National Rural Employment guarantee Act, 2005 (NREGA)

1.The National Rural Employment guarantee Act, 2005 (No.42 of 2005) having
received the assent of the President on 5th September 2005 was published
in the Gazette of India on 7th September 2005 and was renamed as
MGNREGA (Mahatma Gandhi National Rural Employment guarantee Act) on
2 October 2009.(1) MGNREGA is the largest employment providing scheme
in the world.

The Act: NATIONAL RURAL EMPLOYMENT GUARANTEE ACT, 2005 NO. 42 OF

2005

An Act to provide for the enhancement of livelihood security of the

households in rural areas of the country by providing at least one
hundred days of guaranteed wage employment in every financial
year to every household whose adult members volunteer to do
unskilled manual work and for matters connected therewith or
incidental thereto.

2. Objective of The Act:

The main objective of the Act is to enhance livelihood security in rural areas
by providing at least 100 days of guaranteed wage employment in a financial
year to every household whose adult members volunteer to do unskilled
manual work.

3. Salient Features of NREGA:

The key features of the National Rural Employment Guarantee Act 2005 are:
I. Details of the Guarantee:
1. Eligibility: Any person who is above the age of 18 and resides in rural
areas is entitled to apply for work.
2. Entitlement: Any applicant is entitled to work within 15 days, for as many
as he/she has applied, subject to a limit of 100 days per household per
year.
3. Distance: Work is to be provided within a radius of 5 kilometres of the
applicants residence if possible, and in any case within the Block. If work
is provided beyond 5 kilometres, travel allowances have to be paid.
4. Wages: Workers are entitled to the statutory minimum wage applicable to
agricultural labourers in the state, unless and until the Central Government
notifies a different wage rate. If the Central Government notifies, the
wage rate is subject to a minimum of Rs. 60 per day.
5. Timely payment: Workers are to be paid weekly, or in any case not later
than a fortnight. Payment of wages is to be made directly to the person
concerned in the presence of independent persons of the community on
-pre-announced dates.
6. Unemployment allowance: If work is not provided within 15 days,
applicants are entitled to an unemployment allowance: one third of the
wage rate for the first thrity days, and one half thereafter.
7. Worksite facilities: Labourers are entitled to various facilities at the
worksite such as clean drinking water, shade for periods of rest,
emergency health care, and child-minding.

II. Employment guarantee scheme

1. Each state government has to put in place an Employment Guarantee
Scheme within six months of the Act coming into force.
2. Permissible works: A list of permissible works is given in Schedule I of the
Act. These are concerned mainly with water conservation, minor
irrigation, land development, rural roads, etc. However, the Schedule also
allows any other work which may be notified by the Central Government
in consultation with the State Government.
3. Programme Officer: The Rural Employment Guarantee Scheme is to be
coordinated at the Block level by a Programme Officer. However, the
 Act allows any of his/her responsibilities to be delegated to the Gram
Panchayats.
4. Implementing agencies: REGS works are to be executed by
implementing agencies. These include, first and foremost, the Gram
Panchayats (they are supposed to implement half of the REGS works),
but implementing agencies may also include other Panchayati Raj
Institutions, line departments such as the Public Works Department or
Forest Department, and NGOs.
5. Contractors: Private contractors are banned.
6. Decentralised planning: A shelf of projects is to be maintained by the
Programme Officer, based on proposals from the implementing agencies.
Each Gram Panchayat is also supposed to prepare a shelf of works based
on the recommendations of the Gram Sabha.
7. Transparency and accountability: The Act includes various provisions for
transparency and accountability, such as regular social audits by the
Gram Sabhas, mandatory disclosure of muster rolls, public accessibility of
all REGS documents, regular updating of job cards, etc.

