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Dr. RAM MANOHAR LOHIYA NATIONAL LAW UNIVERSITY, LUCKNOW.

ECONOMICS TOPIC: MNREGA ACT 2005

SUBMITTED TODr. MITALI TIWARI

SUBMITTED BYAYUSH PRATAP SINGH

ASST.PROFFESOR OF ECONOMICS DR. RML NATIONAL LAW UNIVERSITY

ROLL NO- 042 BA-LLB SEM III

ACKNOWLEDGEMENT I am overwhelmed in all humbleness and gratefulness to acknowledge my depth to all those who have helped me to put these ideas, well above the level of simplicity and into something concrete. I would like to express my special thanks of gratitude to my teacher Dr. Mitali Tiwari, who gave me the golden opportunity to do this wonderful project on the topic "MGNREGA ACT 2005" , which also helped me in doing a lot of Research. I am really thankful to them. Any attempt at any level can't be satisfactorily completed without the support and guidance of my parents and friends. I would like to thank my parents who helped me a lot in gathering different information, collecting data and guiding me from time to time in making this project, despite of their busy schedules, they gave me different ideas in making this project unique.

CONTENTS INTRODUCTION OVERVIEW PAST SCENARIO GOALS PARADIGM SHIFT MGNREGA A SUCCESS MGNREGA A FALIURE CONTROVERSIES AND CRTICISM CONCLUSION

INTRODUCTION National Rural Employment Guarantee Act 2005 ( later renamed as the "Mahatma Gandhi National Rural Employment Guarantee Act", MGNREGA), is an Indian labour law and social security measure that aims to guarantee the 'right to work'.It aims to enhance livelihood security in rural areas by providing at least 100 days of wage employment in a financial year to every household whose adult members volunteer to do unskilled manual work. The act was first proposed in 1991 by P.V. Narasimha Rao.[3] In 2006, it was finally accepted in the parliament and commenced implementation in 625 districts of India. Based on this pilot experience, NREGA was scoped up to covered all the districts of India from 1 April 2008. The statute is hailed by the government as "the largest and most ambitious social security and public works programme in the world".In its World Development Report 2014, the World Bank termed it a "stellar example of rural development".The MGNREGA was initiated with the objective of "enhancing 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". Another aim of MGNREGA is to create durable assets (such as roads, canals, ponds and wells). Employment is to be provided within 5 km of an applicant's residence, and minimum wages are to be paid. If work is not provided within 15 days of applying, applicants are entitled to an unemployment

allowance.

Thus,

employment

under

MGNREGA

is

a

legal

entitlement.MGNREGA is to be implemented mainly by gram panchayats (GPs). The involvement of contractors is banned. Labour-intensive tasks like creating infrastructure for water harvesting, drought relief and flood control are preferred. Apart from providing economic security and creating rural assets, NREGA can help in protecting the environment, empowering rural women, reducing rural-urban migration and fostering social equity, among others."[8]The law provides many safeguards to promote its effective management and implementation. The act explicitly mentions the principles and agencies for implementation, list of allowed works, financing pattern, monitoring and evaluation, and most importantly the detailed measures to ensure transparency and accountability.

OVERVIEW According to the Eleventh Five Year Plan (2007–12), the number of Indians living on less than $1 a day, called Below Poverty Line (BPL), was 300 million that barely declined over the last three decades ranging from 1973 to 2004, although their proportion in the total population decreased from 36 per cent (1993–94) to 28 percent (2004–05), and the rural working class dependent on agriculture was unemployed for nearly 3 months per year. The UPA Government had planned to increase the number of working days from 100 to 150 before the 2014 Lok Sabha Elections in the country but failed. The NDA government has decided to provide 150 days for rain hit areas. The registration process involves an application to the Gram Panchayat and issue of job cards. The wage employment must be provided within 15 days of the date of application. The work entitlement of ‘120 days per household per year’ may be shared between different adult members of the same household. The law also lists permissible works: water conservation and water harvesting; drought proofing including afforestation; irrigation works; restoration of traditional water bodies; land development; flood control; rural connectivity; and works notified by the government. The Act sets a minimum limit to the wage-material ratio as 60:40. The provision of accredited engineers, worksite facilities and a weekly report on worksites is also mandated by the Act. Furthermore, the Act sets a minimum limit to the wages, to be paid with gender equality, either on a time-rate basis or on a piece-rate basis. The states are required to evolve a set of norms for the measurement of works and schedule of rates. Unemployment allowance must be paid if the work is not provided within the statutory limit of 15 days. The law stipulates Gram Panchayats to have a single bank account for NREGA works which shall be subjected to public scrutiny. To promote transparency and accountability, the act mandates ‘monthly squaring of accounts’.] To ensure public accountability through public vigilance, the NREGA designates ‘social audits’ as key to its implementation. The most detailed part of the Act (chapter 10 and 11) deals with transparency and accountability that lays out role of the state, the public vigilance and, above all, the social audits. For evaluation of outcomes, the law also requires

