The enduring story of MGNREGA

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), passed in September 2005 by the UPA government, was aimed at helping India’s most disadvantaged people. At its core, MGNREGA is a safety net for the rural poor that guarantees 100 days of employment in a year to every registered household. With the introduction of MGNREGA, the then chairperson of UPA, Sonia Gandhi, tried to temper the hard market economics with some compassion. MGNREGA is also good economics. Instead of the present-day dole outs transferred seamlessly through UPI, MGNREGA championed the dignity of productive work that would build rural infrastructure.

Though political opponents scoffed at MGNREGA, the Economic Advisory Council to the Prime Minister Modi, led by its Chairman Bibek Debroy, recently suggested that the government should come out with a guaranteed employment scheme for the urban unemployed. The council has further mooted the introduction of universal basic income and higher fund allocation for the social sector to reduce inequality in the country.

In FY ‘22, the Centre had budgeted Rs 73,000 crore for MGNREGA but ended up spending almost Rs 98,000 crore due to continued demand for work. On an average, around 3 crore households seek work under MGNREGA and the number of active workers stands at over 15 crore. Around 3.16 crore households demanded work under MGNREGA in June 2022, compared to 3.07 crore in May, a jump of 2.9%. This indicates that the recovery in labour market is slow and daunting. However, the household demand for MGNREGA in June 2022 was slightly lower compared to June of last year, when work demand had spiked because of the pandemic.

The latest MGNREGA data corroborates with the unemployment data released by the Centre for Monitoring Indian Economy (CMIE), which showed that June 2022 unemployment rate was higher at 7.8% compared to 7.12% in May. Rural unemployment in June 2022 registered a significant jump at 8.03% compared to 6.62% in May, while urban unemployment fell to 7.3% compared to 8.21% in May.

MGNREGA has not only mitigated rural unemployment distress, it has also facilitated the empowerment of rural women. Though the scheme mandates that 33.3% of workers be women, trends over the last decade have regularly averaged at over 52% nationwide. Women’s participation in the scheme has historically been high. Women constituted 58.6% of the MGNREGA workforce in 2015. Assets created under MGNREGA are also useful to local communities, though some experts are divided on their opinion about the type of assets created. MGNREGA has achieved its objective of mitigating rural poverty, where ever it was implemented genuinely and meaningfully.

MGNREGA has also helped to reduce distress migration from rural areas to urban centres in search of bread and butter. Several studies have suggested that MGNREGA, while not having a direct correlation with overall rural-urban migration trends, has helped to reduce short-term distress migration.

MGNREGA played a stellar role in offering a lifeline during the Covid-19 crisis to hundreds in need. Due to the nation-wide lockdown in March 2020, millions of Indians lost their jobs and the migrant labourers, who had moved to cities, were disproportionately affected. Over one crore migrant workers were forced to make long, arduous journeys back to their villages upon losing their jobs in cities.

As the Covid-19 pandemic raged and the lockdown-induced economic crisis continued, many returned workers, turned to MGNREGA as a source of work in their own villages. A record 40% increase in the demand for MGNREGA work was seen during this time as compared to pre Covid-19.

In conclusion, MGNREGA, which completes 17 years in 2022, is a transformative legislation, enabling livelihoods and social security for millions, as well as serving as an employment alternative during crises and in a jobless, yet a fast growing, economy.

(The writer is an alumnus of IIM, Ahmedabad and a retired corporate professional)