National Rural Employment Guarantee Act 2005
The National Rural Employment Guarantee Act 2005 (No 42), also known as the "Mahatma Gandhi National Rural Employment Guarantee Act", and abbreviated to MGNREGA, is an Indian labour law and social security measure that aims to guarantee the 'right to work' and ensure 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. 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 statute is hailed by the government as "the largest and most ambitious social security and public works programme in the world". The more comprehensive survey of Comptroller and Auditor General (CAG) of India, a ‘Supreme Audit Institution’ defined in Article 148 of the Constitution of India, reports serious lapses in implementation of the act.
Targeting poverty through employment generation using rural works has had a long history in India that began in the 1960s. After the first three decades of experimentation, the government launched major schemes like Jawahar Rozgar Yojana, Employment Assurance Scheme, Food for Work Programme, Jawahar Gram Samridhi Yojana and Sampoorna Grameen Rozgar Yojana that were forerunners to Mahatma Gandhi NREGA. The theme of government approach had been to merge old schemes to introduce new ones while retaining the basic objective of providing additional wage employment involving unskilled manual work and also to create durable assets. The major responsibility of implementation was also gradually transferred to the Panchayati Raj Institutions. Unlike its precursors, the Mahatma Gandhi NREGA guaranteed employment as a legal right. However, the problem areas are still the same as they were in the 1960s. The most significant ones are: lack of public awareness, mismanagement and above all mass corruption.
The statement of the law provides adequate 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. Further the provisions of the law adhere to the principles enunciated in the Constitution of India.
The comprehensive assessment of the performance of the law by the constitutional auditor revealed serious lapses arising mainly due to lack of public awareness, mismanagement and institutional incapacity. The CAG also suggests a list of recommendations to the government for corrective measures. The government, however, had also released a collection of reportedly independent researches evaluating the functioning of the act whose results significantly differed from the CAG report. Meanwhile, the social audits in two Indian states highlight the potential of the law if implemented effectively.
- 1 Background
- 2 The law on paper
- 3 The law in action
- 4 See also
- 5 References
- 6 External links
|Prior to the enactment of Mahatma Gandhi NREGA, India had no programme in rural areas that promised employment as a legal right, although employment generation through rural works had a long history in India dating back to the 1960s. Since 1960,[n 1] the government had been merging old schemes to introduce new ones while retaining the basic objective of providing additional wage employment involving unskilled manual work, creating ‘durable’ assets, and improving food security in rural areas through public works with special safeguards for the weaker sections and women of the community. The problem areas had also been almost similar like mismanagement, lack of planning and implementation. The remuneration had been a combination of wages and foodgrains across all schemes. It took 30 years of government experimentation to launch major schemes like Jawahar Rozgar Yojana (JRY), Employment Assurance Scheme (EAS), Food for Work Programme (FWP), Jawahar Gram Samridhi Yojana (JGSY) and Sampoorna Grameen Rozgar Yojana (SGRY) that were forerunners to Mahatma Gandhi NREGA. In the process, the government decentralized implementation by providing financial and functional autonomy to the local self-government institutions or Panchayati Raj Institutions (PRIs) in order to fight corruption.
The government experimented with various schemes from 1960-90. The most significant ones were Food for Work Programme (FWP) of 1977 and National Rural Employment Programme (NREP) of 1980. The popular FWP provided foodgrains to complement wages. It was then revamped and renamed to NREP with almost similar objective.
On 1 April 1989, to converge employment generation, infrastructure development and food security in rural areas, the government integrated NREP and RLEGP[n 2] 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. Due to implementation issues, JRY was restructured and renamed to JGSY in 1999.
On 2 October 1993, the EAS was initiated to provide employment during the lean agricultural season. The role of PRIs was reinforced with the local self-government at the district level called the ‘Zilla Parishad’ as the main implementing authority. Again due to implementation issues, EAS was merged with SGRY in 2001.
In January 2001, the government again introduced FWP similar to the one initiated in 1977. Once again due to implementation issues, it was merged with Mahatma Gandhi NREGA in 2006.
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. But again due to implementation issues, it was merged with SGRY in 2001.
Once again 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. Yet again due to implementation issues, it was merged with Mahatma Gandhi NREGA in 2006.
In 2005, and again to converge employment generation, infrastructure development and food security in rural areas, the government integrated SGRY and FWP into a new scheme called Mahatma Gandhi NREGA.