management of data and maintenance of records, like registers related to employment, job cards, assets, muster rolls and complaints, by the implementing agencies at the village, block and state level. The legislation specifies the role of the state in ensuring transparency and accountability through upholding the right to information and disclosing information proactively, preparation of annual reports by CEGC for Parliament and SEGCs for state legislatures, undertaking mandatory financial audit by each district along with physical audit, taking action on audit reports, developing a Citizen's Charter, establishing vigilance and monitoring committees, and developing grievance redressal system. The Act recommends establishment of ‘Technical Resource Support Groups’ at district, state and central level and active use of Information Technology, like creation of a ‘Monitoring and Information System (MIS)’ and a NREGA website, to assure quality in implementation of NREGA through technical support. The law allows convergence of NREGA with other programmes. As NREGA intends to create ‘additional’ employment, the convergence should not affect employment provided by other programmes.

PAST SCENARIO From 1960, the first 30 years of experimentation with employment schemes in rural areas taught few important lessons to the government like the ‘Rural Manpower Programme’ taught the lesson of financial management, the ‘Crash Scheme for Rural Employment’ of planning for outcomes, a ‘Pilot Intensive Rural Employment Programme’ of labour-intensive works, the ‘Drought Prone Area Programme’ of integrated rural development, ‘Marginal Farmers and Agricultural Labourers Scheme’ of rural economic development, the ‘Food for Work Programme’ (FWP) of holistic development and better coordination with the states, the ‘National Rural Employment Programme’ (NREP) of community development, and the ‘Rural Landless Employment Guarantee Programme’ of focus on landless households.[9] The Planning Commission later approved the scheme and the same was adopted on national scale.[10] On 1 April 1989, to converge employment generation, infrastructure development and food security in rural areas, the government integrated NREP and RLEGP[n 1] into a new scheme JRY. The most significant change was the decentralization of implementation by involving local people through PRIs and hence a decreasing role of bureaucracy.[12] On 2 October 1993, the Employment Assurance Scheme (EAS) was initiated by the then prime minister P.V.Narasimha Rao to provide employment to agricultural hands during the lean agricultural season. Rao had started discussions on this act in 1991.[13] The role of PRIs was reinforced with the local self-government at the district level called the ‘Zilla Parishad’ as the main implementing authority. Later, EAS was merged with SGRY in 2001.[14] On 1 April 1999, the JRY was revamped and renamed to JGSY with a similar objective. The role of PRIs was further reinforced with the local self-government at the village level called the ‘Village Panchayats’ as the sole implementing authority. In 2001, it was merged with SGRY.[15][16] In January 2001, the government introduced FWP(Food for Work Programme) similar to the one initiated in 1977. Once NREGA was enacted, the two were merged in 2006.[17] On 25 September 2001 to converge employment generation, infrastructure development and food security in rural areas, the government integrated EAS and JGSY into a new scheme SGRY. The role of PRIs was retained with the ‘Village Panchayats’ as the sole implementing authority.[18] Yet again due to implementation issues, it was merged with Mahatma Gandhi NREGA in 2006.[19]

The total government allocation to these precursors of Mahatma Gandhi NREGA had been about three-quarters of ₹1 trillion (US$14 billion)

GOALS 



social protection for the most vulnerable people living in rural India



livelihood security for the poor through creation of durable assets, improved water security, soil conservation and higher land productivity drought-proofing and flood management in rural India



empowerment of the socially disadvantaged, especially women, scheduled



castes and schedules tribes, through the processes of a rights-based legislation



various anti-poverty and livelihoods initiatives



deepening democracy at the grass-roots by strengthening Panchayati Raj



Institutions

effecting greater

transparency

and accountability in governance 

Thus, Mahatma Gandhi NREGA is a powerful instrument for inclusive growth in rural India through its impact on social protection, livelihood security and democratic empowerment.

