MGNREGS: How the employment guarantee scheme holds up after 14 years

The scheme helped villagers beat poverty, created assets; Despite criticisms, it's time to ready MGREGS 2.0

By Karuna Vakati Akella
Published: Thursday 09 July 2020

“Are you aware of the wealth created?” someone asked me once during a dinner. The person referred to the 30 million teak saplings planted on the bunds of agricultural fields across Andhra Pradesh’ Warangal district between 2015 and 2017 under the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS).

Nurseries were set up for raising teak saplings under the MGNREGS. Pitting and planting of the saplings supplied freely was also done under the scheme.

Though slow to start, over a period of three years, some 200,000 farmers planted teak saplings. In a few years’ time, each tree will be worth a minimum of Rs 1 lakh. This is the wealth that was referred to.

Mangrove regeneration works in Krishna district’s Mada forest area show good progress. Marginal farmers received substantial returns from their mango orchards in Chittoor district as well.

Dotted across the country are many such instances of the creation of durable individual and community assets, though the enduring criticism of ‘digging ditches’ is not without basis.

Which side are you on

According to many critics of the scheme, MGNREGS deepened the agricultural crisis with labourers becoming scarce and costlier to hire.

For them, the scheme was about digging holes and filling up the same holes. For those of us who have worked on grounding the scheme for hundreds of hours for months on end, the story has been about how the scheme directly addressed the issues of debilitating poverty, migration and indebtedness in rural areas.

It is about how MGNREGS wages helped supplement incomes of the rural poor, how marginal farmers ploughed back MGNREGS wages into farming activities on their lands and how regeneration works helped improve soil quality and water levels.

Above all, it is about empowerment, giving the most vulnerable strata of Indian society — stagnant for the longest time — a right and choice to work. It was about their dignity and respect.

Almost overnight, we saw power dynamics transform in villages. For ages, workers depended on farmers for work and now they sought them out, sometimes not successfully.

Rural wages rose dramatically. In Mahabubnagar district, about 100 kilometres away from Hyderabad, men were paid Rs 35 and women Rs 25 per day of farm labour before the employment guarantee scheme was implemented.

In the first season of MGNREGS implementation, both men and women received a minimum wage of Rs 125, with it being revised every working season. This compelled the upward revision of farm labour wages as well.

Challenging status quo

MGNREGS has several unique features. One of the most important features in its design is the self-selection mechanism. The fact that wage seekers self-select themselves overcame two big problems of previous anti-poverty programmes.

First, there is no need for targeting, something that was an exceedingly difficult task for governments. Both exclusion (eligible beneficiaries being excluded) and inclusion (people who were included, but not eligible) affected virtually all previous programmes, especially those that targeted Below Poverty Line households.

Removing the selection mechanism by the state resolved this problem. This also had the advantage of not basing the selection on the poverty line which — a lot of research has shown — is extremely low and excluded several people who live in extreme poverty despite having an income above the poverty line.

Also consider that, according to World Bank estimates, about two-thirds of Indians live below the poverty line at Rs 254.80 per day (about a fifth are below the extreme poverty line at Rs 142.38 per day).

This means a lot of people may not be considered extremely poor, but are nevertheless poor and need something like MGNREGS, especially in times of crisis.

The self-selection mechanism also ensured that — in a time of crisis like the present one — the support of the state can be activated quickly, responding to demand coming from the people themselves (this depends on the availability of funds and ability of local implementers to quickly open worksites).

Another important feature in the design of MGNREGS is the role of Gram Panchayaths (GP). Devolving such a large amount of funds to GPs makes it one of the most radical devolution of funds to local bodies the world has ever seen.

GPs do have problems, but in many cases, this has worked as it was supposed to, with very good results.

The downside

From an implementation point of view, the rights-based framework of the scheme has challenged administrative machineries.

This framework involves work to be given on demand to an open-ended number of beneficiaries, measurement of work done, payments within a timeframe, workplace facilities, late pay compensation, mandatory social audits, etc.

These machineries have attempted to overcome constraints in part though detailed implementation arrangements and in part through technology with some success.

The direct benefit transfer of wages ensured money is transferred directly into the wage seekers’ accounts without any middlemen.

Mandatory social audits have seen village communities getting a detailed public account of the money trail in the scheme: A first in any public scheme in the country.

On the downside, work ethics in rural areas suffered irreversibly. From an eight-hour work day, average working time reduced considerably.

With free ration and other subsidies, wage seekers do not feel the need to work for long hours. Farms went fallow due to the lack of labour. Durable assets created are relatively low. Few states institutionalised social audits.

Issues of corruption plague the scheme even though it is relatively cleaner than other wage employment schemes. After almost 14 years of implementation, the growth trajectory of wage seekers remains pretty stagnant.

They continue to be dependent on the state for work. The shelf of works is often decided by those in power and not by wage seekers.

How much empowerment has really taken place is a matter of huge debate. While the preoccupation of those implementing MGNREGS should have been on second-generation issues like marketing, providing cold storage, etc, it is still about basic works done in initial days.

It is as if the state of affairs on the demand and supply sides will continue in perpetuity.

Relevant as never before

Be that as it may, MGNREGS is relevant today as never before. Employment generation schemes for the creation of white-collar jobs have, at their best, failed to take off in any major way.

In the present scenario, where the job market has all but collapsed, MGNREGS or an MGNREGS-like scheme is set to take the centre stage for providing succour.

This season has seen an exponential rise in the number of wage seekers. With educated, degree-holders signing up for MGNREGS work by the droves, the scheme appears to be the lifeline which keeps many sections of people afloat.

This social safety net scheme is green by design. At a time when global warming is a centre-stage issue, MGNREGS — because of its size, reach and design — has the potential to reverse negative environment trends like soil degradation, deforestation, groundwater depletion, etc.

It is time for version 2.0 of the scheme to be expanded to include urban areas, taking into account urban needs (for instance the service sector) and have separate streams of work for skilled labour as well.

Views expressed are the author's own and don't necessarily reflect those of Down To Earth.

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