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Time to re-think MGNREGS

Debraj Bhattacharya

Updated: May 5, 2014, 10:37 PM IST
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The Mahatma Gandhi National Rural Employment Scheme is probably the most important rural development scheme of Government of India. Indeed if you go to a Panchayat office responsible for the implementation of the scheme you will see that at least 50% of its time is spent implementing this scheme. The scheme of course followed from the National Rural Employment Guarantee Act of 2005 and it was rolled out across the country since 2006. After eight years it is now necessary to have a fresh look at this scheme and ask what difference is it making to a poor person's life? Is there a better way in which the money allocated can be spent in order to reduce rural poverty?
The data released by Government of India for 2013-14 makes interesting reading. Whereas the Act guarantees up to 100 days of employment, the national average of number of days for which work has been provided is only 45.78. Of course there is wide variation among different states/UTs. Tripura is highest with 87.69 days and Puducherry is lowest with 21.49 days of work provided (see table below). The average wage for the country is Rs 139.85. Therefore simple arithmetic tells us that if a poor Indian household living in a village has got 45.78 days of work at Rs 139.85 per day then it has earned Rs 6402.33 in a year or Rs 533.52 per month.
This income is certainly important but is it good enough to lift the household out of poverty? We can safely say that the amount is not good enough to make a significant difference. If on the other hand the promise of 100 days of work would have been realised across the country then a household would have earned Rs 13,985.00 per year or Rs 1165.41 per month. In other words, because of poor implementation, a poor rural Indian household is being deprived of more than 50% of the financial support that is supposed to go to it.
The second important objective of MGNREGS was to create durable assets for the villages which would generate income indirectly. It is now quite well known that the assets that have been generated are often of poor standard and are quite useless for long term benefits. Of course there are exceptions here and there but they are exceptions.
In other words, in order to assist a poor household with roughly Rs 534 per month, Government of India has created an enormously complicated scheme involving huge amount of manpower and paper work. Ask any GP functionary how difficult it is to execute MGNREGS and you will know what amount of paper work they need to do to implement the scheme. I am not even discussing the problems of corruption and political clientelism that has resulted from this scheme.
Therefore it seems to me that it would be a better idea to identify the poor people and transfer them the amount of money that is due to them (100 x wage rate) through cash transfer mechanism and avoid the ritual of making them work in order to earn their money. Such cash transfers already take place in case of IGNOAPS for senior citizens (about Rs 400 per month). Hence it will not be anything new. MGNREGS wages are paid to the bank/post office account of the person rather than in cash therefore transferring money would not be difficult either. A one-time annual payment or a quarterly transfer of funds would be good enough. This will save an enormous amount of administrative cost and hassle. The money will be useful to the poor families to subsidise their cost and it will help them more to get out of poverty. Of course there will be a few cases of misuse but that is unlikely to be the general story. This will have a positive impact on distressed migration and increase bargaining power of the poor in rural India. It is also likely to reduce corruption. It is also possible to make this cash transfer conditional such as sending all children to school as per RTE norms. Brazil has already successfully shown the impact of such conditional cash transfer.
On the other hand assets can be created more efficiently and economically through employing expert organisations rather than through unskilled labour. This will also reduce administrative hassle and improve rural economy by creating durable assets.
Table 1: Performance of states/UTs in MGNREGS 2013-14
Rank States Avg Number of Person Days (2013-14)
1 Tripura 87.69
2 Mizoram 70.01
3 Sikkim 68.35
4 Tamil Nadu 58.58
5 Kerala 56.81
6 Meghalaya 56.36
7 Himachal Pradesh 52.29
8 Chattisgarh 51.61
9 Jammu and Kashmir 50.95
10 Rajasthan 50.85
11 Andhra Pradesh 49.6
12 Karnataka 49.56
13 Maharashtra 45.06
14 Andaman And Nicobar 43.94
15 Madhya Pradesh 42.14
16 Bihar 41.56
17 Odisha 41.55
18 Uttarakhand 40.62
19 Gujarat 39.8
20 Nagaland 39.16
21 Jharkhand 38.3
22 West Bengal 37.42
23 Haryana 36.2
24 Uttar Pradesh 34.9
25 Punjab 32.64
26 Chandigarh 27.36
27 Arunachal Pradesh 24.88
28 Assam 23.67
29 Lakshadweep 23.36
30 Manipur 23.32
31 Goa 22.71
32 Puducherry 21.49

1. MGNREGS data is available here. Users will have to switch to 2013-14 in the data sheet.
2. MGNREGS guidelines are available here.

First Published: May 5, 2014, 10:37 PM IST