MGNREGA has its flaws but remains important for the rural economy

The much maligned MGNREGA (“monument of sixty years of failure”) is again in the news. The Parliamentary Standing Committee on Rural Development and Panchayati Raj submitted its report on the functioning of MGNREGA to the Lok Sabha on February 8, 2022.

Entitled ‘Critical Assessment of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)’, the report is an acknowledgment, if any were needed, of the crucial role that the law plays in the rural economy.

Adopted in 2005 with the ambitious goal of providing at least 100 days of guaranteed wage employment in a financial year to every rural household, whose adult members volunteer to perform unskilled manual labor, the program has become a powerful tool to ensure inclusive growth in rural India. . The law covers the entire country except for districts whose population is 100% urban.

The report contains more than 30 recommendations, which also reflect the nonchalant manner in which this critical program is being managed.

The most important of these highlights the fact that there has always been an increase in the revised estimate over the budget estimate in the past. However, the BE for 2021-22 has been kept at Rs 73,000 crore. This while the expenditure of the previous year was around Rs 1,11,000 crore. If ever an estimate of the impact of the pandemic were needed, this figure highlights the reverse migration from urban to rural areas. MGNREGA was the last resort for all these workers.

The law guarantees the release of wages within 15 days from the date of closure of the call lists. The Committee “painfully” learned of the delay in the release of funds. The pending dues as of November 15, 2021 were Rs 276,378.22 lakhs, defeating the very purpose of the scheme.

The Committee noted the wide disparity in wage rates from state to state. From as little as Rs 193 to Rs 198 in Chhattisgarh and MP, Bihar, Jharkhand (the poorest states) to as high as Rs 318 in Sikkim. The Committee recommended increasing the number of guaranteed working days from 100 to at least 150; what the Committee felt, given the situation in the country, was the “need of the hour”.

The Committee recommended the need to regularly review the scope and nature of the work authorized under the MGNREGA. He stressed the need to increase the authorized work taking into account the local geographical terrain and local requirements. This is particularly relevant given the criticism the Regime faces that unproductive work (playing with mud, digging holes) is often carried out (not the Regime’s fault but reflects a lack of imagination and supervision).

The Committee commented negatively on the delay in compensation. The law provides for the payment of compensation for delays beyond 15 days. This is applicable at the rate of 0.05% of the unpaid salary per day. The Committee was also “stunned” to learn of the flagrant violation of the employment allowance provisions.

The law provides that if a job seeker under the law does not get a job within 15 days, he is entitled to daily unemployment benefit. However, the Committee was told that as of November 5, 2021, no amount was paid in the name of unemployment benefit. Obviously, something is seriously wrong.

The Panel noted that despite the fact that MGNREGA stipulates payment of wages to beneficiaries within 15 days of completion of works, there is undue delay. This is mainly because the transfer does not take place due to either an inactive Aadhaar or the bank account not being functional.

The law provides that the Gram Sabha carry out regular social audits of all projects undertaken within the Gram Panchayat. However, this did not happen. Thus, in 2020-21, only 29,611 Gram Panchayats (we have around 2,53,000 Gram Panchayats) were audited at least once.

MGNREGA is considering an ombudsman to deal with grievances. But as the Committee has observed, and more incisively by Sanjiv Kumar and S Madheswaran in their Institute for Social and Economic Change in Karnataka Context Working Paper 460, the MGNREGA Ombudsman, in the absence of any infrastructural support, is a “desperate bogeyman”.

How many rural poor people can afford to go to an ombudsman is another question. That said, there is anecdotal evidence to suggest heartbreaking corruption at the lowest level (effective oversight by the Gram Panchayats and the weeding out of middlemen will be more needed). The Department of Rural Development and Panchayati Raj would do well to address these shortcomings. MGNREGA is still relevant. As Sudha Narayanan points out, the scheme is a crucial part of “comprehensive social protection that serves as a safety net for the most vulnerable people”.

Again, as noted, despite the scale of MGNREGA, spending has never exceeded 0.4% of GDP per year since its inception. Narayanan claims that at no time did MGNREGA account for more than 3% of total rural employment, belying the belief that the program was “destroying the national labor market”. In fact, there is now a demand to extend the program to the urban poor as well.

The time will surely come when the MGNREGA will no longer be needed. It’s safe to say that it won’t be happening anytime soon. The pandemic has instead re-emphasized the importance of the regime as an essential relief provider.

(The author is a former chairman of the Central Excise and Customs Board)

About Keneth T. Graves

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