Critical Analysis of MGNREGA


Swaraj Abhiyan has filed a Public Interest Litigation in Supreme Court concerning the violation of various provisions of the MGREGA.

What is MGNREGA?

  • The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is a employment guarantee act
  • It was introduced in 2005 through the National Rural Employment Guarantee Act, 2005.
  • In 2010, NREGA renamed as MGNREGA


To enhance livelihood security of household in rural areas of India


  1. To provide guaranteed 100 days of wage employment per year to each rural household
  2. Creation of durable rural assets
  3. Social inclusion of women, SCs and STs
  4. Strengthen the Panchayati Raj Institutions


  • The Act currently covers all districts with the exception of those that have a 100% urban population.

Key Features:

  1. Demand driven scheme: Worker to be hired when he demands and not when the Government wants it.
  2. Gram Panchayat is mandated to provide employment with 15 days of work application, failing which worker is entitled to unemployment allowance
  3. Payment of wages within 15 days of competition of work, failing which worker is entitled to delay compensation of 0.05%/ day of wages earned
  4. Minimum one-third of the workers should be women
  5. Wages to be paid according to the Minimum Wages Act 1948 for agricultural labourers in the State
  6. Social Audit to be done by Gram Sabha

Recent developments:

  • Direct Benefit Transfer: Wages are electronically transferred to the worker’s bank/ post office accounts through National Electronic Fund Management System (NeFMS)
  • GeoMGNREGA: Geo-tagging all assets created under MGNREGA



  1. MGNREGA has been a powerful instrument for empowerment of poor women through its effect on livelihood security and social protection. In FY2015-16 out of the total employment through MGNREGA, 56% was generated for women.
  2. Reduced distressed rural to urban migration and also seasonal migration by providing work closer to home and decent working conditions.
  3. Has helped in the upliftment of SCs and STs through creation of livelihood opportunities. The percentage of Scheduled Caste workers has consistently been about 20% and Scheduled Tribe workers has been about 17%
  4. Sustainable assets have been created linked to conservation of natural resources and has helped in overall development of Gram Panchayats.
  5. Payment of wages through bank accounts/ post office has led to large financial inclusion of the poor.
  6. The average daily wage rate of farm workers has grown sharply after MGNREGA


  1. Insufficient budget allocation:
  • Increase in nominal budget but actual budget (after adjusting inflation) decreased over years
  • Though allocated 55,000 crore, the actual value of budget allocation of 2018-19 is much lower than that of 2010-11
  • In 2018, Rs 7,000 crore has been allocated from “Extra Budgetary Resources (EBR)”. Annual outlay remains same as 2017-18
  1. Shift to Supply-driven programme:
  • State submits Labour Budget to the Centre- A labour budget contains anticipated labour demand for the next financial year.
  • The Centre through the arbitrary “Approved Labour Budget” has reduced the number of days of work and put a cap on funds through the National Electronic Fund Management System
  • According to Ne-FMS guidelines, states won’t be allowed to generate employment above the limits agreed by Approved labour Budget
  • This has made the programme supply-driven
  1. Poor wages rate:
  • Stagnation of wage rate due to delinking MGNREGA wage rates from Minimum Wages Act, 1948
  • MGNREGA wages are lower than minimum wages in most states
  • This could push marginalized section to take up vulnerable and hazardous jobs

  1. Delay in wage payments:
  • Delayed payments increased from 39% in 2012-13 to 73% in 2014-15
  • 32% of payments in first 2quarters of FY17-18 were on time
  • As of 2016-17, total amount of wage pending is Rs. 11000 crore
  • In current financial year, 25% of Funds Transfer Order (FTOs) pertaining to wage payment from January to April is pending to be processed by Centre
  1. Non-payment of unemployment allowance
  2. Partial compensation for delayed payment
  3. Distortion in labour market
  4. Fabrication of job cards: Payments to fictitious workers
  5. Infrequent social audits
  6. Ineffective grievance redressal
  7. Insufficient involvement of Panchayati Raj institutions
  8. Large number of incomplete work
  9. Poor quality of assets created

Measures to be taken:

  1. Proper and timely allocation of funds
  2. Ensuring minimum wages for workers
  3. Effective monitoring of projects
  4. Ensuring employment to rural households as per demand for work.
  5. Proper job card verification
  6. Ensuring efficient grievance redressal mechanism
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