Debate over MGNREGA: Sustainable Development v/s Populism

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is a social security measure that guarantees of ‘Right to Work’ to Indian citizen.  Enacted by legislation on 25 August 2005; the scheme provides a legal guarantee for at least one hundred days of employment in every financial year to adult members of any rural household willing to do public work-related unskilled manual work at the statutory minimum wage.

It aims at addressing causes of chronic poverty through the ‘works’ (projects) that are undertaken and thus ensuring sustainable development.  Finally, there is an emphasis on strengthening the process of decentralization through giving a significant role to Panchayati Raj Institutions (PRIs) in planning and implementing these works.

Key features:

• Legal right to work: Unlike earlier employment guarantee schemes, the Act provides a legal right to employment for adult members of rural households.  At least one third beneficiaries have to be women.  Wages must be paid according to the wages specified for agricultural labourers in the state under the ‘Minimum Wages Act’, 1948; unless the central government notifies a wage rate (this should not be less than Rs 60 per day).  At present, wage rates are determined by the central government but vary across states, ranging from Rs 162 per day (in Bihar) to Rs500 per day (in Kerala).
• Time bound guarantee of work and unemployment allowance: Employment must be provided with 15 days of being demanded failing which an ‘unemployment allowance’ must be given.
• Decentralized planning: Gram sabhas must recommend the works that are to be undertaken and at least 50% of the works must be executed by them.  PRIs are primarily responsible for planning, implementation and monitoring of the works that are undertaken
• Work site facilities: All work sites should have facilities such as crèches, drinking water and first aid.
• Transparency and accountability: There are provisions for proactive disclosure through wall writings, citizen information boards, Management Information Systems and social audits.  Social audits are conducted by gram sabhas to enable the community to monitor the implementation of the scheme.
• Funding:  Funding is shared between the centre and the states.  There are three major heads (classification) of expenditure – wages (for unskilled, semi-skilled and skilled labour), material and administrative costs.  The central government bears 100% of the cost of unskilled labour, 75% of the cost of semi-skilled and skilled labour, 75% of the cost of materials and 6% of the administrative costs. However, in case a state is unable to offer work to an applicant within stipulated time-period, then the unemployment allowance is to borne fully by the state.

MGNREGA was implemented in phases, starting from February 2006, and at present it covers all districts of the country with the exception of those that have 100% urban population.  The Act provides a list of works that can be undertaken to generate employment related to water conservation, drought proofing, land development, and flood control and protection works.

Achievements of MGNREGA:

• Ensuring livelihood for people in rural areas.
• Large scale participation of women, Scheduled Castes and Scheduled Tribes (SCs/STs) and other traditionally marginalized sections of society.  SCs/STs account for 51% of the total person-days generated and women account for 47% of the total person-days generated.
• Increasing the wage rate in rural areas and strengthening the rural economy through the creation of infrastructure assets.
• Facilitating sustainable development, and
• Strengthening PRIs by involving them in the planning and monitoring of the scheme.

CAG report on MGNREGA

Some of the findings of the CAG are highlighted below:

A. Inefficient Planning

According to the MGNREGA guidelines, the responsibility for the implementation of the scheme and the primary unit of planning is the Gram Panchayat (GP). The CAG audit however found a number of inefficiencies with this planning process. These included:

• In 1201 GPs (31% of the sampled GPs) across 11 states, annual plans at the GP level were either not prepared or prepared in an incomplete manner. Interestingly, in 3 states, including Andhra Pradesh – none of the sampled GPs had made annual plans.
• District Labour budgets were not prepared in 49 districts (26% of sampled districts).
• The CAG also noted significant delays at every level in the submission of the annual plans. Delays were highest at the GP level –difference between the target date of submission to the block and actual submission ranged from 1 month to as high as 21 months!

B. Shortfall and Delays in Execution of Works

The effectiveness of the planning has to be measured against the actual execution.

• The audit report observed large variations in some states between planned employment generations (as per the labour budget) and actual employment generated. Moreover, in 14 states and 1 UT , 129.22 lakh works amounting to Rs 126,961.11 crore were approved in the annual plans but only 38.65 lakh works ( 30% of planned works) amounting to Rs 27,792.13 crore were completed during the audit period indicating significant inefficiencies in implementation of annual plans.

C. Human Resource Shortfall and Capacity

The MGNREGA guidelines envisage Gram Rozgar Sahayaks (GRS) appointed at the village level to assist the GP in the implementation of the scheme. These GRS are responsible for maintaining all documents, overseeing the process of registration, distribution of job cards, allocation of works, payment of wages and ensuring monitoring of the scheme through social audits.

• The audit report found widespread shortages in GRS posts across 9 states ranging from 20% in Uttar Pradesh to as high as 93% in Punjab. In 4 states including Tamil Nadu and Kerala no dedicated GRS had been appointed.
• Further, funds for training personnel were highly under-utilized in many states. In Uttar Pradesh for instance, 74% of funds for training in 2010-11 had not been utilized.
D. Specific problems related to wages and MGNREGA works

• Job cards were not issued to 12,455 households in six states. Photographs on 4.33 lakh job cards (an important identifier against fraud and misrepresentation) were missing in 7 states. Non-payment or under payment of wages of Rs 36.97 crores was noticed in 14 states. In 55 GPs, payment was made in cash violating the guidelines which prescribes payment through banks or post offices. Other issues included, suspected misappropriation of wages through engagement of ghost works, incomplete or improperly filled “muster rolls” non-payment of unemployment allowance, delays in receipt of wages, amongst others

E. Record Keeping and Monitoring

• The audit found poor record maintenance at not just the GP level but also at the block and district levels. Deficiencies relating to both non-maintenance and/or incorrect maintenance of prescribed basic records were noticed in 18%-54% of all tested GPs.

