Labour Law -II Project

MGNREGA
BY: Rasmiika Punnose (1560)

VIth Semester
 Table of Contents
INTRODUCTION................................................................................................................ 2
HISTORY BEHIND THE SCHEME ....................................................................................... 3
SALIENT FEATURES AND OBJECTIVES OF THE MGNREGA ............................................ 4
How does the scheme work? .......................................................................................... 5
PERFORMANCE OF THE SCHEME ...................................................................................... 6
THE WAY FORWARD ........................................................................................................ 7
CONCLUSION ................................................................................................................... 8
 INTRODUCTION
On February 2, 2006, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)
went into effect. It was the first time in the world that a right to work was used to give an economic
safety net to roughly two-thirds of the population. The development of rural households is critical for
the development of India as a whole, as inclusive and equitable growth unlocks the potential of the vast
rural households that currently lack access to basic amenities and are deprived of their basic needs to
survive in this world and to emerge from this situation. This project will look into the background to
the enactment of the scheme, the salient features, the working of the scheme and the effectiveness of
the same since its inception. Finally, I will propose a few reforms that further fill the loophole in the
scheme.
 HISTORY BEHIND THE SCHEME
In India, almost 270 million people live in poverty, with 80.3 percent of them living in rural areas. 1
Poverty and unemployment are becoming more prevalent among small and marginal farmers, as well
as landless agricultural labourers, fueling widespread migration to cities. Poverty is also more prevalent
in female-headed households and underprivileged communities, such as scheduled castes (SCs) and
scheduled tribes (STs).

MGNREGA contains various key aspects that were missing in previous public works and employment
generation programs for achieving the required objectives. India has a lengthy history of public-works-
based job-guarantee schemes, with tests dating back to the 1980s. Some of which include the National
Rural Employment Programme (NREP), Rural Landless Employment Guarantee Programme (RLEGP),
Jawahar Rozgar Yojana (JRY), Employment Assurance Scheme (EAS), Jawahar Gram Samridhi
Yojana (JGSY), Sampoorna Grameen Rozgar Yojana (SGRY) and National Food for Work program
(NFFWP). In 2006, SGRY and NFFWP combined to form NREGA. In the implementation of all of
these programmes, there were certain common issues.2 These were:

1. They were all centralised projects, created and implemented by the bureaucracy without consultation
or popular participation.

2. The second element was that they were supply-driven, which meant that employment was based on
the government's needs. As a result, the people's needs were ignored.

3. Lack of accountability and transparency mechanisms, as well as social accounting and monitoring.
As a result, there was a lot of looting and waste of resources, as well as incidences of leakage and
pervasive corruption among government employees.

4. The creation of jobs was insufficient. Furthermore, the creation of jobs was not considered as being
linked to the provision of a minimal level of livelihood stability.

5. Income, minimum wages, and worker amenities were not included in the entitlement, denying the
impoverished a minimum level of dignity.

6. Women's participation in the programmes is low.

7. Job opportunities were not adaptable to the needs of workers.

MGNREGA represents a dramatic shift away from supply-driven work-based employment policies and
toward right-based demand-driven policies.3

1
RBI. (2014). Handbook of Statistics on Indian Economy 2013-2014. New Delhi, available at:
https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/000HSE13120914FL.pdf
2
Pankaj, A. (2012). Right to Work and Rural India: Working of the Mahatma Gandhi National Rural Employment Guarantee Scheme
(MGNREGS). New Delhi: SAGE Publications India.

3
Sharma, A. (2011). The Mahatma Gandhi National Rural Employment Guarantee Act. Innovative, 271.
 SALIENT FEATURES AND OBJECTIVES OF THE MGNREGA
MGNREGS was adopted as part of the then-ruling government's inclusive growth and rights-based
policies, which recognised citizens' rights to social and economic development. During the low
agricultural season and weak monsoons, MGNREGS strives to give an alternate source of income.
Furthermore, to strengthen grassroots governance and to build long-lasting assets like roads and
irrigation canals that will promote sustainable rural livelihoods and deter migration to cities. Encourage
environmental preservation as well.