The total government allocation to these precursors of Mahatma Gandhi NREGA had been about three-quarters of 1 trillion (equivalent to over $18 billion).
|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 which was rising due to a downward trend of the agricultural productivity and in turn also aggravating poverty. In large states like Bihar, Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh, the number of poor even increased. The plan targeted poverty through MGNREGA which promised employment as an entitlement.
Previous employment guarantee schemes (EGS) like ‘Sampoorna Grameen Rozgar Yojana’ (SGRY) or Universal Rural Employment Programme and National Food For Work Programme (NFFWP) - both SGRY and NFFWP were merged with MGNREGA - also provided short-term unskilled employment to poor, assured food and job security and created durable assets. In contrast to the earlier wage employment programmes, MGNREGA, as per its definition, is a right-based, demand-driven public employment programme that is principally based on decentralized, participatory planning at the gram panchayat level with adequate transparency and accountability safeguards for effective implementation.
The MGNREGA is notified on 7 September 2005 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". In addition to this the aim of MGNREGA is to create durable assets that would augment the basic resources available to the poor. At minimum wage rate and within 5 km radius of the village, the employment under MGNREGA is an entitlement that creates an obligation on the government failing which an unemployment allowance is to be paid within 15 days. Along with community participation, the MGNREGA is to be implemented mainly by the 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. Starting from 200 districts in 2 February 2006, the MGNREGA covered all the districts of India from 1 April 2008.
The law on paper
Details of the law
|The stated objective of the Act is “to enhance 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. This work guarantee can also serve other objectives: generating productive assets, protecting the environment, empowering rural women, reducing rural-urban migration and fostering social equity, among others."
For effective management, the legislation also mentions implementation principles and key agencies.The principles are: collaborative partnership and public accountability; community participation; panchayats as principal authorities; overall responsibility of district programme coordinator (DPC) and programme officer (PO); coordination among agencies; and resource support. The agencies are: Gram Sabha and Gram Panchayat at the village level; intermediate panchayat and PO at the block level; district panchayats and DPC at the district level; state employment guarantee council (SEGC), state government and employment guarantee commissioner at the state level; and central employment guarantee council (CEGC) and Ministry of Rural Development at the central level. The Act further mandates its ‘wide publicity’.
Likewise the stated 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 ‘100 days per household per year’ may be shared between different adult members of the same household.
The law too lists the 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 works executed by the Gram Panchayat as 50 per cent and 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. The unemployment allowance must be paid if the work is not provided within the statutory limit of 15 days.
Moreover, the legislation details the financing pattern between the central and the state government and the establishment of the ‘Employment Guarantee Funds’ at both levels. Unlike the SGRY and NFFWP, the financing to the states is based on proposals and is not predetermined. 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’.
The statute further imposes monitoring across all five levels: the village level, the block level, the district level, the state level, and the central level. Further the monitoring methods and the evaluation criteria are also detailed in the act using which an annual ranking of districts may be drawn.
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.
To ensure public accountability through public vigilance, the NREGA designates ‘social audits’ as key to its implementation.
The continuous process of social audit on NREGA works involves public vigilance and verification at the stipulated 11 stages of implementation: registration of families; distribution of job cards; receipt of work applications; selection of suitable public works; preparation of technical estimates; work allocation; implementation and supervision; payment of wages; payment of unemployment allowance; evaluation of outcomes; and mandatory social audit in the Gram Sabha or Social Audit Forum. The Gram Panchayat Secretary called ‘Sarpanch’ is designated as the authority responsible for carrying out the social audit at all stages. For some stages, the programme officer and the junior engineer is also responsible along with Sarpanch.
The statute designates the Gram Sabha meetings held to conduct social audit as the ‘Social Audit Forums’ and spells out three steps to make them effective: publicity and preparation of documents; organizational and procedural aspects; and the mandatory agenda involving questions verifying compliance with norms specified at each of the 11 stages of implementation.
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.
The law and the Constitution of India
The Act aims to follow the Directive Principles of State Policy enunciated in Part IV of the Constitution of India. The law guarantees the 'right to work' which is consistent with Article 41 that directs the State to secure to all citizens the right to work. Further conforming to the Article 23 of the Universal Declaration of Human Rights that defines the right to work as a basic human right, this law guarantees the right to work to the people of India and hence is termed as a "People’s Act". The statute also seeks to protect the environment through rural works which is consistent with Article 48A that directs the State to protect the environment.
