National Rural Employment Guarantee Act (NREGA)

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is an Indian job guarantee

Job guarantee

A job guarantee is an economic policy proposal aimed at providing a sustainable solution to the dual problems of inflation and unemployment. Its aim is to create full employment and price stability...

scheme, enacted by legislation on August 25, 2005. The scheme provides a legal guarantee for 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

Minimum wage

A minimum wage is the lowest hourly, daily or monthly remuneration that employers may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell their labour. Although minimum wage laws are in effect in a great many jurisdictions, there are differences of opinion about...

of per day in 2009 prices. The Central government outlay for scheme is in FY 2010-11.

This act was introduced with an aim of improving the purchasing power of the rural people, primarily semi or un-skilled work to people living in rural India, whether or not they are below the poverty line. Around one-third of the stipulated work force is women. The law was initially called the National Rural Employment Guarantee Act (NREGA) but was renamed on 2 October 2009.

Political background

This act was brought about by the UPA

United Progressive Alliance

The United Progressive Alliance is a ruling coalition of center-left political parties heading the government of India. The coalition is led by the Indian National Congress , which is currently the single largest political party in the Lok Sabha...

coalition government supported by the left parties. The promise of this project is considered by many to be one of the major reasons for the re-election of the UPA

Upa

Upa or UPA may refer to:As the word Upa*Upa, central character in the video game Bio Miracle Bokutte Upa *Bridge in Brazilian jiu jitsu, a move designed to dislodge a mounted opponent...

in the Indian general election, 2009

Indian general election, 2009

India held general elections to the 15th Lok Sabha in five phases between 16 April 2009 and 13 May 2009. With an electorate of 714 million , it was the largest democratic election in the world to date.By constitutional requirement, elections to the Lok Sabha must be...

.

Dr. Jean Drèze

Jean Drèze

Jean Drèze is a development economist who has been influential in Indian economic policymaking. He is a naturalized Indian of Belgian origin. His work in India include issues like hunger, famine, gender inequality, child health and education, and the NREGA...

, a Belgian born economist, at the Delhi School of Economics

Delhi School of Economics

Delhi School of Economics , commonly referred to as DSE or D School, is a centre of post graduate learning of the University of Delhi. The centre is situated in the university's North Campus in Maurice Nagar, and is surrounded by a host of other prestigious academic institutions of the country...

, has been a major influence on this project. A variety of peoples movements and organisations actively campaigned for this act.

The plan

The act directs state governments to implement MGNREGA "schemes".
Under the MGNREGA the Central Government meets the cost towards the payment of wage, 3/4 of material cost and some percentage of administrative cost. State Governments meet the cost of unemployment allowance, 1/4 of material cost and administrative cost of State council. Since the State Governments pay the unemployment allowance, they are heavily incentivized to offer employment to workers.

However, it is up to the State Government to decide the amount of unemployment allowance, subject to the stipulation that it not be less than 1/4 the minimum wage for the first 30 days, and not less than 1/2 the minimum wage thereafter. 100 days of employment (or unemployment allowance) per household must be provided to able and willing workers every financial year.

Provisions under NREGA

Adult members of a rural household, willing to do unskilled manual work, are required to make registration in writing or orally to the local Gram Panchayat
The Gram Panchayat after due verification will issue a Job Card. The Job Card will bear the photograph of all adult members of the household willing to work under NREGA and is free of cost.
The Job Card should be issued within 15 days of application.
A Job Card holder may submit a written application for employment to the Gram Panchayat, stating the time and duration for which work is sought. The minimum days of employment have to be at least fourteen.
The Gram Panchayat will issue a dated receipt of the written application for employment, against which the guarantee of providing employment within 15 days operates
Employment will be given within 15 days of application for work, if it is not then daily unemployment allowance as per the Act, has to be paid liability of payment of unemployment allowance is of the States.
Work should ordinarily be provided within 5 km radius of the village. In case work is provided beyond 5 km, extra wages of 10% are payable to meet additional transportation and living expenses
Wages are to be paid according to the Minimum Wages Act 1948 for agricultural labourers in the State, unless the Centre notices a wage rate which will not be less than per day. Equal wages will be provided to both men and women.

Note: The original version of the Act was passed with Rs 60/ day as the minimum wage that needs to be paid under NREGA. However, a lot of states in India already have wage regulations with minimum wages set at more than per day. NREGA's minimum wage has since been changed to per day.

Wages are to be paid according to piece rate or daily rate. Disbursement of wages has to be done on weekly basis and not beyond a fortnight in any case.
At least one-third beneficiaries shall be women who have registered and requested work under the scheme.
Work site facilities such as crèche, drinking water, shade have to be provided
The shelf of projects for a village will be recommended by the gram sabha and approved by the zilla panchayat.
At least 50% of works will be allotted to Gram Panchayats for execution
Permissible works predominantly include water and soil conservation, afforestation and land development works
A 60:40 wage and material ratio has to be maintained. No contractors and machinery is allowed
The Central Govt. bears the 100 percent wage cost of unskilled manual labour and 75 percent of the material cost including the wages of skilled and semi skilled workers
Social Audit has to be done by the Gram Sabha
Grievance redressal mechanisms have to be put in place for ensuring a responsive implementation process
All accounts and records relating to the Scheme should be available for public scrutiny

History

MNREGA was launched on February 2, 2006 from Anantapur in Andhra Pradesh and initially covered 200 "poorest" districts of the country. The Act was implemented in phased manner - 130 districts were added in 2007-08. With its spread over 625 districts across the country, the flagship program of the UPA Government has the potential to increase the purchasing power of rural poor, reduce distress migration and to create useful assets in rural India. Also, it can foster social and gender equality as 23% workers under the scheme are Scheduled Castes, 17% Scheduled Tribes and 50% women. In 2010-11, 41 million households were employed on NREGA worksites.