F.  Beneficiary Analysis

• While at an all India level the total women beneficiaries is 33% (as per the norm), this ratio was less than 1/5th in Gujarat, Madhya Pradesh, Odisha, Uttar Pradesh, West Bengal, Jammu and Kashmir and Mizoram.
• On average about 72% of beneficiaries were aware of the number of days of employment to which they were entitled. Awareness levels were highest in some of the smaller states/UTs – Kerala, Meghalaya, Mizoram, Tripura and Pondicherry. In contrast, it was 28% in Gujarat; 43% in Odisha; 52% in Bihar; and 57% in Maharashtra.
• Around 70% of respondents were aware of the timeliness within which wages are to be paid.
• Only half of the interviewed beneficiaries were aware of the prescribed quantum of work which entitled them to full wage payment. Similarly only around 56% were aware of the manner of wage calculations.
• A positive finding was that on average work was provided after 9 days of the job request (the guidelines say within 15 days of job application). However 99% of beneficiaries who were not provided work within 15 days were not paid the unemployment allowance.
• 78% of beneficiaries reported that muster rolls were maintained at the work site and attendance was marked on it.
• 65% reported that they received wages within 15 days, 16% within 1 month, 11 % between 1-2 months, 4% within 2-3 months and 2% reported delays of more than 2 months.

Recommendations of the Standing Committee on Rural Development

The recommendations are as follows:

• Regulation of job cards: Offences such as not recording employment related information in job cards and unlawful possession of job cards with elected PRI representatives and MGNREGA functionaries should be made punishable under the Act.
• Participation of women: Since the income of female workers typically raises the standard of living of their households to a greater extent than their male counterparts, the participation of women must be increased through raising awareness about MGNREGA
• Participation of people with disabilities: Special works (projects) must be identified for people with disabilities; and special job cards must be issued and personnel must be employed to ensure their participation.
• Utilization of funds:  The Committee found that a large amount of funds allocated for MGNREGA have remained unutilized.  For example, in 2010-11, 27.31% of the funds remained unutilized.  The Committee recommends that the Department of Rural Development should analyze reasons for poor utilization of funds and take steps to improve the same.  In addition, it should initiate action against officers found guilty of misappropriating funds under MGNREGA.
• Context specific projects and convergence: Since states are at various stages of socio-economic development, they have varied requirements for development.  Therefore, state governments should be allowed to undertake works that are pertinent to their context.  There should be more emphasis on skilled and semi-skilled work under MGNREGA.  In addition, the Committee recommends a greater emphasis on convergence with other schemes such as the National Rural Livelihoods Mission, National Rural Health Mission, etc.
• Payment of unemployment allowance: Dated receipts for demanded work should be issued so that workers can claim unemployment allowance.  Funds for unemployment allowance should be met by the central government.
• Regular monitoring: National Level Monitors (NLMs) are deployed by the Ministry of Rural Development for regular and special monitoring of MGNREGA and to enquire into complaints regarding misutilisation of funds, etc.  The Committee recommends that the frequency of monitoring by NLMs should increase and appropriate measures should be taken by states based on their recommendations.  Additionally, social audits must mandatorily be held every six months.  The Committee observes that the performance of MGNREGA is better in states with effective social audit mechanisms.
• Training of functionaries: Training and capacity building of elected representatives and other functionaries of PRIs must be done regularly as it will facilitate their involvement in the implementation of MGNREGA.

The future of MGNREGA is uncertain as the new Government at Center has shown its inclination towards complete restructuring of the scheme. It has proposed to limit MGNREGA programmes within tribal and poor areas and programme and is expected to be restricted to 2,500 backward blocks; identified as per the percentage BPL population. Similarly, a change to labour:material ratio from 60:40 to 51:49 has also been proposed. Fund disbursement has been reduced by 45%, since the new government has taken charge. In response to these proposals and changes, a group of leading economists from India and abroad have written a letter to PM to retain MGNREGA in its original structure and rather work towards stopping the leakages and construction of productive assets. 

They central point of their argument was, ‘Despite numerous hurdles, the MGNREGA has achieved significant results. At a relatively small cost (currently 0.3% of India's GDP), about 50 million households are getting some employment at NREGA worksites every year. A majority of NREGA workers are women, and close to half areDalits or Adivasis. A large body of research shows that the NREGA has wide-ranging social benefits, including the creation of productive assets.’

On the other hand some analysts argue, MGNREGA belittles the long-term development of the worker by paying out cash for unproductive labor and discourages skill development which alone can lead to long-term and sustainable employment of the rural poor. Instead the money can be used for skill development, e.g., painting, polishing, assembling, packaging, and equipment handling, among others, to cite a few. This would enable the poor and needy to become self-dependent and become a contributor, rather than a burden on exchequer.

The current debate is also important from the point of view of the political viewpoint; as from the recent election results, people have voted out government that promised social change through grants, subsidies, and doles. While MGNREGA is not exactly a dole program, the poor planning by village level authorities and dysfunctional Gram Sabha have made it so as the asset creation is very poor and the money is just spent on social welfare, instead of rural infrastructure.

Mains questions:

1) MGNREGA is a tool for human resource development but in turn it is in need of good human resource. Explain the statement.

2) Should MGNREGA be discontinued; give reasons in support of your answer.