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Employment Guarantee: Welfarism or Not?

Photo: PTI

“The saving of labour of individuals should be the object and honest humanitarian consideration, and not greed, the motive.”

                                     —Mahatma Gandhi

Since the advent of the planning process in India from 1950 onwards, the Indian economy has adopted a capital-accumulation approach to further the economy. Thrust on industrialisation and commodity production in urban towns was promoted even more rigorously since the liberalisation in 1991, to compete in an increasingly globalised world. While the neo-liberal policies may have entailed the growth of the economy, it failed to benefit the rural classes in small towns and villages.

Post-1991, both real agriculture wages and employment rates saw a decline. This was accompanied by regular fluctuations in the prices of agricultural products in the late 1990s dealing a crushing blow to the rural agrarian economy. The government took cognizance of the crisis at hand and in 2005, the world’s largest welfare and social protection program, National Rural Employment Guarantee Act (or later Mahatma Gandhi National Rural Employment Guarantee Act), was launched.

Social protection, as Jean Dreze points out, can serve two purposes—prevention and promotion. While prevention relates to stopping people from falling into destitution, promotion empowers them by uplifting themselves from poverty. MGNREGA is a social protection scheme that has managed to do both. It is a welfare program in the traditional sense of providing monetary support to its recipients; but also goes beyond it by empowering them through the means of community participation, engagement, and support.

While employment generation schemes exist around the world—Community Work Programme of South Africa being an example—MGNREGA is perhaps the only one that claims the guaranteed provision of work. As Martin Luther King has said, “All labour that uplifts humanity has dignity and importance and should be undertaken with painstaking excellence.” Hence, MGNREGA isn’t only restricted to poverty alleviation measures but also recognises employment and the dignity of labour as a legal right by providing 100 days of guaranteed unskilled work in a financial year. The state governments under the scheme are bound to provide an unemployment wage if they fail in this pursuit. This provision acts as a built-in structure of incentive for the states to not shell out money from its coffers without the creation of productive assets for the economy in return.

Envisaged as a strong social safety net and a growth engine for the sustainable development of the rural economy, MGNREGA has managed to fulfill some of its goals and has unfortunately failed in others. In this paper, I will attempt to analyse MGNREGA as a social protection scheme through the lens of political economy by drawing from the accounts of various states in the country. The analysis will be based on four parameters, namely local governance, wage dispersion, asset creation, and the impact of the act on women.

Local Governance

As a transformative empowerment process of democracy, MGNREGA was initially implemented in two hundred of the most socio-economically backward districts of the country. Inevitably 119 of these fell in the socio-economically backward states of Bihar, Chhattisgarh, Jharkhand, Orissa, Uttar Pradesh, and Rajasthan. These states are marred with low rural connectivity, inadequate banking facilities, and empirically subpar quality of governance. Under such circumstances, the implementation of any government welfare scheme can be successful only when the local governance at the grass-root level is independently efficient and has a stronghold over the functioning of the rural society.

In light of the varying socioeconomic circumstances that shape the local polity, coordination between the two branches of local governance, the bureaucracy and the elected local representatives becomes paramount. Thus, unquestionably, the success of MGNREGA is pillared on the efficacy of the third tier of government, the Panchayati Raj.

The Gram, Block, and District Panchayats perform the bulk of the implementation under the scheme. From the issuing of the job cards to estimating the labour demand, and from generating the shelf of projects to be created to prioritising their order of creation, the Panchayats perform an array of crucial functions. In such a situation a non-existent, or a weak Panchayat in certain states like Bihar, Jharkhand, and Uttar Pradesh acts as a stumbling block in the proper implementation of the Act.

For example, in Jharkhand, Panchayat elections have not been held since 1878, which acts as an institutional gap. There exists a lack of staff at the block and Panchayat level, along with a deficit in the number of engineers present at the local level to supervise the projects undertaken. The local elites and contractors have assumed the position of Panchayat for themselves. The delay in capacity building measures through training programmes of key officials as per the guidelines of the Act has left this wrongdoing unchecked. These said local elites and contractors, or the ‘Adhyaksh’ and ‘Abhikarta’ have transformed the scheme into a money-minting program. Instances of exploitation of the poor labourers by charging up to ₹10 for the application forms and as much as ₹60 for clicking the passport sized photographs have been widely reported. Moreover, applications from non-BPL households are routinely rejected arbitrarily to curb the number of job cards handed out. This is done to reduce the responsibility and workload on the Adhyaksh and the Abhikarta.

Closer scrutiny in the Palamu district of Jharkhand brings out many other deficits and ill doings. For example, there exists no written record of wages to be dispersed, the amount of work done, and payments handed out. The muster roll maintained by the Abhikarta—who is largely absent from the site—is a kachcha document, which remains unsigned by the labourers. Maintenance of such a piece of paper acts as no prevention against corruption. Furthermore, in a conflict of interest, the Abhikarta acts as both the contractor and the grievance redresser leading to the labourer holding no bargaining power with himself. The absence of an elected body of local representatives has paved the way for the act being utilised for personal gains. This is in stark contrast to states like Tamil Nadu, wherein a strong Gram Panchayat and competent bureaucracy has facilitated a history of social welfarism.

