MGNREGS: Monument of failure

The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), the world’s first and largest social programme of its kind, has brought with it several benefits in the last 10 years. Lauded by the International Labour Organisation, the scheme has helped rural households earn and demand higher wages for their labour. It has also helped the country manage its natural resources through initiatives such as drought proofing works, water harvesting structures, land development, water conservation, revival of water bodies and afforestation.

The scheme was launched by the former Congress-led United Progressive Alliance (UPA-I) government on February 2, 2006. Enacted by Parliament, the scheme legally guaranteed at least 100 days of unskilled labour to every rural household.

In 2008-09, the scheme enabled the government to provide 48 person days of employment per rural household. In 2009-10, this number increased to 54 person days, especially when the country was reeling from the worst drought of the century. MGNREGS was widely credited with helping the UPA win a second term in office in the 2009 general elections.

The total expenditure incurred on the programme since it started in 2006 is Rs 3,13,844.55 crore. Of this, 71 percent has been spent on wages for workers. Twenty-three percent of those employed belonged to Scheduled Castes while around 17 percent came from Scheduled Tribes. 

A total of 19.8 billion person-days were generated. The proportion of person days claimed by women rose steadily and exceeded the statutory minimum of 33 percent by a large margin. A record 52 percent of all workers were women in 2015-16, again crossing the statutory requirement of 33 percent and the highest in three years.

Sustainable assets, linked to the conservation of natural resources and overall development of gram panchayats, have been created. More than 65 percent of all works taken under the programme are linked to agriculture and allied activities.

It is unclear, however, what the present NDA government thinks about the performance of the scheme. Last year, Prime Minister Narendra Modi called MGNREGS a “monument of failure”.

Now, the Rural Development Ministry has termed it as “a cause of national pride”. In a press release issued on the completion of 10 years, the Ministry says, “The achievements of a decade are a cause of national pride and celebration.”

In 2014, Rajasthan Chief Minister Vasundhara Raje had stirred a debate by asking in an official letter why rural employment could not be provided under a scheme without legal backing. Her government later turned to the same scheme to help farmers affected by unseasonal rains.

Economists and political leaders have criticised the scheme since its inception, some of them claiming that the increase in rural wages under MGNREGS had contributed to rise in food inflation. RBI had refuted the charge in its study.

MGNREGS is a demand-driven scheme, with the government allocating funds depending on the demand for jobs. However, it started losing steam when wages were kept pending, leading to the liability being carried forward to the following year. This led to a reduction in the amount available for commissioning new projects. But the fund squeeze is not unique to the NDA government. Even the UPA II government saw a carrying forward of pending liabilities. 

Consecutive crop failures due to droughts and unseasonal rains have led to a rise in demand for jobs under MGNREGS. But pending liabilities are eating into the fund allocation. Take for example the state of funds in 2015-16. This year, 17 percent of the budget was spent on clearing pending wage and material payments from the previous financial year, reducing the actual allocation for employment generation to around Rs 29,000 crore.

Besides, more than 12 states have a negative balance—Andhra Pradesh, Assam, Chhattisgarh, Haryana, Himachal Pradesh, Kerala, Meghalaya, Nagaland, Odisha, Punjab, Sikkim and Uttar Pradesh

In the last four years, the rate of work completion has also declined, sparking fears that the scheme may be seeing a slow death.

In spite of the challenges, the Rural Development Ministry claims MGNREGS is on the path to revival. The person day generation was the highest in the second quarter (458 million) and third quarter (461 million) of 2015-16 than it had been in the last five years. The national person day generation till date is 1.4 billion which is also well above the figure at this time last year.

In addition, 44 percent of all wage payments are being made on time. More than 64 percent of the total expenditure is on agriculture and allied activities, the highest in three years.

The Ministry is now planning to restructure this scheme and enhance it in 2,569 backward blocks. Its target for this year includes the creation of farm ponds and one million vermin-compost pits in financial year 2016-17. There will be a continued focus on the construction of anganwadi buildings and individual household latrines. Additionally, the ministry will focus on imparting skills to workers.