HomeSocio Legal ColumnImpacts And Impoverishment Of MGNREGA

Impacts And Impoverishment Of MGNREGA


Indian poverty, an enduring crisis, has concerned the nation for centuries. After various colonial invasions during different epochs, the overwhelming level of poverty has inflicted trauma upon the people, resulting in intense agitation against despotism. When India gained independence as a sovereign nation, a staggering 70% of its total population lived below the poverty line, longing for liberation. Subsequently, there has been a decrease in the poverty percentage, but the magnitude of poverty has steadily grown alongside demographic expansion. Unemployment, uncontrolled demographic growth, sluggish economic progress, unequal distribution of resources and income, as well as the under utilization of resources, have been identified as significant causes of poverty.

MGNREGA was born

As a significant step towards eradicating poverty, the Indian government implemented Mahatma Gandhi National Rural Employment Guarantee (MGNREGA) in 2005. This program aimed to address the root causes of poverty and provide opportunities for the disadvantaged, including those lacking education, land, skills, and social support. Many of them relied on seasonal agricultural labour during cultivation and remained unemployed for the rest of the year or had to work as migrant labourers. Women, in particular, were often burdened with household chores imposed by the dominant class. MGNREGA brought about a transformative change by ensuring 100 days of employment and timely payment within 15 days during a fiscal year. While the global crisis of 2008 adversely affected many countries with negative growth, unemployment, and widening economic disparities, India experienced progress and a reduction in such disparities. MGNREGA played a crucial role in poverty alleviation and contributed to stabilizing the Indian economy. According to the United Nations Development Programme (UNDP) and Oxford Poverty and Human Development Initiative (OPHI), between 2005 and 2015,[1] around 27 crore Indian households were lifted out of poverty.

MGNREGA: Transforming Economic Stability in India

MGNREGA, known to be an antidote to poverty, has even wider socio-economic prospects. The scheme impetuses considerable social change, espousing social harmony and inclusive participation. With the objective of empowerment, MGNREGA guarantees one-third of its jobs to women. Overwhelmingly in practice, more than half of the participants are women. In FY 22-23, 57.40% of person-days to total are women, while in FY 21-22 it was 54.82%, and in FY 20-21 it was 53.19%.[2] Women getting exposed to employment opportunities has a significant impact on social participation, optimizing their role in decision making, enhancing education, and extending the marital age. This obviously multiplies household savings and results in better microfinance management. Complementing the idea of participatory democracy, MGNREGA increased Dalit and tribal participation. In FY 22-23, 37.19% of person-days to total were from scheduled communities, while in FY 21-22 it was 37.5%, and in FY 20-21 it was 38%. Eventually, ensuring self-reliance, there was a great deal of rural infrastructure development, creating various natural resources such as ponds, dug wells, horticulture plantations, and vermicomposting pits. This mutually enhances biodiversity and sustainable development. Until 2019, more than 3.61 crores have been geo-tagged under MGNREGA, and 7.32 crores assets have been created under NREGA.[3]

Battling Dual fronts – COVID-19 and Escalating Poverty in India

The unprecedented COVID-19 crisis has had an awful global effect, and India is no exception. Unemployment in India is 8.11%, exceeding the previous 45-year high unemployment rate of 6.1% in 2019. Along with a complicated poverty rate, this has significantly impacted the economy. Despite efforts to revitalize NREGA and stimulate the economy, the pioneering poverty alleviation scheme is plagued by a string of distress due to budget constraints. The budget has reduced from the peak of INR 111,500 crores in FY 20-21 to INR 98,000 crores in FY 21-22, further decreasing to an initial allocation of INR 73,000 crores in FY 22-23, and now to an initial allocation of INR 60,000 crores in FY 23-24, which is 18% less than the previous year. These allocations are inadequate to meet the demands, and there has been a continuous dip in average working days. The average days of employment provided per household were only 47.84 days in 2022-2023, compared to 50.07 days in 2021-22 and 51.52[4] days in 2020-21. The number of households completing 100 days of wage employment has also declined from 7,197,090 in FY 20-21 and 5,914,761 in FY 21-22 to 3,600,911 in FY 22-23.

Liabilities and Digitalization: Revitalizing MGNREGA for Poverty Alleviation

The government of India has liabilities amounting to ₹6,157 crores under material compensation to the states as of February 3rd. West Bengal leads the table with ₹2,700 crores, followed by Andhra Pradesh with ₹836 crores, Karnataka with ₹638 crores, Bihar with ₹471 crores, Madhya Pradesh with ₹362 crores, Maharashtra with ₹200 crores, Odisha with ₹187 crores, Kerala with ₹137 crores, Assam with ₹112 crores, and Meghalaya with ₹102 crores. Additionally, there are pending liabilities of ₹4,457 crores for wage components under NREGA. As of today, overall pending liabilities are expected to be around ₹17,000 crores, which will have an adverse effect on poor households and other beneficiaries.

In the attempt of digitalization, the scheme faces constraints due to the low average rate of digital literacy in rural India, which is not more than 30%. In such conditions, the ABPS (Aadhaar-based payment system) and NMMS (National mobile monitoring system) have imposed additional burdens due to irregularities such as attendance failures, payment failures, improper ground monitoring, unstable networks, multiple links with Aadhaar and bank accounts, and a lack of transparency.

Building a resilient future with MGNREGA

While there may be a few anomalies in the system, the scheme has yielded positive outcomes. MGNREGA is a lifeline for poor households in the trend of widening disparities. To control poverty and improve livelihoods, it must be repaired and not abandoned. It is crucial to rejuvenate the scheme by allocating adequate funds, at least three times the current allocation, to meet the demand-driven job requirements and ensure a complete 100 days of work for all the requested workers. Adhering to Section 3 of the act, payments must be processed within 15 days from the date of closure. If there are delays, the rate of delayed payments must be increased, and serious reconciliation is required. Considering the technical constraints, many technical flaws still need to be rectified. Until then, complete digitalization must be halted. Indeed, the optimal usage of the scheme is mandatory for self-reliance, poverty reduction, economic recovery, and a prosperous nation.


[1] UNDP, OPHI., Report on poverty data, multi-dimensional poverty levels between 2000-2019.

[2] Ministry of Urban and Rural Development, MGNREGA report.

[3] Ministry, supra note 2.

[4] Ministry, supra note 2.

S. Vijayakrishna
S. Vijayakrishna
S.Vijayakrishna is a socio- political activist. He is a congressman who is concerned about the contemporary socio-political issues and their impacts in subsequent evolution.


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