In Tamil Nadu, the local infrastructure for the adequate implementation of the scheme had already existed. The Gram Panchayat in the state doesn’t belong to the traditional castes and is hence much more responsive to the demands of the people to maintain its vote bank. As opposed to states like Uttar Pradesh and Bihar wherein fudging of muster rolls is quite common, in Tamil Nadu, the muster rolls are subjected to regular scrutiny by the District and Block Offices. Bureaucrats ensure that payments are dispersed weekly in a transparent fashion in a public payment venue instead of the more opaque route of post offices and banks. Hence, a system of robust paperwork and safeguards has assisted in eliminating corruption from the governance and enactment of the scheme, which in turn has led to the advancement of the village rural economy in Tamil Nadu.

Wage Dispersion

The economy of any society whether rural or urban, can only advance further if its people have a certain level of purchasing power in their hands. For the express purpose of increasing people’s purchasing power, providing for adequate wages becomes unavoidable. MGNREGA wages are to be paid according to the Minimum Wages Act, 1948 for agricultural labourers in the State unless the Centre notifies a wage rate which will not be less than Rs. 60/ per day. The wages can be paid in both cash and kind, with at least one-fourth of the wage being paid through cash. The Act also specifies an inter-spread of 60:40 ratio of the allocated money between wage and construction material respectively. Contractors and the usage of machinery are strictly barred.

However, many of these provisions are regularly flouted by local-level government machinery in many states.

In states such as Uttar Pradesh, the deficient local administration is accompanied by low coverage of households under the Act, as well as uneven and delayed delivery of wages and job cards. Since people aren’t aware of the features of the Act and the job card entitlements, they fail to demand the authorised and sanctioned unemployment wage. As Reetika Khera in her work points out, this unemployment wage is a fine imposed on the states and plays a key role in the realisation of the work guaranteed. But in the absence of the availability of the guidelines of the scheme to the recipients in their local language, this fine on the state fails to act as a deterrent.

The case of Uttar Pradesh is not an isolated one. In Jharkhand’s Palamu and Latehar districts, wages are not just delayed but are also below the statutory minimum wage. The dispersion of the wages is unscrupulous. The ‘Chauka’ system which ensures that personnel is appointed to correctly assess and measure the work of the labourers is absent in lieu of the lack of supervisors available in the state at the local level. The workers are then left helpless and confused when the wages provided to them do not correspond to the amount of work they have put in. The hardest hit are the poorest Adivasi communities of Jharkhand like the Cheros, Parhaiyas, Bhuiyas, etc. As quoted in Jean Dreze and Bela Bhatias’s study ‘Employment Guarantee in Jharkhand:

Ground Realities’, an Adivasi labourer pointing towards the tendu leaf says, “As you can see in this season we are collecting tendu pattas. We make a paula of 50 pattas. For each paula we get paid 50-60 paise. The season will last for another 15 days but the contractor will take a month or two to make the payment. So we go for casual labour on public works. And what happens there? There too we are not paid for months on end. Is the government no better than the tendu contractors?”

The externalities of wage dispersion as mentioned above constitute of only half the problem.

There are inherent flaws in the wage calculation through the Structure of Rate (SOR) system in MGNREGA. Firstly, the assigned average wage rate takes no account of climatic and ecological differences prevalent across different states. A labour toiling under the harsh sun in Rajasthan is paid just as much as a labour working in the chilly hills of Uttarakhand. Secondly, since the Act makes provisions only for ‘able-bodied men’, malnourished, physically challenged, and old workers are many a time weeded out. For example, the Sahariyas of Rajasthan and Madhya Pradesh have acquired a weaker physical structure due to certain historical factors, and thus may be subjected to discrimination under the guidelines of the Act. The SOR also doesn’t differentiate between the productive capacity of a man or a woman. The woman, if not as productive as his male counterpart, is often denied equal wages by the contractor. Thirdly, while the minimum wage rate is revised every year, SORs are revised only once in three to five years, thus not accounting for inflation.

Asset Creation

The objectives of the scheme employ a multi-pronged approach to escape the rural crisis brought on by neo-liberalism post-1991. The scheme not only attempted to attack the issue of declining employment head-on, and increase the purchasing power of the rural sector, but also aimed to build productive assets that would increase advancements in agriculture and provide for rural commons in the form of public infrastructure (although the creation of private assets is also permitted).

The decision of which asset to create is supposed to be taken by Gram Sabhas as per the immediate ground-level needs of the village, and the existing demand for work. The Gram Sabha is also supposed to have the discretion to rank the creation of these assets in a prioritised order, along with identifying costs for the projects to be implemented. The priority order is more often than not the reflection of the ecological needs of the state. For example, in Andhra Pradesh, drought-proofing and water conservation infrastructure have been put thrust upon. While in Tamil Nadu, the drying up of water bodies has led the Gram Sabhas to prioritise water conservation and restoration assets like water harvesting tankers and pits. However, there are debates over the quality of the assets created under the scheme.

