MGNREGA has its defects but is still important for rural economy

rural

The much-maligned MGNREGA (‘monument of sixty years of failure’) is in the news again. The Parliamentary Standing Committee on Rural Development and Panchayati Raj has submitted its report on the functioning of the MGNREGA to the Lok Sabha on February 8, 2022.

Titled ‘Critical Evaluation of Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA)’, the report is an acknowledgement, if one was needed, of the critical role the Act plays in the rural economy.

Enacted in 2005 with the ambitious aim of providing at least 100 days of guaranteed wage employment in a financial year to every rural household, whose adult members volunteer to do unskilled manual work, the scheme has become a powerful tool for ensuring inclusive growth in rural India. The Act covers the entire country except for districts that have a 100% urban population.

The report has more than 30 recommendations, which are also a reflection of the lackadaisical manner in which this critical scheme is being run.

The more important among them highlights the fact that there has always been a hike in the revised estimate over the budget estimate in the past. However, the BE for 2021-22 has been maintained at Rs 73,000 crore. This when the expenditure in the previous year was in the region of Rs 1,11,000 crore. If ever an estimate of the impact of the pandemic was needed, this figure brings out starkly the reverse migration from urban to rural areas. MGNREGA was the last resort for all these workers.

The Act guarantees the release of wages within 15 days from the date of closure of the muster rolls. The Committee has ‘painfully’ taken cognisance of the delay in the release of funds. The pending dues as of November 15, 2021, was Rs 276,378.22 lakhs, defeating the very purpose of the scheme.

The Committee has noted the wide disparity in the wage rate between one state to another. From as low as Rs 193 to Rs 198 in Chhattisgarh and MP, Bihar, Jharkhand (the poorer states) to a high of Rs 318 in Sikkim. The Committee has recommended increasing the number of guaranteed working days from 100 to at least 150; this the Committee felt, given the situation in the country, was the “need of the hour”.

The Committee recommended the need for regularly reviewing the scope and nature of work permitted under the MGNREGA. It emphasised the need to increase the permissible work taking into account the local geographical terrain and local requirements. This is particularly relevant given the criticism that the Scheme faces that unproductive work (playing with mud, digging holes) is often carried out (this is not the fault of the scheme but reflects poor imagination and supervision).

The Committee has commented adversely about the delay in giving compensation. The Act provides for payment of compensation for delays beyond 15 days. This is applicable at the rate of 0.05% of the unpaid wages per day. The Committee has also been “dumbfounded” to learn about the blatant violation of the provisions of employment allowance.

The Act provides that if an applicant for employment under the Act is not provided employment within 15 days, he/she shall be entitled to a daily unemployment allowance. However, the Committee learnt that as of November 5, 2021, zero amount was paid in the name of unemployment allowance. Obviously, something is seriously wrong.

The Committee noted that despite the MGNREGA stipulating payment of wages to the beneficiaries within 15 days of completion of work, there is an inordinate delay. This is mainly due to transfer not taking place due to either a dormant Aadhaar or the bank account not being functional.

The Act contemplates the Gram Sabha conducting regular social audits of all projects taken up within the Gram Panchayat. However, this has not been happening. Thus in 2020-21, only 29,611 Gram Panchayats (we have an estimated 2,53,000 Gram Panchayats) were audited at least once.

The MGNREGA contemplates an ombudsman to attend to grievances. But as observed by the Committee, and more trenchantly by Sanjiv Kumar and S Madheswaran in their Working Paper 460 of the Institute of Social and Economic Change in the context of Karnataka, the MGNREGA ombudsman, in the absence of any infrastructural support, is a “forlorn scarecrow”.

It is a different matter as to how many of the rural poor will have the wherewithal to approach an ombudsman. Having said that, there is anecdotal evidence to suggest gut-wrenching corruption at the lowest level (effective supervision by the Gram Panchayats and elimination of middlemen will be more necessary). The Department of Rural Development and Panchayati Raj would do well to address these deficiencies. MGNREGA is still relevant. As Sudha Narayanan points out, the Scheme is a crucial part of “comprehensive social protection that serves as a safety net for those who are most vulnerable”.

Again, as pointed out, despite the scale of MGNREGA, expenditure has never exceeded an annual 0.4 % of the GDP since inception. Narayanan states that at no time has MGNREGA accounted for more than 3% of total rural employment, belying the belief that the programme was “wrecking the national labour market”. In fact, there is a demand now for expanding the scheme to the urban poor too.

Surely the time will come when the MGNREGA will no longer be required. It is safe to say that this will not happen soon. The pandemic has on the contrary re-emphasised the importance of the scheme as an essential provider of succour.

(The writer is a former chairman of the Central Board of Indirect Taxes & Customs)