MGNREGA – National Importance, Potential and Challenges

The Decentralization Experience

The other sub-theme can be said to be the very slow progress in actual devolution and democratic decentralization. A major bottleneck in this regard has been insufficient progress in devolution of what is known as the three Fs – Funds, Functions and Functionaries. Essentially, this means that while the legislation has been passed, the actual work of making PRIs in charge has proceeded very slowly and the progress has been uneven across states (Aiyar, 2005, Widmalm, 2005 , ARC, 2007, MoPR, 2008). Thus, even if functions have been demarcated to be carried out by PRIs, the requisite funds have not been placed at their disposal but have been diverted by state governments, even if temporarily, to meet their own “ways and means requirements” (Aiyar, 2005, p.65), or the functionaries have not been made fully accountable to them, with line departments still maintaining their stranglehold (Social Watch India, 2009), or there has been a lack of clarity on demarcation of powers and functions to be performed between tiers of the PRI system. An index of devolution, based on scores for different parameters of devolution suggests that while there has been some progress in devolution, this progress has been uneven across states (NCAER, 2009).

A serious consequence of such decentralization without adequate preparation has been on the one hand a universalization of basic social services without sufficient attention to quality (Shankar and Shah, 2009, op.cit.). On the other, such “subsidiarity without empowerment” has also the possible implication of effectively absolving the state of its responsibilities in the social sector (Shah, 2007 op.cit.).

MGNREGA: Potential, Performance and Problems

The passage of the National Rural Employment Guarantee Act (MGNREGA) in 2005 marks a new chapter in Indian history as well the history of decentralization in India. Through this Act, the state is committed to providing employment (“not less than one hundred days of such work in a financial year”, NREGA, 2005 Ch. II) to every rural family which demands such work and whose adult members volunteer to do such work. Such work will be provided at the minimum wage rate and, as far as possible, within a 5 km radius of the village where the applicant resides. Failure to provide such wage employment within 15 days of the receipt of the application will entitle the applicant to receive a daily unemployment allowance. The Act moves towards ensuring the right to work and lays the basis for development interventions which do not depend on the wilful benevolence of the state but legally bind the state to provide employment for any rural family that demands it. Since April 2008, the coverage of the Act was expanded to all districts of India, making it the largest employment programme in the world. The principal implementing agency under the Act is the Gram Panchayat (GP). MGNREGA is also supported by unprecedented operational guidelines, which give central emphasis to community participation in quality planning, implementation, social audit and transparency. A remarkable feature of MGNREGA through which it makes a decisive break with the past is that it places a complete ban on the use of contractors and also lays emphasis on labour-intensive work for water conservation, drought- and flood-proofing as priority works under MGNREGA, underscoring water security as the pre-requisite and foundation for rural transformation in India (NREGA, 2005, Schedule I). The transformatory potential of MGNREGA lies in creating sustainable livelihoods through well targeted public investments in rural areas for creation of durable assets in priority works as listed above, thus easing the resource constraints faced by the poor, rural labour households, a very high proportion of whom are actually owners of land (Labour Bureau, op.cit). Backed by a constitutional right, it is MGNREGA’s mandate of addressing chronic causes of poverty, redressing imbalances and deficiencies in the natural resource base, empowerment of the poor and governance reform that makes it stand apart from all social sector initiatives hitherto attempted. This acquires particular significance in the light of growing realization in economic thinking about the synergies between equity and growth (see Bourguinon, 2004, Ravaillion, 2005 for a discussion of the issues involved). The reasons are for one, in an unequal situation, the impact of growth on poverty would be muted (Datt and Ravaillion, 2002; Deaton and Dreze, 2002). For another, if we reverse the growth-poverty linkage argument, by an understanding that the poor remain poor because of lack of access to productive resources (say for instance due to imperfect credit markets or an unequal distribution of wealth [Bourguinon, op.cit., 2004]), which in turn inhibits their productive growth-oriented potential from being unlocked. Thus, the poor are not simply passive receptors of growth but, as producers, are contributors to it, representing both a “slack” in the system and an opportunity, which, with systematic and well-directed investments (such as the priority activities listed in Schedule I of the MGNREGA), could actually begin to contribute to the growth process itself. MGNREGA funds could be initially utilized to create the basic water infrastructure in villages through proper grassroots planning. Over time this could serve as the basis for a range of income-generating livelihoods interventions. Together, these would ensure that the investments made are productive, put the economy on a sustainable growth path and further that the number of dependents on a state-sponsored guarantee would steadily decline. The recent amendment to allow MGNREGA work on lands of small and marginal farmers (MoRD, 2009), has further deepened the possibilities of working on such activities under MGNREGA. However, for such possibilities to be fully articulated, the bottom-up architecture of MGNREGA would have to become a reality, the key to which in turn, is a deepening of democratic decentralization. It is to an understanding of these issues that we now turn.

MGNREGA: Performance and Achievements

Over the past 5 years or so, MGNREGA’s performance according to key aggregate indicators has been quite impressive, particularly when compared with previous employment programmes. The cumulative expenditure under MGNREGA works is Rs.2,055,000 million. The cumulative employment generated has been 14,133 million person-days over the same period (as of beginning of May 2013). Since its launch, the benefits of MGNREGA has reached women, SC/ST families and the poor. Over the last four years, the share of SC/ST families in the work provided under MGNREGA has ranged between 50-60%. The share of women in the employment provided has been between 40 to just over 50%. With nearly 100 million bank/post office accounts opened for MGNREGA workers, and about 85% of NREGA payments being made through them, MGNREGA has also moved financial inclusion of the poor several steps forward. A study by Chandrashekhar and Ghosh, 2011 point to the impact of MGNREGA on rural wages. The study, based on the 64th round of the National Sample Survey Oorganization’s survey data concludes that real wages for casual labour in rural areas have increased between 1993-94 and 2007-08 and the increase has been more rapid for women workers. Further, that between 2004-05 and 2007-08, public works accounted for a greater share of economic activity and this rise was particularly greater for women, with the days of employment of rural women in public works increasing by a factor of 4.4. Finally, average female wages in MGNREGA were slightly higher than average male wages, whereas they were lower in non-MGNREGA public works and even lower in non-public works.