheme more transparent, accountable,
and acceptable. Last not least, web-based management information systems
(MIS), knowledge resource centers (KRCs), doorstep financial services, fund
management are some of the other policy innovations of the programme.
32
2.10 POVERTY ALLEVIATION AND MGNERGA Mahatma Gandhi
National Rural
Employment
In a study regarding the role of MGNREGA in reducing rural poverty, Guarantee Act
Prottay Sarkar, Jagdish Kumar and Supriya have concluded that the
combined effect of additional employment guaranteed by the Act and the
increased wage rate in both MGNREGA and agricultural labour has made
significant changes in the annual per capita income of the beneficiaries. Also,
in the selected regional studies, it was found that in the initial years of
implementation, the socio-economic condition of the beneficiaries has
improved significantly. Also, the proportion of beneficiaries in the
subsequent years of implementation has improved significantly.

If we look at the release of the funds, then in the initial ten years of
implementation, Central Government, (which bears 75% of the cost of
material, the wage of skilled and semi-skilled workers) has released INR
2,78,197 crore, which reflects the commitment of the Union Government
towards its funding. In the financial year 2020-21, a provision of INR 61,500
crore has been made for it in the annual budget. However, in the light of the
COVID-19 pandemic, an additional INR 40,000 crore has been allotted, as
the MGNERGA provided huge relief in the rural areas during the lockdown
period.

The magnitude of this Act and its implementation is quite vast. After fifteen
years of the launch, this Act, in 2020, is operational in 701 districts of the
country, encompassing 2,68,603 villages of the country. Since its launch, a
total of 14.68 job cards have been issued to the 28.47 crore workers. Out of
these, nearly 50% are active workers. In the times of pandemic, most of the
states witnessed sudden rise in the demand for the job and that’s why around
half a dozen states have created person-days 50% or more of such daily jobs
produced in the whole financial year under the MGNERGA in the first
hundred days of this financial year, which culminated into 123.36 crore
person-days. Also, the average wage rate.which is indexed to the consumer
price index Agricultural labour index has risen from INR 65 per person per
day in 2006 to INR 150 in 2015 and INR 205 in 2020. The expenditure data
for the various years reflect that more than 70% of the total expenditure on
the programme has been spent on wages.

Independent research, having empirical pieces of evidence from the field,

suggests that the marginalized section of the Indian society has benefitted
most from the Act. The average participation of the scheduled castes
remained more than 20% and it is more than 10 % for the scheduled tribes
varying from state to state as per their respective population. Equitable and
easy access to work to the women with decent working conditions and equal
payment of wages and representation in the decision-making bodies is
provided under the Act. Last fifteen years' figure give a very encouraging
picture in this regard. The average percentage of women's participation in
employment under MGNERGA remains more than 40%. Various factors like
33
Poverty Alleviation non-requirement of any technical skill, outmigration of the male member of
and Employment
Generation the family, job opportunity at the doorstep, equal and non-discriminatory rate
Programmes of wages, tradition of rural women working in other’s field and gender
differential task for the uniform rate, helps in increasing the women’s
participation in different regions. Access to economic power has also had a
favourable impact on the social status of women as they have a greater say in
the way the money is spent within households. Also, in her study, Padma
establishes that women’s share of work in the programme is higher than their
share in the casual labour market. This is because of the reason that they have
not to travel long and they earn cash income when otherwise they would
remain at home or unemployed. In another study, it was observed that the Act
is not as effective in reaching poor female-headed households yet the female
participation ranged between 40% to 50% since the launch of this scheme.

Studies to access the impact of the programme observed a positive effect on

the livelihood security of the people of the rural areas and its potential to
bring out a positive change in rural India. The income at doorstep, mostly in
the lean season, increases consumption expenditure mainly on food, clothing,
education, and health and this has a multiplier effect across the rural
economies. Research suggests that MGNERGA has helped rural households
in a sustained manner to smooth consumption between agricultural peak
season and lean season. The crises of joblessness will be more acute without
MGNERGA. Such employment has a direct impact on human development
indicators as the studies reflect that participants' caloric and protein intake
has increased and it leads to the improvement in participants' food security
and nutrition.

The direct benefit transfer under the scheme led to the opening up of more
than a million new bank accounts. As per the review report of 2013, 90.3
million accounts have been opened up under the programme.bringing the
poor into the organized financial sector and in some cases better access to
credit. Last but not the least, the work undertaken in MGNERGA like water
and soil conservation, water harvesting, afforestation, and rural infrastructure
development, etc. has a cumulative effect on agricultural livestock
production. It was observed that the act provided ‘multiple environment
series and reduced vulnerability, apart from providing employment and
income to the rural communities. The main impact included better
groundwater recharge, water percolation, more water storage, increased soil
fertility, reclamation of degraded lands, and carbon sequestration.

2.11 CHALLENGES
Despite having impressive statistics, MGNERGA has not been able to
provide the employment that one would have expected in the poor states that
have largely to do with the implementation and funding. The Act provides for
a multi-tier structure of the authority for implementation and monitoring of
the scheme with specified functions and duties for each authority. However,
34
the initial experiences suggest that a coordinated approach of different tiers of Mahatma Gandhi
National Rural
government or vertical coordination is critical for the successful Employment
implementation of the scheme. Also, horizontal coordination across the Guarantee Act
department for programme identification and execution of work through the
panchayat assumes critical importance. These do not seem to be working too
well. Under the Act, the State government bears the full cost of the
unemployment allowances. Therefore, individual states will have to evolve a
well-coordinated approach to equate the supply of employment in
accordance. Therefore, individual states will have to evolve a well-
coordinated approach to equate supply of employment in accordance with the
demand. This requires a proper understanding of state and region-specific
labour demand and its seasonality so that a demand-based scheme of projects
can be implemented at a frequency matching the demand for work instead of
relying on supply-side provisioning. Failure to fulfill these demands may
result in an imprudent use of funds, as the inability to provide employment on
demand will result into the payment of unemployment allowances. Thus,
there is a need to design a monitoring mechanism by strengthening the
institutional structure at the local level so that resources can be used
optimally. As it is, a demand-based provisioning system, the flow of
resources from the Union Government level to Panchayat levels needs to be
assured according to the demand. This needs a clear mechanism of the fund
as per the demand for employment rather than the normal bureaucratic way.

