Understanding the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). A Scheme Supporting Economic Development
On Economic Development in Rural India
Academic Paper 2018 17 Pages
History of Wage Employment Programme
Table 1: Workfare Programmes in India
Objectives of MGNREGA
Salient Features of MGNREGA
Funding of MGNREGA
Why NREGA is so popular?
What is wrong in MGNREGA?
How Long MGNREGA?
Employment Schemes across the World
Discussion and Suggestions
Since 2000 India has experienced rapid economic growth and a sharp decline in poverty. But employment has grown more slowly. Government intervened in the economy through National Rural Employment Guarantee Act, which provides employment to unskilled workers in rural areas besides creating community/productive assets at the level of village such as wells, tanks, ponds, roads etc. This programme is designed to provide income protection against poverty in rural area. The choice of works under MGNREGA seeks to address the causes of chronic poverty such as drought, deforestation and soil erosion. MGNREGA is different from other employment and poverty alleviation programme in the sense that it is a legal framework and right to work based programme. This is a paradigm shift from its earlier programmes for it is a bottom-up, demand driven structure with built-in social audits. The paper investigates how this employment generating scheme is different from other employment generating scheme and finds how MGNREGA is supporting economic development by creating community/productive assets at the level of villages.
Keywords: community assets, employment, demand-driven, universalism
JEL: H54, J33, J69, N30, Q25, Q29
Work enables people to earn a livelihood and be economically secure. It is critical for equitable economic growth, poverty reduction and gender equality. It also allows people to fully participate in society while affording them a sense of dignity and worth (UNDP, 2015: 1). Having these objectives in view, Ministry of the Rural Development (MoRD), Government of India implemented National Rural Employment Guarantee Act (NREGA). The NREGA was enacted by legislation on August 25, 2005. The Act received assent of the President on September 5, 2005 and was notified in the Gazette of India on September 7, 2005. The law was initially called the National Rural Employment Guarantee Act (NREGA) but was renamed as Mahatma Gandhi National Rural Employment Guarantee Act/Scheme (MGNREGA/S) on 2nd October 2009. The MGNREGA is a centrally sponsored scheme designed to cover entire rural area of the country. The significance of MGNREGA lies in the fact that it creates a right based framework for wage employment programmes and makes the Government legally accountable for providing employment to those who ask for it. In this way, the legislation goes beyond providing a social safety net towards guaranteeing the right to employment.
India has initiated massive economic development and safety net programmes over the past two decades. It has, for example, moved from universal food subsidies to targeted food subsidies and back again to a near-universal programme (Desai, 2015: iii). Universalism implies equal access and opportunities to build core capabilities. Universalism is a powerful way of directly addressing the uncertain nature of vulnerability. Social policies that have a universal aim not only protect those who currently experience poverty, poor health or a bout of unemployment; they also protect individuals and households that are doing well but may find themselves struggling if things go wrong. And they secure certain basic core capabilities of future generations (UNDP, 2014:85). Universalism is frequently discussed with regard to social policies – such as health, education, childcare and income support (UNDP, 2014:92). Some programmes have been able to target beneficiaries more easily, for example conditional cash transfers for hospital delivery (Desai, 2015: iii). And others have been ambitious in their design, scale and reach, as for example the rural safety net (such as income support) provided by the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), a nationwide rural public works programme that costs India about 1 percent of GDP and works on the principle of self-selection (workers have access to 100 days of public employment a year when they choose). Every person working under the Scheme shall be entitled to wages at the minimum wage rate fixed by the State Government (or the competent authority concerned) for agricultural labourers under the Minimum Wages Act, 1948, unless the wages have been notified by the Central Government under Section 6(1) of the Act. It is essential to ensure that wages are paid on time. In the event of any delay in wage payments, workers are entitled to compensation as per the provisions of the Payment of Wages Act, 1936 (NREGA, Schedule II, Section 30). Compensation costs shall be borne by the State Government (Government of India, 2005: 26). During 2009-10, 80 per cent wages are paid within 15 days. In 2014-15, 77 per cent wages are paid after three months.
