MGNREGA or the Mahatma Gandhi National Rural Employment Guarantee Act is a rights-based rural employment scheme. Enacted in 2005 and implemented from February 2006, it grants every rural household in India a legal right to demand paid work from the state.
Under the Act, any adult member of a rural household aged 18 years or above can apply for work. And the government is legally bound to provide up to 100 days of unskilled manual work per household in each financial year. If work is not provided within 15 days of a written or oral demand, the state must pay an unemployment allowance. MGNREGA is not merely a welfare scheme but a legally enforceable right.
An employment rights programme of such vast coverage and legal framework doesn’t exist anywhere else in the world. The scheme covers crores of rural citizens and grants them employment as a statutory right. During economic shocks such as droughts, agrarian distress, and even during the Covid-19 pandemic, it served as an economic safety net when millions of migrant workers returned to their villages.
Proposing major changes to this scheme, the Viksit Bharat-Guarantee for Rozgar and Ajeevika Mission (Gramin), 2025 (VB-GRAMG) was introduced in Parliament on 16 December. If passed, it will replace MGNREGA. While the government is presenting the new Bill as a reform aligned with the vision of a developed India, the Opposition is strongly against it.
Opposition parties argue that the government is deliberately indulging in politics by removing MK Gandhi’s name from the law. Further, since the abbreviated name of the Bill would become VB-GRAMG, or colloquially “Viksit Bharat G Ram G”, the Opposition finds it objectionable. The debate around the Bill has taken the form of a verbal battle, while the real provisions in the Bill are barely being discussed.
We need a detailed understanding of the Bill—what its provisions actually are and what benefits or drawbacks it may bring for the country and its rural population.
Role of states
The idea behind MGNREGA was to protect people in rural areas from poverty caused by unemployment. It guaranteed them income while also facilitating rural development works such as water conservation projects, irrigation canals, roads, flood control structures, and land development activities.
It must be understood that the scheme is demand-driven. According to government data, although wage rates under the scheme have been increased over the years, there has been a decline in the number of days for which people are registering to work. This implies that rural people are now finding alternate sources of employment that are more attractive than MGNREGA.
Since 2005, the economic condition of rural populations has improved. And the resolve to become part of the developed India story is strengthening every day. So, the government believes that fundamental changes in the MGNREGA law are also necessary.
Although the Bill proposes an increase in guaranteed employment from 100 days to 125 days, and up to 150 days in tribal areas, its financing will no longer be the sole responsibility of the central government. State governments will also play a role.
It is noteworthy that in 2005, the states’ share in central revenue was only 32 per cent. This was later increased to 42 per cent by the 14th Finance Commission for the 2015-2020 period. The states’ share was increased so they could bear the burden of welfare schemes. Since the National Rural Employment Guarantee Act (NREGA) was enacted earlier, the burden could not be imposed on the states at the time.
Also read: The long arc of rural employment—from welfare to rights to rationing
From NREGA to MGNREGA
Although the NREGA was passed in 2005 and implemented in 2006, it was renamed the Mahatma Gandhi National Rural Employment Guarantee Act by the UPA government in 2009. Now that a new avatar of the scheme has been proposed by Parliament in the context of the nation’s resolve to become Viksit Bharat, a change in the name was obvious.
Coincidentally, the new name resembles that of Ram, a deity revered by many in the country. It is this aspect that the Opposition is objecting to.
Labour availability
The objective of MGNREGA was to provide income security during periods of unemployment. However, during the sowing and harvesting seasons, workers often remained attracted to MGNREGA, leading to a shortage of labour in farms. This shortage increased wage costs and reduced the competitiveness of agriculture.
The new Bill addresses this issue by providing that the employment guarantee programme will be suspended for 60 days of agricultural activities. Additionally, the nature of works under the programme has also been updated in line with present needs, including water security, rural and livelihood-related infrastructure, and mitigation of extreme weather events. These works have also been linked with the PM Gati Shakti National Master Plan.
Also read: Why the VB-GRAMG Bill strikes at the heart of MGNREGA
Curbing corruption
The biggest flaw of MGNREGA was that, despite numerous efforts, corruption could not be fully contained. Widespread corruption at the gram panchayat and block levels led to large-scale misuse of public funds. Often, projects existed only on paper.
The new Bill provides for the use of technology such as biometric authentication for transactions, geospatial technology for planning and monitoring, mobile application-based dashboards for real-time monitoring, and a weekly public disclosure system. The use of technology in the Pradhan Mantri Awas Yojana has already placed checks on corruption. It can do the same for the employment guarantee programme.
For a long time, analysts in the country have opposed MGNREGA from a long-term perspective, arguing that it leads to labour shortages in agriculture and industry. While the new Act has attempted to address labour shortages in agriculture, it does not account for shortages in the industrial sector and allied agricultural activities. Instead of fixating on the scheme’s name, had the Opposition engaged in a substantive debate to incorporate such useful provisions, more improvements could have been made to MGNREGA’s new avatar. Unfortunately, that did not happen.
Ashwani Mahajan is National Co-Convener of Swadeshi Jagran Manch and a former professor at PGDAV College, University of Delhi. He tweets @ashwani_mahajan. Views are personal.
(Edited by Prasanna Bachchhav)