Unlike its predecessors, which were based on executive directives, MNREGA is enacted by the
legislature and thus has both legal and constitutional authority. It is irreversible and can only be repealed
by a new act of parliament. It is not simply a work-based employment programme, but it also
incorporates the aim of providing rural households with a minimal level of livelihood security and other
development goals. The act's core theme is entitlement, and it includes rules for minimum pay, adequate
worksite facilities, and female involvement (at least one-third of the workforce). It is a first-of-its-kind
experiment in partially decentralised programme planning, implementation, and monitoring across
states via Panchayati Raj Institutions (PRIs).

Other distinguishing elements of MGNREGA include at least 100 days of employment at a minimum
pay, establishing a minimum level of livelihood stability for disadvantaged rural households and
ensuring a dignified existence for them. A demand-driven employment method that allows participants
to self-select. Unemployment benefits to the requester in the event that the state agency is unable to
supply acceptable work, hence keeping government personnel on their toes in terms of delivering
gainful employment.

MGNREGA funding is a legal requirement that is not subject to budgetary allocations, guaranteeing
that the poor's livelihood is not dependent on fiscal allocations. Salaries for unskilled labour will account
for 60% of the project cost, while wages for semi-skilled labour, skilled labour, and material costs will
account for 40%. Central funding for 100% of the wages of unskilled workers and 75% of the wages of
semi-skilled workers, skilled labour, and material expenditures. The state is responsible for
unemployment benefits. Unlike budgetary allocations, a non-lapsable fund that can be carried over from
year to year. An emphasis on water conservation and harvesting projects, which are crucial in rural
areas. PRIs provide a decentralised implementation mechanism. Transparency and accountability are
enforced through social auditing. There are also four types of worker entitlements: drinking water,
housing, first aid, and a crèche for female workers' children under the age of six. Contracts are avoided
as much as possible, and machines are avoided. The establishment of an ombudsman and a three-tier
grievance redress system is found in the scheme.

An examination of the Act's goals and key elements reveals that it can be viewed as a social security
measure, an employment creation programme, a conditional cash transfer scheme, a rural development
effort, and a macroeconomic policy project. Its multi-directional and multi-pronged objectives provide
a lot of ambiguity about the program's true nature. Despite worries regarding the direction and exact
nature of development, it enshrines the notion of minimum livelihood security as a non-negotiable
democratic entitlement of citizens. As a result, it firmly defines the concept of rights and entitlements
as part of democratic citizenship, which could have far-reaching ramifications in the future.4

How does the scheme work?

MGNREGA protects Indian citizens' freedom to work by enforcing specific sections of the Indian
constitution. For rural households in need of minimum income support, the programme is demand-
driven and self-targeting. MGNREGS employed 57.8 million people in fiscal year 2014-15, accounting
for approximately 16.9% of the rural labour force.5

MGNREGA is based on the values of openness and democracy at the grassroots. It mandates
decentralised administration and governance, under which each state develops and funds its own
MGNREGS in collaboration with the national Ministry of Rural Development (MORD). Local PRIs
are in charge of the majority of the planning, implementation, monitoring, and evaluation operations.

MNGREGS is unique in that its systems for proposing works, enrolling beneficiaries, financing and
sharing costs, assessing production, and paying wages are essentially bottom-up, multi-agency, and
multi-level. The Gram Sabha is in charge of recommending relevant projects at the most basic level.
The Gram Panchayat is in charge of making decisions, planning, and implementing them (at least 50
per cent of works by law). Work should be available within a 5-kilometer radius of the hamlet;
otherwise, monetary compensation for additional travel and living expenses will be offered. State
governments are obligated to offer an unemployment cash benefit if work is not provided within 15
days of a worker's application. Contractors and labor-replacing machinery are prohibited, and materials,
skilled labour, and administrative costs can account for no more than 40% of the entire project cost.
The remainder is set aside as pay for beneficiaries who do unskilled manual labour. MGNREGS are
managed and monitored using NREGASoft, a specific management information system.