Funding

MNREGA started with an initial outlay of $2.5bn(Rs 11300cr) in year 2006-07.The funding has considerably been increased as shown in the table below:

Year	Total Outlay(TO)	Wage Expenditure(Percent of TO)
2006-07	$2.5bn	66
2007-08	$2.6bn	68
2008-09	$6.6bn	67
2009-10	$8.68bn	70
2010-11	$8.91bn	71

Implementation

The Comptroller and Auditor General (CAG) of India, in its performance audit of the implementation of MGNREGA has found "significant deficiencies" in the implementation of the act. The plan was launched in February 2006 in 200 districts and eventually extended to cover 593 districts. 44,940,870 rural households were provided jobs under NREGA during 2008-09, with an national average of 48 working days per household. In recent times, nrega workers have faced problems due to delays in payment of wages, some of which have been pending for months.

Employment under NREGAS in 2010

Indian Minister of State for Rural Development Pradeep Jain said in a written reply to a question in Rajya Sabha on Tuesday that As of 30 June, a total of 179,43,189 families in the country have been provided employment under MGNREGS.

Works/Activities

The MGNREGA achieves twin objectives of rural development and employment. The MGNREGA stipulates that works must be targeted towards a set of specific rural development activities such as: water conservation and harvesting, afforestation, rural connectivity, flood control and protection such as construction and repair of embankments, etc. Digging of new tanks/ponds, percolation tanks and construction of small check dams are also given importance. The employers are given work such as land leveling, tree plantation, etc. First a proposal is given by the Panchayat to the Block Office and then the Block Office decides whether the work should be sanctioned.In Rangareddy district manchal mandal the dry land horticulture and plantation of trees on the bunds of the fields taken up under MGVN programme is taken up in a big way.

Criticisms

Many criticisms have been levelled at the programme, which has been argued to be no more effective than other poverty reduction programmes in India, with key exceptions such as Rajasthan

Rajasthan

Rājasthān the land of Rajasthanis, , is the largest state of the Republic of India by area. It is located in the northwest of India. It encompasses most of the area of the large, inhospitable Great Indian Desert , which has an edge paralleling the Sutlej-Indus river valley along its border with...

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The first criticism is financial. The MGNREGA is one of the largest initiatives of its kind in the world. The national budget for the financial year 2006-2007 was Rs 113 billion (about US$2.5bn and almost 0.3% of GDP) and now fully operational, it costs Rs. 391 billion in financial year 2009-2010. Funding was argued by Jean Dreze and others to be possible through improved tax administration and reforms, yet the tax-GDP ratio has actually been falling. There are fears the programme will end up costing 5% of GDP.

Another important criticism is that the public works schemes' completed product (e.g. water conservation, land development, afforestation, provision of irrigation systems, construction of roads, or flood control) is vulnerable to being taken by over wealthier sections of society. A monitoring study of NREGA in Madhya Pradesh showed the types of activities undertaken were more or less standardised across villages, suggesting little local consultation.

Further concerns include the fact that local government corruption leads to the exclusion of specific sections of society. Local governments have also been found to claim more people have received job cards than people who actual work in order to generate more funds than needed, to be then embezzled by local officials. Bribes as high Rs 50 are paid in order to receive the job cards.

A multi-crore fraud has also been suspected where many people has been issued the NREGA card who is either employed with another Government Job and who are not even aware that they have a Job Card. The productivity of laborers involved under NREGA is considered to be lower because of the fact that laborers consider it as a better alternative to working under major projects. There is criticism from construction companies that NREGA has affected the availability of labor as laborers prefer to working under NREGA to working under construction projects.

It is also widely criticized that NREGS has contributed to farm labour shortage. In July 2011, the government has advised the states to suspend the NREGS programme during peak farming periods.

The National Advisory Committee(NAC) advocated the government for NREGA wages linkage with statutory minimum wages which is under Minimum wages act as NREGA workers get only Rs100 per day.

External links

Official web site of NREGA
Official web site of NREGS, Andhra Pradesh
Action for Employment Guarantee (resources and toolkits for organisations working towards realisation of entitlements under NREGA)
Web site of the Right to Food Campaign, India (contains a wealth of material on the EGA)
A primer to the NREGA
Shovelling for their supper, Apr 24th 2008, The Economist
Radio series on MGNREGA
Battle for Work, The Hindu
Official NREGA Operational guidelines - 3rd Edition
http://economictimes.indiatimes.com/news/economy/infrastructure/core-sector-builders-face-fund-crunch/articleshow/7315633.cms?curpg=2

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