III. Other provisions

1. Participation of women: Priority is to be given to women in the
allocation of work, in such a way that at least one-third of the
beneficiaries shall be women.
2. Penalties: The Act states that whoever contravenes the provisions of
this Act shall on conviction be liable to a fine which may extend to one
thousand rupees.
3. State Council: The implementation of the Act is to be monitored by a
State Employment Guarantee Council.
4. Cost sharing: The Central Government has to pay for labour costs and
75% of the material costs. State governments have to pay the
unemployment allowance and 25% of the material costs.
5. Time frame: The Act is to come into force initially in 200 districts, and
is to be extended to the whole of rural India within five years of its
enactment
IV. Decentralized Planning
 1. Gram Sabhas to recommend works
2. At least 50% of works by Gram Panchayats for execution
3. Principal role of PRIs in planning, monitoring and implementation
V. Non Negotiable
1. Only Job Card holders to be employed for MGNREGA works
2. To provide employment within 15 days of application
3. No contractor
4. Task to be performed by using manual labour & not machines
5. Muster rolls to be maintained on work sites
6. Proactive disclosure of information.
7. Wage payments to be through accounts in banks/post offices
8. Wage material ratio- 60:40
9. At least 50% of the works in terms of cost under a Scheme to be
implemented through GPs
4. COVERAGE:
The Act was notified in 200 districts in the first phase with effect from
February 2nd 2006 and then extended to additional 130 districts in the
financial year 2007-2008. The remaining districts have been notified under
the NREGA with effect from April 1, 2008.2 Thus, NRGA covers, at present,
the entire country with the exception of districts that have a hundred percent
urban population.
5. ISSUES AND CHALLENGES:
MGNREGA is the most ambitious anti-poverty scheme launched anywhere in
the world. However, the scheme has shown several anomalies when it comes
to implementation in the right manner.
6. ISSUES AND CHALLENGES FACED BY THE GOVERNMENT.
(i) POOR PLANNING & ADMINISTRATIVE SKILL
The panchayats, barring those in Karnataka and, to some extent, in those in
West Bengal, have no experience at all in planning large-scale programmes.
Even the report by the Comptroller and Auditor General (CAG) has
highlighted the lack of administrative capacity of the village panchayat
members to run this scheme in a designed and decentralised manner.
(ii) LACK OF FOCUS ON OBJECTIVES
Though Schedule One of the MGNREG Act referred to conservation of natural
resources such as rainwater, land, forests, this was not reflected in the works
floated for the scheme. Under this scheme, contractors and machineries
should not be used. However, in some work places, contractors were allowed
and machineries were involved.
(iii) LACK OF ADEQUATE MANPOWER
Another issue is the deficiency of adequate administrative and technical
manpower at the Block and Grama Panchayat (GP) Levels, especially at the
level of programme officer, technical assistants, and Employment Guarantee
Assistant Level etc. The lack of manpower has adversely affected the
preparation of plans, scrutiny, approval, monitoring and measurement of
works, and maintenance of the stipulated records at the block and GP level.
(iv) DIFFICULTY IN FUNDING THE SCHEME
Being one of the largest initiatives of its kind in the world, MGNREGA was
started with an initial outlay of Rs.11, 300 crore in the year 2006-07 (almost
0.3% of GDP). The total outlay for the program is increasing by leaps and
bounds every financial year. There are fears that the program will end up
costing 5% of GDP.
(v) DISCRIMINATION
MGNREGA has provided a unique opportunity to people from rural India to
earn their own income without any discrimination of caste or gender. The
most remarkable feature of MGNREGA is that it pays women the same as
men, something that was virtually unimaginable in Rural India. However,
cases of discrimination against women and people from backward groups are
reported from several regions of the country.
Some states such as Kerala and Andhra Pradesh have registered high
percentage of women workers getting enrolled in the scheme whereas others
have registered a very low percentage of women availing benefit under
MGNREGA. Women are sometimes told that manual labour under the
MGNREGS is not meant for women and they could not participate in ongoing
works as it entailed digging and removing soil.
(vi) CORRUPTION & IRREGULARITIES
Statistics clearly indicate that the poverty alleviation programs have had a
minimal effect on poverty levels in India due to corruption. The actual funds
that reach the beneficiaries are very little compared to the funds allocated
for welfare schemes. Further concerns, include the fact that corruption of the
local governments leads to the exclusion of specific sections of the society.
Local governments have also been found to claim that more people have
received job cards than people who actually work in order to generate more
funds than needed, to be then embezzled by local officials. There are several
cases of fake muster roll entries, over writing, false names and irregularities
in job cards.
(vii) MAOIST INSURGENCY
A small percentage of Households in the 60 districts most affected by Maoist
militancy found the required 100 days of employment under the countrys
rural jobs program. The percentage of women employed under the
programme in the insurgency hit districts in the same period was lower
compared with the national average. The poor performance of the scheme in
these areas has prompted the Rural Development Ministry to boost the
implementation of social and economic development programmes in the 60
Integrated Action Plan (IAP) districts in nine states, including Orissa,
Jharkhand, Chhattisgarh, Bihar and West Bengal.
(viii) LACK OF SAFETY MEASURES
Around one-third of the stipulated work force under MGNREGS is women.
Therefore, Crches have to be set up so as to enable women carrying their
children to the work site to do their work without much apprehension about
their children. It is seen at the work place that women workers lay their
children in cradles tied around tree branches. In the absence of this facility
women may hesitate to come forward to demand for work.