4
Pankaj, A. (Ed.). (2012). Right to Work and Rural India: Working of the Mahatma Gandhi National Rural Employment Guarantee Scheme
(MGNREGS). SAGE Publications India.
5
Sangita Misra and Anoop K Suresh, (2014) Estimating Employment Elasticity of Growth for the Indian Economy, RBI Working Paper
Series 6. Available at: https://www.rbi.org.in/SCRIPTS/PublicationsView.aspx?id=15763
 Fig. Work flow of MGNREGAS

PERFORMANCE OF THE SCHEME

Many of the provisions of ILO Social Protection Floors Recommendation No. 2026 are met by design,
such as universal protection, eligibility to benefits stipulated by national law, social inclusion, and
respect for people's rights and dignity. MGNREGS was successful in securing the participation of
women and disadvantaged SC and ST groups, according to administrative data from 2014-15. Women
have profited from more over half of the effort (54.5%), while SC and ST groups have benefited from
39.1%. It has fostered the financial inclusion of the rural poor by opening 98 million new bank/post
office accounts for MGNREGS labour payments7.

However, due to a lack of understanding or unwillingness to perform manual labour, some rural
households, particularly the impoverished, remain excluded from the system8. Nationally, 56% of
households that stated a wish to work were able to find work. The differences between states are
significant, ranging from 16 to 85 percent. Having said that, practically every household that had
requested work was given a job. This indicates that some households are in need of assistance but do
not want to work.

6
R202 - Social Protection Floors Recommendation. (2012). International Labour Conference. Geneva.
7
Available at: https://nrega.nic.in/netnrega/homestciti.aspx?state_code=26
8
Ehmke, E. (2016). India's Mahatma Gandhi National Rural Employment Act: Assessing the quality of access and adequacy of benefits in
MGNREGS public works. International Social Security Review.
Despite helping to reduce poverty in rural households, the programme has had significant hiccups.
Shortage of staff, insufficient public awareness of the scheme, lack of effective monitoring and audit
mechanisms at the local level, and late wage payments are some of the issues identified during the
public audit9 conducted by the Comptroller and Auditor General of India (CAG), all of which reduce
the scheme's reliability as a livelihood coping mechanism. Furthermore, MGNREGS' decentralised
structure does not adequately handle significant inter-state disparities in administrative and service
delivery capacities.10 States with large rural populations, including as Bihar, Maharashtra, and Uttar
Pradesh, have been found to underutilize central government money for MGNREGS implementation11.

THE WAY FORWARD

The following steps, among others, might be claimed to reform MGNREGS in order to boost its
effectiveness. The use of Information, Education, and Communication (IEC) funds to raise beneficiary
awareness. Encourage must be given to state governments to pay unemployment allowances through
co-funding and monitoring. Improvements must be made to the administrative records and programme
monitoring, particularly at the local level, to ensure compliance, prevent misappropriation of funds, and
evaluate MGNREGS performance.

Since its inception, MGNREGS has issued guidelines on late salary payment compensation, launched
mass media campaigns, and offered financial assistance to states for the staffing of social audit units
and MGNREGS staff training.

9
India, C. a. (2013). Performance Audit of MGNREGA, Ministry of Rural Development.
10
Ehmke, E. (2016). India's Mahatma Gandhi National Rural Employment Act: Assessing the quality of access and adequacy of benefits in
MGNREGS public works. International Social Security Review.
11
Ibid.at 10.
 CONCLUSION
The MGNREGS has made significant progress in its first 10 years of operation, and the spirit of the Act
follows many of the concepts now included in ILO Recommendation No. 202. It also demonstrates
several noteworthy characteristics from which other countries – as well as other Indian states and areas
– might learn. MGNREGA has altered the lives of rural people where the programme works, where
employment and money are provided on a regular and consistent basis, and where the infrastructure
developed is beneficial and long-lasting. People are already reporting good changes in their life where
only some of the Act's provisions are in place, such as reduced reliance on moneylenders or distress
migration. These minor and large changes are good reasons to keep investing resources and energy in
the MGNREGS and improving its delivery.