In accordance with the Article 21 of the Constitution of India that guarantees the right to life with dignity to every citizen of India, this act imparts dignity to the rural people through an assurance of livelihood security. The Fundamental Right enshrined in Article 16 of the Constitution of India guarantees equality of opportunity in matters of public employment and prevents the State from discriminating against anyone in matters of employment on the grounds only of religion, race, caste, sex, descent, place of birth, place of residence or any of them. The statute mandates that at least one-third of the beneficiaries shall be women (Section 4.6.9 of the NREGA Operational Guidelines). Moreover women representation in the employment under the Act has been reported as 48 per cent from 2009–12, showing that the law has been used as an instrument to reduce gender inequality and foster women empowerment. Moreover the share of Scheduled Castes and Scheduled Tribes has been around 30 per cent, showing that the statute has empowered weaker sections ensuring social justice. In doing so, the legislation also follows Article 46 that requires the State to promote the interests of and work for the economic uplift of the scheduled castes and scheduled tribes and protect them from discrimination and exploitation.
Article 40 mandates the State to organise village panchayats and endow them with such powers and authority as may be necessary to enable them to function as units of self-government. Conferring the primary responsibility of implementation on Gram Panchayats, the Act adheres to this constitutional principle. Also the process of decentralization initiated by 73rd Amendment to the Constitution of India that granted a constitutional status to the Panchayats is further reinforced by the Mahatma Gandhi NREGA that endowed these rural self-government institutions with authority to implement the law.
The law in action
Assessment of the act by the constitutional auditor
|To improve livelihood security in rural areas, NREGA aims to provide an assured job involving unskilled manual work for minimum 100 days per year. Starting from 200 districts in 2 February 2006, the NREGA covered all the districts of India from 1 April 2008. The report of the Comptroller and Auditor General (CAG) of India on the second performance audit of NREGA, that covered 3,848 gram panchayats (GPs) in 28 states and 4 union territories (UTs) of India from April 2007 to March 2012, was "laid on the table of the Parliament house on April 23, 2013". The CAG is the Supreme Audit Institution (SAI) defined in Article 148 of the Constitution of India. The CAG reports, mainly under Vinod Rai, are believed to have exposed few major scams like the coal scam and the 2G Spectrum scam allegedly costing the Indian exchequer close to a quarter of US$1 trillion in lost revenues that is roughly equivalent to China's total defence expenditure for three years (2011–13). Lack of public awareness, mismanagement, and institutional incapacity are the three most significant factors that are highlighted by the CAG report on the second performance audit of the NREGA.
Although half of India’s poverty resides in Uttar Pradesh, Bihar and Maharashtra, the CAG reports that out of every 100 poor in India only 9 beneficiaries of the law belonged to these states. Hence due to lack of awareness, the CAG reports, the statute is not effective in reducing poverty, the aim with which it was conceived. Moreover a significant fall of 20 per cent in demand is also reported by the CAG audit. Notwithstanding the statutory requirement of notification, yet five states have not even notified the eight-years-old scheme. Though the public awareness in a demand driven scheme is crucial, still the Information, Education and Communication (IEC) plan is not drawn by half of the states and UTs.
The CAG reports that the mismanagement of NREGA works resulted in a declining trend in the number of works completed since the law was enacted, with only 1 out 4 works completed in 2012. This reportedly affects the realization of the primary objective of the Act which is to provide livelihood security and to create durable assets. Despite the approved 13 million tasks worth $25 billion, only 4 million tasks are completed and $18 billion is unutilised – an efficiency of only 30 per cent in implementation. According to Section 5.4 of the NREGA Operational Guidelines, minimum wage component in the total outlay must be 60 per cent. The CAG reports that out of total sanctioned amount of $25 billion, only $7 billion was utilized. The CAG also reports that the material component exceeded the prescribed level by about $350 million. Hence the maximum expenditure on the payment of wages is only $3.85 billion out of total allocation of $25 billion. Thus only 15 per cent is spent to pay wages. Even though Section 16(3) of the NREGA mandates the drafting of Annual Development Plans (ADPs), yet only 70 per cent of gram panchayats (GPs) have complied. Mismanagement of tasks costing $1 billion is also reported in the audit. Other mismanagement issues like the scarcity of 'Gram Rozgar Sahayaks' (rural employment helpers), no jobcards, no photographs on job cards and payment irregularities are also found in the CAG audit. Moreover, in breach of financial accountability rules, the central government unconditionally released around $1.5 billion to the states.