PARADIGM SHIFT i) The Mahatma Gandhi NREGA has given rise to the largest

employment programme in human history and is unlike any other

in its scale, architecture and thrust. Its bottom-up, people-centred, demand-driven, self-selecting, rights-based design is new and unprecedented. The Mahatma Gandhi NREGA provides a legal guarantee of wage employment. ii)

It is a demand-driven programme where provision of

work is triggered by the demand for work by wage-seekers. iii)

There are legal provisions for allowances and

compensation both in cases of failure to provide work on demand and delays in payment of work undertaken. iv)

The Mahatma Gandhi NREGA overcomes problems of

targeting through its self-targeting mechanism of beneficiary selection. v) The Act incentivises States to provide employment as 100%

percent of the unskilled labour cost and 75% of the material cost of the programme is borne by the Centre. vi)

Unlike the earlier wage employment programmes that

were allocation-based, Mahatma Gandhi NREGA is demanddriven and resource transfer from Centre to States is based on the demand for employment in each State. This provides an additional incentive for States to leverage the Act to meet the employment needs of the poor. vii)

There is also a concomitant disincentive for failing to

provide work on time, as the States then bear the cost of the unemployment allowance. viii)

Gram Panchayats are to implement at least 50 per cent

of the works. ix)

This order of devolution of financial resources to Gram

Panchayats is unprecedented. x)Plans and decisions regarding the nature and choice of works

to be undertaken, the order in which each work is to be triggered,

site selection etc are all to be made in open assemblies of the Gram Sabha and ratified by the Gram Panchayat. Works that are inserted at Intermediate Panchayat and District Panchayat level have to be approved and assigned a priority by the Gram Sabha before administrative approval can be given. The Gram Sabha may accept, amend or reject them. xi)

These decisions cannot be overturned by higher

authorities, except to the extent of ensuring conformity with the provisions of the Act and its Operational Guidelines. xii)

This

bottom-up,

people-centred,

demand-driven

architecture also means that a great share of the responsibility for the success of the Mahatma Gandhi NREGA lies with wageseekers, Gram Sabhas and Gram Panchayats. xiii)

Mahatma Gandhi NREGA also marks a break from the

relief programmes of the past towards an integrated natural resource management and livelihoods generation perspective. xiv)

Social audit is a new feature that is an integral part of

Mahatma

Gandhi

NREGA.

Potentially,

this

creates

unprecedented accountability of performance, especially towards immediate stakeholders. xv)

An Annual Report on the outcomes of Mahatma Gandhi

NREGA is presented annually by the Central Government to Parliament and to State Legislatures by the State Governments, facilitating oversight by elected representatives. xvi)

Given the radically new character of the programme,

very innovative approaches are required for the effective implementation of Mahatma Gandhi NREGA so that the novel elements of the Act can be properly realised on the ground at the cutting-edge level of implementation. These Operational Guidelines have been issued to facilitate this compliance.

MGNREGA – A SUCCESS 1. Equality promoted: Equal work opportunity is a reverie in India, without being discriminated on basis of caste and gender. MGNEGA showed that it is possible for equality to prevail in work. The scheme gives equal opportunity to work for everyone regardless of caste or gender. Equal pay for men and women is a daydream in India but MGNERA made it possible for rural women to have

equal

earning

opportunity

along

with

men.

2. Restoration of wells and ponds: NREGA has reached out to many remote villages and helped in restoration of ponds by removing silt. Many wells have been prevented from drying in summer heat. Along with employing people of these villages in developing watering facilities for them, NREGA has resolved the issues of water restoration in many ways. Building and revival of water conservation

structures

is

one

of

the

best

works

done

under

this

scheme.

3. Cleaning work: A good part of the NREGA program took to cleaning. Water supply channels like ditches along the roads were cleared. In districts of Tamil Nadu, the NGREGA took to cleaning bushes and grass in the channels to ensure better drainage. This proved to be beneficial as fewer bunds

were

breached

during

the

recent

flood

in

the

state.