Since 2000 India has experienced rapid economic growth and a sharp decline in poverty. But employment has grown more slowly. And although agriculture contributes 18 per cent to the Indian economy, it continues to employ 47 per cent of the workers. The difference between 47 per cent of workers in agriculture and their contribution is only 18 per cent to the Indian economy reflect disguised unemployment (i.e., crowding of workers in agriculture sectors) in agriculture particularly women. During 2005, Indian economy was growing at the rate of 7 – 8 per cent but income disparity was widening. Labour class were not getting the benefit of market reforms, growth and globalisation. In this context, government intervention was required. Thus, government intervened in the economy through National Rural Employment Guarantee Act to provide employment to unskilled workers in rural areas. This programme is designed to provide income protection against poverty in rural area. A majority of the poor in rural areas of the country depend mainly on the wages they earn through unskilled, casual, manual labour. They are often on threshold levels of subsistence, and are vulnerable to the possibility of sinking from transient to chronic poverty. Inadequate labour demand or unpredictable crises that may be general in nature, like natural disaster or personal like ill-health, all adversely impact their employment opportunities. The choice of works under NREGA seeks to address the causes of chronic poverty such as drought, deforestation and soil erosion. In order to attack on causes of chronic poverty and bringing excluded people into the mainstream of economic development, the Government of India is focusing on rural development through agriculture development under MGNREGA.
MGNREGA is different from other employment and poverty alleviation programme in the sense that it is a legal framework and right to work based programme. Besides, it has bottom-up, demand driven structure with built-in social audits. Demand driven structure means that MGNREGA provides employment to those who demand it. In this sense it is a paradigm shift from its earlier programmes. Notified on September 7, 2005, MGNREGA aims at enhancing livelihood security by providing at least one hundred days of guaranteed wage employment in a financial year to every rural household whose adult members volunteer to do unskilled manual work. The Act was implemented on February 2, 2006, by covering 200 districts in its first phase, and was extended to 130 additional districts in 2007-2008. All the remaining rural areas have been notified with effect from April 1, 2008. The National Rural Employment Guarantee Act was implemented with an objective to provide wage employment in rural areas, create durable/community assets, and ensure food security. The scheme is not only guaranteeing 100 days of employment in a financial year to any rural household whose adult members are willing to do unskilled manual work but also seeks to create community/productive assets at the level of village such as wells, tanks, ponds, roads etc. In addition this scheme also serves other objectives such as protecting the environment, empowering the rural women, reducing rural-urban migration, thereby boosting the rural economy, reducing rural poverty, and fostering the social equity, among others. This Act is an important step towards the realization of right based employment guarantee, which provides income support to the weaker sections of the rural society. It can also serve the larger objective of enhancing agricultural productivity because the first priority under MGNREGA is being given to projects aimed at water conservation (XI FYP, Vol. I: viii). It is also expected to enhance people’s livelihoods on a sustained basis, by developing the economic and social infrastructure in rural areas. These will lead to regeneration of the natural resource base with potential to provide sustained stimulation to our agrarian economy. The National Rural Employment Guarantee Act is a “People’s Act.” More than any other law, MGNREGA is an Act of the people, by the people and for the people. Effectively implemented, the employment generated under the Act has the potential of transforming the geography of poverty (Government of India, 2005: ii). In fact NREGA remains a most revolutionary scheme, with a potential to change the rural landscape. The Act places a strong emphasis on transparency and on voluntary public disclosure. The Act has generated considerable enthusiasm among the rural people of our country given its features of statutory time bound for providing employment, demand based approach, shift from being work-led to employment generation, focus on accountability and transparency and compensation by the State Government (in the form of unemployment allowance) in case of non-provision of employment. The payment of unemployment allowance shall be made no later than 15 days from the date on which it becomes due for payment (NREGA, Section 7(5)). In the event of any delay, the recipients shall be entitled to compensation based on the same principles as wage compensation under the Payment of Wages Act, 1936. Compensation costs shall be borne by the State Government (Government of India, 2005: 29).
The MGNREGP is self targeting as it is expected that only the unemployed with no other source of income for that period would opt for a programme of wage employment. Also, MGNREGP provides an opportunity to States and districts to plan and execute programmes that provide employment and create rural assets that would support further economic activity. The availability of funds on demand distinguishes NREGP from other schemes. The SGSY is targeted at BPL families and has in-built safeguards for the weaker sections with 50 per cent benefits reserved for SCs/STs (XI FYP, Vol.I: 143).