Besides, the implementation of the scheme witnessed a huge spatial variation.

The enrolment under MGNERGA exceeds the number of BPL households in
most states, except for Bihar and Jharkhand, where only 50 to 80 percent of
BPL households could obtain involvement. If we look at enrolment rate as a
percentage of the number of applicants, it is abysmally low in Maharashtra,
followed by Karnataka, Bihar, and Jharkhand. It is also noted that while for
Andhra Pradesh and Gujarat the supply of employment has met, the demand
for most other states’ enrolment falls short of the demand. the all-state ratio is
79.15% for 2016. If we look at the fund utilization ratio, defined as the fund
allocation to actual utilization, it is low in the poorer states of the country.
Also, lack of technical capacity at the local level leads to delays in payment
and project completion, as well as low quality of work and non-creation of
durable and quality assets. Besides, dominant caste hierarchy, which reflects
in the functioning of PRIs in many states, results in the siphoning of funds to
the non-eligible beneficiaries and also at the planning level due to elite
domination.

2.12 LET US SUM UP

After independence, the government aims to reduce the economic inequality
through various affirmative interventions, and in spite of the implementation
of various self and wage employment programmes for reduction of poverty,
expected results were not achieved. Against this backdrop, a unique
programme called Mahatma Gandhi National Rural Employment Guarantee 35
Poverty Alleviation Programme (MGNREGA) was launched in the year 2006, with a view to
and Employment
Generation cover all sections of the people and regions. It has achieved tremendous
Programmes success in providing stable income to the poor households apart from the
creation of assets in rural areas and avoids migration of workers from rural
areas to town areas. It also provided livelihood security for the rural
households as they can purchase food grains and other essential commodities
and access education and health care. Empowerment of the marginalized
sections of the society like women, scheduled castes, and tribes, emerged as
unintended consequences of MGNERGA. These sections benefitted more as
a worker than as a community and their gain at the individual level became
possible only because of their ability to earn independently, made possible
due to paid employment opportunities under the Act. However, there have
been issues with regard to its implementation. These issues have to be
identified by proper monitoring and evaluation, for which one independent
research wing has to be established for conducting concurrent evaluation and
also by promoting beneficiary participation and strengthening social audit
and effective implementation mechanism in reducing rural poverty.

2.13 KEYWORDS
National Advisory Council (NAC): Founded by the Congress party on June
4, 2004, it is a 14-member committee comprised of ex-bureaucrats, members
of civil society, academics, and lawyers. The Prime Minister of India, in
consultation with cabinet ministers, appoints the members. It works as a
bridge between the Indian civil society and the government. NAC’s role is to
devise social policies for the betterment of India’s poor.

Consumer Price Index (CPI): A comprehensive measure used for

estimation of price changes in a basket of goods and services representative
of consumption expenditure in an economy. It is a measure that examines
the weighted average of prices of a basket of consumer goods and services,
such as transportation, food, and medical care. It is calculated by taking price
changes for each item in the predetermined basket of goods and averaging
them.

2.14 SUGGESTED READINGS AND

REFERENCES
Chopra Deepta (2014). Mediating in India’s policy spaces
http://epress.utsc.utoronto.ca/cord/wp-content/uploads/sites/82/2014/05/
Chapter-6-Chopra.pdf\

Papola, T.S. (2005). A universal programme is feasible, Economic and

political weekly, vol 40, No 7, February 12. 594–599.

Sarkar Prottoy, Kumar Jagdish, & Supriya (2011). “Impact of MGNERGA

on reducing rural poverty & empowering socio-economic status of rural poor:
A study of Burdwan district of West Bengal, Agricultural Economics
36
Research Review, Vol-24, pp437-448. Mahatma Gandhi
National Rural
Employment
Bhagwan Vishnu (2009). National Rural Employment Guarantee Act: A Guarantee Act
SWOT analysis, The Indian Journal of Political Science, Jan-March, vol 70,
No-1, pp139-150.

Bernstein Henry (1992). ‘Rural Livelihood: Crises and Responses’, Oxford

University Press, New York.

Chakraborthy, Pinaki (2207). “Implementation of Employment Guarantee: A

preliminary appraisal’ Economic and Political Weekly, Feb 17-23, Vol 42,
No 7, pp. 548-551.

Mehrotra Santosh (200). ‘NREGA two years on: Where do we go from here,
Economic and Political Weekly, August 2-8, No 31, pp 27-35.

Porras Ina & Kaur Nanki (2018).’ India’s Mahatma Gandhi Guaranteed
employment programme’, International Institute for Environment and
Development.

Report Part, ‘Analysis’, Aligning Social protection & climate resilience: A

Case study of MGNERGA & MGNERGA-EB in Andhra Pradesh’,
International institute on environment and Development.

The report, Mahatma Gandhi National Rural Employment Guarantee Act

2005: A journey of decades, Ministry of Rural Development.

MGNERGA, FY 2020-2021, Performance Review Meeting, August 24, 2020

Gaur Seema & Rao Srinivas (2020). ‘Poverty measurement in India: A status
update’, working paper 1/2020, Ministry of Rural Development.

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