4. Restorations at the Sundarbans: Embankments were built to prevent high tide and flood waters from drowning habitation areas. Flood protection work was undertaken at large scale. Refurbishment of mangroves to prevent erosion of soil has also worked very well.

5. Other beneficiary works: NREGA collaborated with fishery department to generate profit from fish farm ponds dug by them. Plantation and afforestation work under this scheme have had positive effect on the environment. Recharging public wells and borewells have also been undertaken by NREGA which have proved to be advantageous in many districts of Jharkhand and Karnataka.

6. Waste recycling work: In Tamil Nadu and adjoining states, NREGA workers have undertaken

an excellent waste management project. They collect discarded garbage from households and collect them in a yard. The bio-degradable waste is composted while the non-degradable waste is sold to road contractors to use them in road laying.

MGNREGA – A FALIURE 1. No asset created: Unless and until a government scheme created some asset, it cannot be called complete success. MGNEGA is one such scheme that created employment in rural belts but generated no asset from the investment done by the state and central government for funding the scheme. The audit reports by The Controller and Auditor General shows “significant deficiencies” in the scheme and concludes that more investment in this scheme will be non-profitable.

2. Exaggerated reports: The reports of higher agricultural wage rate and significant decrease in immigration of rural population to urban cities are actually a tad more exaggerated opposed to what

real

statistics

have

to

say

about

it.

3. Randomly done work: The projects undertaken under NREGA are mostly arbitrarily done work that lacks proper planning and implementation. The silt removed from ponds were left beside the pond itself only to flow back during the next monsoon. There have also been some unnecessary work done under the NREGA project. Those projects have been a total waste of money with unnecessary diggings at places that did not benefit from them during summer when water evaporated

easily.

4. Scarcity of men at agriculture: People saw NREGA as an opportunity for less work and more pay. More and more people flowed towards MNGEGA projects hence creating shortage of men to work in agricultural fields during harvest seasons. Decrease in productivity and outcome is because of people’s interest in the 100 days/per year work scheme. The work involved in these projects are less exhausting compared to agricultural work which is why people in good number went for them while

ignoring

cultivation.

5. ill-distribution of resources: Corrupt practices of ill-distribution of pay to workers, creation of fake bills, delay in payments, scamming of funds had entered NREGA long back which led to the epic failure and criticism of the scheme by the government.

CONTROVERSIE AND CRITICISM A major criticism of the MNREGA is that a lot of money disbursed by the government gets siphoned off by middlemen , thus leaving a number of MGNREGA workers either with unpaid wages or less than standard wages. In Mahuadand, Jharkhand, most of the people who had worked under the MNREGA did not get paid, while some either got paid less than stipulated or were given 5 kg of rice by private contractors instead. Another criticism of NREGA is that it is making agriculture less profitable. Landholders often oppose it on these grounds. The big farmer’s point of view can be summed up as follows: landless labourers are lazy and they don’t want to work on farms as they can get money without doing anything at NREGA worksites; farmers may have to sell their land, thereby laying foundation for the corporate farming. Economists like Jagdish Bhagwati and Arvind Panagariya have described NREGA as “an inefficient instrument of shifting income to the poor” – the general notion being that it takes five rupees to transfer one rupee to NREGA workers. Economists including Surjit Bhalla have termed it as unsuccessful suggesting that schemes such as the NREGA need to be junked, saying that any scheme with 85 percent leakages can’t be proclaimed to be “working successfully”. The workers points of view can be summed up as: labourers do not get more than Rs. 80 in the private agricultural labour market, there is no farm work for several months; few old age people who are jobless for at least 8 months a year; when farm work is available they go there first; farmers employ only young and strong persons to work in their farms and reject the others and hence many go jobless most of the time.

CONCLUSION MGNREGA have might have its downfalls but the advantages and opportunities created by the scheme cannot be disregarded. That’s the basic reason why NDA government decided to continue funding the scheme despite criticizing it as a failure. The new budget also raised the funding to NREGAshowingfull support to the rural development plan. However, it is important that on the 10th anniversary of the scheme, the government takes it on them to improvise on the drawbacks of the scheme after proper analysis based on the performance of the scheme in all these years.

With proper planning, good coordination by the government engineers, and strict monitoring of funds, this scheme will not just be good for employment in rural areas but also for creation of asset which has been its major drawback.