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MGNREGA - The People's Scheme Completes 17 Years

Updated: Jun 19

The National Rural Employment Guarantee Act [NREGA] or newly known as the Mahatma Gandhi National Rural Employment Act [MGNREGA] was launched in 2005. The former Prime Minister Manmohan Singh’s UPA government passed this act on 23 August 2005.

Mahatma Gandhi currency eradicate poverty rural employment labour  work

Image Graphics by Team Geostrata

The scheme with the main aim to alleviate poverty was implemented 17 years ago, and many states have performed very well while some states are lagging due to the poor implementation by the administration. The scheme has also faced criticisms from many economists as an inefficient tool of shifting income to the poor.


A committee was set up by the centre to review the MGNREGA scheme headed by former Rural Development Secretary Amarjeet Sinha. The first meeting was held on 21 November 2022 and is expected to submit its suggestions within 3 months.

The demand-driven scheme guarantees 100 days of unskilled work (whoever is in need) per year for every rural household. People between 16-80 age are eligible to work.

There are currently 15.51 crore active workers enrolled under the scheme. The Sinha committee has now been tasked to study the various factors behind the demand for MGNREGA work, expenditure trends and inter-state variations, and the composition of work. It will suggest some changes and governance structures are required to make MGNREGA more effective. It will also review whether it should focus on community-based assets or individual works.


The states like Bihar and Uttar Pradesh, have disappointed the centre as they failed to utilize the scheme to alleviate poverty while states like Kerala have used this scheme as an asset.


Rajasthan’s government launched the Indira Gandhi Urban Employment Guarantee Scheme on 9 September 2022. This scheme provided jobs for at least 1 lakh urban workers within 6 days of its launch and intended to provide 100 days of employment in a year to families in urban areas. The state government allocated Rs.800 crore funds for the scheme.

Interestingly, projects on the conservation of water and heritage, environment protection, hoardings and banners, illegal sign boards, maintenance of gardens, removal of encroachment, and sanitation are being undertaken.

Rajasthan’s state government has been ranked as the leading state under MGNREGA. The State has also announced that it would provide for an additional period of 25 days of work.


The Central government has issued a notice to the state of Telangana after the Centre found issues with the implementation of work under the MGNREGA scheme. The central team deployed from June 9-12 found non-permissible work like fish drying platforms or staggered trenches in forest areas.

The central government also argued that the Telangana state has misused funds in a massive amount. The centre will resort to stopping future installments if Telangana refuses to pay the Rs.152 crores. However, the state government has denied the allegations.


The Centre allocated the highest-ever budget of Rs.1.11 lakh crore during the first Covid-19 lockdown in 2020 which employed 11 crore workers. Surprisingly, in the following financial year 2021-22 the budget allocation saw a dip as the scheme was allocated only Rs.73,000 crore, that is, the scheme ran out of funds and put its balance sheet in negative territory by October.

The payments of MGNREGA workers are still awaited. The reduction in funding would have a disastrous impact on the workers. Nearly Rs.12,300 crore, Rs.1464 crore in the form of wages, and Rs.10,900 crore in form of other benefits are yet to be paid, and this will consume the next year’s budget, says Sangharsh Morcha’s Debmalya Nandy, who worked with tribal masses in states like Odisha and Jharkhand for the past 9 years.

The largest pending payment systems can be seen in West Bengal, Uttar Pradesh, and Rajasthan. The center also reduced its budget allocation for rural schemes bringing an imbalance in paying wages to the workers of the demand-driven scheme.

There is also an issue with the improper usage of the budget as 80-90% gets exhausted in the first 6 months itself.

The centre’s budget allocation for the scheme is 25% less than the previous year. According to Debmalya Nandy, only Rs.54,650 would be available for next year including all the pending liabilities.


The month of October has seen a decline in demand for work both across individuals and households. This made it record its lowest in the current fiscal year 2022-23. According to government data, household demand for work fell 7.2% month-on-month to 15.5 million when compared with 16.7 million in September. On the other hand, individual demand fell by 8.4% to 18.5 million as against 20.2 million in September.


Under the rural employment guarantee scheme, the household demand for work stood at 23.2 million in April, while 30.7 million in the month of June, 20.4 million in July, and 15.9 million in August.


On the other hand, the individual demand recorded 32.8 million in April, 43.5 million in May, and 43.2 million in June maintaining a steady record until it dropped to 25.2 million in the month of July, and 19.1 million in August.


In 2015, Prime Minister Narendra Modi called the scheme a ‘living monument of Congress government’s failure’.

He also said ‘After so many years in power, all you were able to deliver is for a poor man to dig ditches a few days a month.’

The scheme has also faced criticism as an inefficient instrument of shifting income to the poor by economists Jagdish Bhagwati and Arvind Panagariya.


Despite all the criticism, MGNREGA acted as a crucial safety for the people of India in the financial year 2020-21. There was a drastic rise in the number of person days of work provided under the Act, that is, 389 crores while it was just 265 crores in the previous year. Person days of work is the product of the number of days provided for work and the number of people involved in the work.

In the current financial year 2022-23 too, the demand for work remained high as it recorded the generation of 363 crore person days of work.

According to the current statistics, 196 crore person days of work have already been generated in 2022.

This scheme is transformative legislation, enabling livelihoods and social security for some, as well as serving as an employment alternative during a crisis, yet fast-growing, economy.



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