- As MGNREGA enters its 20th year, it remains a cornerstone of India’s rural welfare framework, ensuring livelihood security for millions. The scheme has been instrumental, particularly during crises such as the COVID-19 pandemic, in providing employment and financial stability to rural households.
- However, despite its demand-driven nature, MGNREGS faces declining budgetary allocations, wage delays, and administrative hurdles, weakening its impact. To uphold its original intent of poverty alleviation and rural empowerment, urgent reforms and increased funding are essential.
About Mahatma Gandhi National Rural Employment Guarantee Act 2005 (MGNREGA)
- MGNREGA is a social security scheme guaranteeing 100 days of work to any rural household willing to do public work-related unskilled manual work at the statutory minimum wage.
- The Ministry of Rural Development (MRD) is monitoring the entire implementation of this scheme in association with state governments.
- The wages are revised according to the Consumer Price Index-Agricultural Labourers (CPI-AL).
- The act obligates the state to give rural households work on demand.
- The applicant becomes eligible for an unemployment allowance if such employment is not provided within 15 days of registration.
- The employment will be provided within a radius of 5 km. If it is >5 km, an extra wage will be paid.
- Under the act, priority shall be given to women, and at least one-third of the beneficiaries shall be women who have registered and requested work.
- All work sites should have crèches, drinking water and first aid facilities.
- Social Audit must be done by the Gram Sabha.

- In Odisha, the job seekers under MGNREGA in the twenty migration-prone blocks will be paid additional wages over and above the notified wage rate under MGNREGA.
- The Odisha government provided additional 200 days of employment under MGNREGA in twenty migration-prone blocks of four districts.
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Funding pattern
- 100% of the unskilled labour cost and 75% of the material cost (including wages of skilled and semi-skilled workers) of the programme is borne by the Centre.
- Under the MGNREGS, wages of unskilled workers must be paid within 15 days; if there is a delay, the Centre has to compensate them.
Wages and material cost
- The Act provides for the wage and material costs to be in the proportion of 60:40.
- For instance, if a project costs Rs. 100, the wage expenditure should be at least Rs. 60, and the expenditure on materials should be Rs. 40.
- It should be ensured that the total material cost (including wages of skilled and semi-skilled workers and mates) of all works in the Annual Shelf of Projects should not exceed 40%.
- However, over 80% of the scheme’s funds have been used for wage payments in several labour-rich states.
Mates
- Mates are the site supervisors under MGNREGA.
- They are the frontline supervisors of the programme and are listed as semi-skilled workers because of the specialist nature of their job.
- Their wages come from the “material component“, 60% of which the Union government pays.
- Due to their payment delays, most mates started listing themselves as unskilled workers.
Significance of MGNREGS for Rural India
- Livelihood Security: MGNREGS acts as a safety net, particularly during agricultural off-season and economic downturns, preventing distress migration and rural poverty.
- Asset Creation and Infrastructure Development: The scheme has contributed significantly to rural infrastructure by developing irrigation canals, roads, and water conservation structures, enhancing agricultural productivity.
- Boosting Rural Economy: By injecting disposable income into rural households, MGNREGS stimulates local economies and strengthens rural demand.
Amarjeet Sinha Committee
- The Central government has constituted a committee to review the implementation of the MGNREGS, primarily to assess the programme’s efficacy as a poverty alleviation tool.
- Former Rural Development secretary Amarjeet Sinha heads the committee.
- The committee will also study the factors behind the demand for MGNREGA work, expenditure trends and inter-State variations, etc.
Section 27 of MGNREGA
- Section 27 of the MGNREGA empowers the Centre to give directions to the State for the effective implementation of the Act.
- The Union Rural Development Ministry has served notice on the Telangana government asking it to return 151.9 crore spent under the MGNREGS on the construction of platforms for drying fish and grain, which is not permitted under the scheme.
Urban employment guarantee scheme
- On the lines of MGNREGA, an urban employment guarantee scheme is rolled out in Rajasthan.
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Current Challenges in MGNREGS Implementation
- Funding Constraints and Demand Suppression: Funding Constraints and Demand Suppression – Budget allocation declined from 3.2% of GDP in FY21 to 1.78% in FY25 (BE), with no additional funds sanctioned, leading to a ₹4,315 crore wage shortfall and ₹5,715 crore material liability, limiting employment opportunities.
- Wage and Inflation Mismatch: Wages linked to CPI-AL have not kept pace with inflation, reducing their value and impact.
- Payment and Accessibility Issues: Aadhaar-based payment system has led to exclusion errors, preventing many eligible workers from receiving wages.
- Corruption in MNREGA works: Machines are being used in place of the workers, Many receive wages without doing work, Works beyond the approved list being undertaken, etc.
- Bogus attendance: To stop any bogus attendance of workers, the Centre has made the attendance of workers through a mobile application with time-stamped and geo-tagged photographs mandatory.
MGNREGA expansion proposals
- Extend the duration of employment to 200 days.
- Encompass urban areas.
- Raise the wage rate per the state’s statutory minimum wage.
- Augment the budget allocation for MGNREGA.
Way Forward
- Enhancing Budgetary Allocations: The government must ensure adequate funding aligned with actual demand, preventing wage delays and work shortages.
- Indexing Wages to Inflation: Periodic wage revisions should be implemented to maintain the scheme’s purchasing power.
- Ensuring Payment Efficiency: Addressing Aadhaar-related payment issues and promoting alternative payment mechanisms will ensure seamless disbursement of wages.
- Strengthening Implementation Mechanisms: Transparency, better monitoring, and grievance redressal systems must be improved to enhance scheme efficiency.
MGNREGS is vital for rural employment and poverty alleviation. Strengthening its financial and administrative framework through increased budgetary allocations and reforms will ensure its continued role as a robust safety net for India’s rural population.
Reference: The Hindu | PMF IAS: MGNREGA: Provisions, Issues & Reforms Required
PMF IAS Pathfinder for Mains – Question 72
Q. Critically examine the impact of funding constraints and administrative challenges on MGNREGS. Suggest measures for its effective implementation. (250 Words) (15 Marks)
Approach
- Introduction: Briefly Introduce the answer by showing the criticality of MGNREGS for livelihood & economic stability.
- Body: Define the significance and challenges affecting MGNREGS. Also, write a way forward.
- Conclusion: Conclude appropriately by highlighting the need for a structural approach for all.
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