Even though the mass social audits have a statutory mandate of Section 17 (as outlined in Chapter 11 of the NREGA Operational Guidelines), yet only seven states have the institutional capacity to facilitate the social audits as per prescribed norms. Although the Central Council is mandated to establish a central evaluation and monitoring system as per the NREGA Operational Guidelines, even after six years it is yet to fulfill the NREGA directive. Further, the CAG audit reports discrepancies in the maintenance of prescribed basic records in up to half of the gram panchayats (GPs) which inhibits the critical evaluation of the NREGA outcomes. The unreliability of Management Information System (MIS), due to significant disparity between the data in the MIS and the actual official documents, is also reported.
To address this lack of public awareness, mismanagement, and institutional incapacity, the CAG suggests a list of recommendations to the Ministry of Rural Development of the Government of India. To increase public awareness, the intensification of the Information, Education and Communication (IEC) activities is recommended. To improve management of outcomes, the CAG recommends proper maintenance of records at the gram panchayat (GP) level. A need to revamp the NREGASoft (MIS) through incorporation of strict data integrity checks in software design is also suggested. Further the Central Council is recommended to establish a central evaluation and monitoring system for "a national level, comprehensive and independent evaluation of the scheme". The CAG also recommends a timely payment of unemployment allowance to the rural poor and a wage material ratio of 60:40 in the NREGA works. Moreover for effective financial management, the CAG recommends proper maintenance of accounts, in a uniform format, on a monthly basis and also enforcing the statutory guidelines to ensure transparency in the disposal of funds. For capacity building, the CAG recommends an increase in staff hiring to fill the large number of vacancies.
Evaluation of the law by the government
Indian Prime Minister Manmohan Singh released an anthology of research studies on the MGNREGA called "MGNREGA Sameeksha" in New Delhi on July 14, 2012, about an year before the CAG report. Aruna Roy and Nikhil Dey said that "the MGNREGA Sameeksha is a significant innovation to evaluate policy and delivery". The anthology reportedly draws on independent assessments of MGNREGA conducted by Indian Institutes of Management (IIMs), Indian Institutes of Technology (IITs) and others in collaboration with United Nations Development Programme (UNDP) published from 2008 to 2012. The Prime Minister said:
Further the Minister says:
Main article: Social audit
Civil society organisations (CSOs), nongovernmental organisations (NGOs), political representatives, civil servants and workers of Rajasthan and Andhra Pradesh collectively organise social audits to prevent mass corruption under the NREGA. As the corruption is attributed to the secrecy in governance, the 'Jansunwai' or public hearing and the right to information (RTI), enacted in 2005, are used to fight this secrecy. Official records obtained using RTI are read out at the public hearing to identify and rectify irregularities. "This process of reviewing official records and determining whether state reported expenditures reflect the actual monies spent on the ground is referred to as a social audit." Participation of informed citizens promotes collective responsibility and awareness about entitlements.
An application under the RTI to access relevant official documents is the first step of the social audit. Then the management personnel of the social audit verify these official records by conducting field visits. Finally, the 'Jansunwai' or public hearing is organised at two levels: the Panchayat or village level and the Mandal level. The direct public debate involving the beneficiaries, political representatives, civil servants and, above all, the government officers responsible for implementing the NREGA works highlights corruption like the practice of rigging muster rolls (attendance registers) and also generates public awareness about the scheme.
These social audits on NREGA works in Rajasthan highlight: a significant demand for the scheme, less that 2 per cent corruption in the form of fudging of muster rolls, building the water harvesting infrastructure as the first priority in the drought-prone district, reduction of out-migration, and above all the women participation of more than 80 per cent in the employment guarantee scheme. The need for effective management of tasks, timely payment of wages and provision of support facilities at work sites is also emphasised.
To assess the effectiveness of the mass social audits on NREGA works in Andhra Pradesh, a World Bank study investigated the effect of the social audit on the level of public awareness about NREGA, its effect on the NREGA implementation, and its efficacy as a grievance redressal mechanism. The study found that the public awareness about the NREGA increased from about 30 per cent before the social audit to about 99 per cent after the social audit. Further, the efficacy of NREGA implementation increased from an average of about 60 per cent to about 97 per cent. Finally, the effectiveness of the social audit as a grievance redressal mechanism was measured to be around 80 per cent.
Academic research has focused on how the scheme impacts agricultural wages. Several studies have found that agricultural wages have increased significantly since the inception of the scheme. This indicates that overall wage levels have increased due to the act, however, further research highlights that the key benefit of the scheme lies in the reduction of wage volatility. This highlights that NREGA may be an effective insurance scheme. Ongoing research efforts try to evaluate the overall welfare effects of the scheme; a particular focus has been to understand whether the scheme has reduced migration into urban centers for casual work.
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