7. ISSUES AND CHALLENGES AMONG THE PEOPLE

Following are the issues and challenges among the people covered under the
Act.
 (i) INADEQUATE AWARENESS
MGNREGA provides the rural poor a right to demand for work for 100 days in
a financial year. But peoples efforts to get jobs under this scheme have been
obstructed by the fact that Governments have done nothing to encourage
people to register demands. The fact is that the national average for
workdays generated under the scheme is less than half of the entitlement of
100 days per household, per year.
Due to lack of awareness about the provisions of the Act, People are unaware
of their basic entitlements under MGNREGA such as Job Cards, Minimum
Wage Amount, Unemployment Allowance. The Government must carry out
an intensive training and awareness building program to make the officials
and citizens fully aware of all the details of the program. People at the grass
roots level must be made aware of RTI Act and encouraged to use it.

(ii) NON-PURPOSIVE SPENDING

MGNREGA has obviously, increased the earning capacity of the rural people.
But the spending pattern of the workers assumes significance because there
is hardly any saving out of the wage earned from MGNREGS. Raw cash in the
hands leads to non-purposive spending. Lack of awareness on the impact of
inflation and illiteracy level among the rural poor are the reasons for not
saving part of their income from this scheme. Therefore, the chance of
creating financial inclusion is missing and the idea of saving is wiped out of
the minds of the rural poor

(iii) BEING UNORGANIZED

In spite of large number of provisions under MGNREGA being in favor of
workers, they could not enjoy their entitlements, such as getting work for the
stipulated 100 days, unemployment allowances and basic amenities at the
work site, on account of being unorganized. It seems to be a setback for the
workers under the Act.
MGNREGA Achivements

(i) The Mahatma Gandhi National Rural Employment Guarantee Act

(MGNREGA) completed ten years of implementation on 2nd
February 2016. Since the start of the programme, the expenditure
on the programme has amounted to Rs. 3,13,844.55 crore and out
of this 71% has been spent on wage payments to workers.
(ii) Of the workers, the percentage of Scheduled Caste workers has
consistently been about 20% and Scheduled Tribe workers has been
about 17%. A total of 1,980.01 crore person-days have been
generated, out of which the percentage worked by women has
steadily increased much above the statutory minimum of 33%.

(iii) Sustainable assets have been created linked to conservation of

natural resources and overall development of Gram Panchayats.
More than 65% of the works taken up under the programme are
linked to agriculture and allied activities.
(iv) The past year, 2015-16, has seen a revival of the programme. The
personday generation is the highest in the second quarter (45.88
crore) and third quarter (46.10 crore) than it has been in the last
five years. The national personday generation to date at 146 crore
is well above what this figure was at this time last year.
(v) 44% of all wage payments are being made on time. More than 64%
of total expenditure is on agriculture and allied activities, the
highest in three years. 57% of all workers are women, well above
the statutory requirement of 33% and the highest in three years.
23% of all person-days are being done by SC workers, and 18% by
ST workers, the highest in three years.
(vi) This revival has been achieved due to a slew of reforms undertaken
by the Ministry of Rural Development. Most important of these has
been the timely release of funds to states to provide work on
demand. An electronic fund management system has been
successfully instituted which allows for real time and transparent
 release of funds to implementing agencies and beneficiaries. There
has been consistent coordination between banks and post
offices and constant monitoring of pendency of payments has led to
a reduction in wage delays.
(vii) The Ministry has reacted swiftly to the distress situation of droughts
in nine states by declaring an additional 50 days of employment in
the drought affected areas.

Way Forward
(i) The focus for the upcoming years will be on simplification and
strengthening of procedures for the implementation of the
MGNREGA as an employment guarantee. A Master Circular has been
issued by the Ministry which consolidates all key instructions from
the Central Government on the implementation of the Act. Beyond
this, states are encouraged to innovate with flexibility.

(ii) The convergent planning exercise is currently underway in 2569

backward blocks in the country will be consolidated in the State
Rural Development Plan (SRDP) which will be the basis of
implementation and monitoring for the coming year.
(iii) Concurrent social audits and community monitoring has been
undertaken. The Ministry has decided to have a renewed focus on
sustainable individual assets to benefit the poor and vulnerable
households with the following targets; 5 Lakh farm ponds and 10
Lakh Vermi and NADEP compost pits in the FY 2016-17. There will
be a continued focus on construction of Anganwadi Buildings and
individual household latrines.
(iv) The Ministry is planning to focus on imparting skills to workers. It
will aim to train and place 10,000 Barefoot Technicians from worker
households and through Project LIFE, skill and train workers for
wages, for self-employment and livelihood upgradation.
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