In the Manika and Manatu districts of Jharkhand, the toil of the labourers is washed away as soon as the monsoon approaches. Roads created under MGNREGA are of doubtful quality. This is in spite of the Act mandating the presence of an engineer to conduct feasibility, monitoring, and evaluatory checks at the site. The grim situation is not exclusive to Jharkhand, and can also be found replicated in the MGNREGA model of Kerala.

One of the reasons why over time assets created under MGNREGA vanish or deteriorate is because of lack of fund disbursement for the maintenance of the public structures. Assets created on private land, by the virtue of being owned by a private individual are regularly maintained and are thus much more durable. These assets, however, ultimately, do not contribute to the larger public good or the rural economy as a whole. Private gains that benefit the poor and marginalised have been strictly unwelcomed, whereas public works benefiting the local elites, have been pushed through unfairly on multiple occasions.

For example in Kullu, Himachal Pradesh, where the building of protection walls and roads should have taken priority, the workers were made to work on private lands instead. Such instances bring out the problems with the framework adopted for the creation of assets under the scheme namely—

  •  the absence of differential costing of similar projects based on the terrain and climate of the place,
  • availability and transportation cost of construction material, and
  • underutilisation of the local knowledge and recommendations of the residents of the place.

Impact on Women

Despite MGNREGA’s inability to keep all stakeholders content by taking their wants into consideration, there is one section of the society which is unquestionably happy from its implementation. Jean Dreze, the leading scholar on the subject matter, in his work brings out how MGNREGA has served as a glimmer of hope in the hopeless lives of the rural, destitute women. In “Towards Transformative Social Protection: A Gendered Analysis of the Employment Guarantee Act of India” by Sony Pellissery and Sumit Kumar Jain, a young widow is quoted as saying, “I have two small children. If MGNREGA work is not there, I would be exploited by landlords or my own in-laws. The work is hard. But, I am content that I can feed my children and they are able to go to school.”

While the Act has provided for the women beneficiaries to comprise of at least one-third of the workers employed under the scheme, women have outperformed men in participation and wage-earning. Legal provisions such as equal wage for equal work has proved to become a transformative mechanism in a way that women do not need to bargain with their employers, and nor are they now sexually exploited in this bargaining process anymore.

The provisions of the Act also mandate one woman worker to look after the children of the women labourers. There is also the guarantee of work within a five-kilometre radius of the worker’s residence (or an additional transportation allowance, if otherwise). Thus, women do not have to choose between earning a wage outside and rearing the child back at home. In Manchala Village of Guntur district of Andhra Pradesh, for example, due to a large women workforce working under the scheme, each site has been provided for with a creche. Moreover, the disbursement of funds in the bank account of each labourer has ensured that women retain some if not all of their earnings. Women’s economic dependence on men has thus has come down, giving them greater freedom of choice.

Concluding Remarks

In the backdrop of the criticisms and shortcomings of the policy as highlighted above, while concluding, the positive outcomes of the scheme should be brought to the forefront as well. MGNREGA as the world’s largest welfare and social protection scheme has managed to prove advantageous to the growth of the political-economic structure of many rural economies.

In states of Andhra Pradesh and Gujarat, the supply of jobs has far exceeded the demand. While in Rajasthan, the Right to Information Act has been put to use brilliantly through public vigilance and support groups such as Mazdoor Kisan Shakti Sangathan and Akal Sangharsh Samiti, for the proper implementation of the scheme. While in many states like Kerala and Tamil Nadu, the scheme was appropriated for vote-bank and identity politics respectively, the safeguards in the policy execution were largely successful in preventing diversion and leakage of funds. While the analysis of the Mahatma Gandhi National Rural Employment Guarantee Act paints a mixed picture, it can be concluded that in the matter of employment generation, women empowerment, and increasing government accountability, the scheme has emerged as a winner.

The famous quote by Abraham Lincoln seems befitting to end this paper—“Capital is only the fruit of labour and couldn’t have existed if labour had not first existed. Labour is the superior of capital and deserves much the higher consideration.”


Pellissery, S., & Jalan, S. (2011). Towards transformative social protection: A gendered analysis of the Employment Guarantee Act of India (MGNREGA). Gender and Development, 19(2), 283-294. Retrieved from

Bela Bhatia, & Drèze, J. (2006). Employment Guarantee in Jharkhand: Ground Realities. Economic and Political Weekly, 41(29), 3198-3202. Retrieved from

Kothari, J. (2014). A Social Rights Model for Social Security: Learnings from India. Verfassung Und Recht in Übersee / Law and Politics in Africa, Asia and Latin America, 47(1), 5-21. Retrieved from


Ghosh, R. (2013). THE POLITICAL ECONOMY OF SOCIAL SECURITY : A Bird’s Eye View into Mahatma Gandhi National Rural Employment Guarantee Act [Ebook] (1st ed.).

The views and opinions expressed by the writer are personal and do not necessarily reflect the official position of VOM.
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