History of Wage Employment Programme
In India, employment provision has been used extensively as a tool for protecting entitlements for centuries. Since the fourth century B.C., when Kautilya, the ancient Indian political economist, wrote his Arthasastra, India's rulers and governments have emphasized public relief works, particularly during famine (Dev, Mahendra S). One of the earliest treatises on famine relief goes back more than 2000 years. This treatise is commonly attributed to Kautilya, who recommended that a good king should build new forts and water-works and share his provisions with the people, or entrust the country to another king. Historically, Indian rulers have employed several methods of famine relief. Some of these were direct, such as initiating free distribution of food grains and throwing open grain stores and kitchens to the people. Other measures were monetary policies such as remission of revenues, remission of taxes, increases of pay to soldiers, and payment of advances. Yet other measures included construction of public works, canals, and embankments, and sinking wells. Migration was encouraged. Kautilya advocated raiding the provisions of the rich in times of famine to “thin them by exacting excess revenue.” (en.m.wikipedia.org) Employment in public works later became the main element of strategies for famine prevention in India and it has proved effective (World Bank 1990). After India's independence in 1947, there were many central government-sponsored schemes, beginning with the Rural Manpower Program in 1960. The most important program at the state level is the Maharashtra Employment Guarantee Scheme (EGS), which was introduced in 1972. The Maharashtra EGS is one of the most researched and discussed programs in the country. The United Nations Development Program's (UNDP) Human Development Report (UNDP, 1993: 43) commends Maharashtra's EGS as one of the largest public programs in the developing world.
In the semi-arid region to which the state of Maharashtra in India belongs, agriculture is a highly seasonal activity. During the lean periods, large numbers of rural households eke out a bare subsistence through short spells of mostly unremunerative employment. The aim of the Maharastra Employment Guarantee Scheme (EGS) is to address this problem by providing guaranteed employment at a wage level sufficient to ensure a minimum level of subsistence. By reducing risks faced by poor households, and by constructing productive assets and infrastructure, the scheme also aims to have a longer-term developmental role (Gaiha, 2005). Maharashtra’s scheme began in 1972 with the aim of providing, on request, a guarantee of employment at a stipulated wage within 15 days and no more than 5 kilometres from the applicant’s village home (UNDP, 1996: 97). Due to constraints and backwardness, the employment provided by the agriculture sector in Maharashtra is not sufficient for labourers to earn an adequate living. Hence, employment in agriculture needs to be complemented by government intervention. The MGNREGS is one attempt to enlarge the scope of employment in order to alleviate poverty.
The need to evolve a mechanism to supplement existing livelihood sources in rural areas was recognized early in development planning in India. The Government implemented workfare programmes that offered wage employment on public works at minimum wages. The wage employment programmes started as pilot projects in the form of Rural Manpower (RMP) [1960-61], Crash Scheme for Rural Employment (CSRE) was introduced by the late Prime Minister Indira Gandhi in 1971 as part of her garibi hatao (abolish poverty) programme, Pilot Intensive Rural Employment Programme (PIREP) , Small Farmers Development Agency (SFDA), Marginal Farmers & Agricultural Labour Scheme (MFAL) were introduced to benefit the poorest of the poor.
Table 1: Workfare Programmes in India
Abbildung in dieser leseprobe nicht enthalten
These experiments were translated into a full-fledged wage-employment programme in 1977 in the form of Food for Work Programme (FWP). In the 1980s this programme was further streamlined into the National Rural Employment Programme (NREP) and Rural Landless Employment Guarantee Programme (RLEGP). The Jawahar Rozgar Yojana (JRY) was merged with Jawahar Gram Samriddhi Yojana (JGSY) from 1999-2000 and was made a rural infrastructure programme. The programme was merged with Sampoorna Grameen Rozgar Yojana (SGRY) from 2001-02, and National Food for Work (NFFWP, 2005). These wage employment programmes implemented by State Governments with Central assistance were self-targeting, and the objective was to provide and enhance livelihood security, especially for those dependent on casual manual labour (Government of India, 2006-07: 1). At the State level, the Govt. of Maharashtra formulated the Maharashtra Employment Guarantee Scheme which was introduced in 1972, it received statutory basis in 1977 when the Maharashtra Legislative Assembly unanimously voted it a law of the land. The law became operative from January 26, 1979, with the consent of the President of India, and Maharashtra became the first state in the country to guarantee work. This law declares that "every adult person in the rural areas in Maharashtra shall have a right to work, that is, a right to get guaranteed employment . . . in accordance with the provisions of this Act and the Scheme made thereunder" (Maharashtra, Planning Department 1981: 907). The Maharashtra EGS is one of the most researched and discussed programs in the country. The MGNREGA is the experience of Maharashtra Employment Guarantee Scheme, where the main objectives of the employment guarantee scheme (EGS) are to sustain household welfare in the short run (through provision of employment) and to contribute to the development of the rural economy in the long run, through strengthening rural infrastructure. Works undertaken by the EGS have to be productive (Dev, Mahendra S).