The funding and demand for MGNREGA - Chanakya Mandal Pariwar

The funding and demand for MGNREGA


  • The Economic Survey 2022-23 reported that 6.49 crore households demanded work under MGNREGA and of these, 6.48 crore households were offered employment and 5.7 crore availed it.
  • The survey praised the scheme for having a positive impact on household income, agricultural productivity, and Production-related expenditure and for providing income diversification and resilience to rural livelihoods.

Basics of MGNREGA:

  • The MGNREGA was passed in 2005 to improve livelihood security in rural areas by guaranteeing 100 days of work per year for rural households.
  • The scheme covers all districts in the country except those with 100% urban populations and has 15.51 crore active workers
  • Projects such as water conservation, land development, construction, agriculture and allied works are undertaken for employment generation
  • Workers must be given a daily unemployment allowance if work is not provided within 15 days of demand and wages must be paid within 15 days, with compensation required in case of delay

Importance of MGNREGA to rural employment:

  • The MGNREGA not only serves as a safety net for rural households, but also helped migrant laborers during the COVID-19 pandemic.
  • The scheme was ramped up and given a record budget of ₹1.11 lakh crore in 2020, providing a lifeline for 11 crore workers. Studies show that MGNREGA wages compensated for 20-80% of income loss during the lockdown.
  • Demand for work under MGNREGA reached record-high levels during the pandemic, with 8.55 crore households demanding work in 2020-21 and 8.05 crore in 2021-22, compared to 6.16 crore in 2019-20.
  • Demand for work under the scheme has doubled in the past seven years, reaching 3.07 crore households in May 2022 compared to 1.64 in May 2015.

The challenges to its implementation:

  • An analysis by PRS Legislative Research shows that since 2016-17, on average, less than 10% of households completed 100 days of wage employment under the MGNREGA. The average days of employment provided per household also fell to a five-year low.
  • Issues such as delays in wage payments, material costs, and widespread corruption have hindered the implementation of the scheme. The Supreme Court of India ordered the government to ensure timely wage payments in 2016, calling delays “forced labor.”
  • The minimum wage rate is fixed by the Centre based on the Consumer Price IndexAgricultural Laborers and should be based on the Consumer Price Index-Rural, which includes more recent expenditures.
  • Other challenges include fake job cards, late uploading of muster rolls, and inconsistent payment of unemployment allowance. These issues were pointed out by the Rural Development Ministry and a Parliamentary Committee last year

Way Forward

  • Must Ensure Work is Provided: The government must ensure that work is provided notwithstanding the demand. The government should expand the scheme and focus on value addition and multiply community asset works.
  • Strengthening the Scheme: There is a need for better coordination between various government departments and the mechanism to allot and measure the work. This is one of the best welfare schemes in recent years and it has helped the rural poor. However, government officials must take the initiative to implement the scheme and must not block the work.
  • Gender Wage Gap: Some discrepancies in the payouts need to be addressed, too. Women in the sector, on an average, earn 22.24% less than their male counterparts.