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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. [1] 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. [2] The statute is hailed by

the government as "the largest and most ambitious social security and public

works programme in the world". [3] 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. [4]



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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



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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.



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were merged with MGNREGA - also provided short-term unskilled

employment to poor, assured food and job security and created durable

assets. [23] 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. [24]

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". [25] 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,



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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. [26]

INTRODUCTION TO THE AREA OF RESEARCH

The Mahatma Gandhi National Rural Employment Guarantee Act

(MGNREGA) is an Indian job guarantee scheme, enacted by legislation on

August 25, 2005. The scheme provides a legal guarantee for one hundred



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days of employment in every financial year to adult members of any rural

household willing to do public work-related unskilled manual work at the

statutory minimum wage of Rs. 100 per day. The Central government outlay

for scheme is Rs. 39,100 crores ($8 billion) in FY 2009-10.

This act was introduced with an aim of improving the purchasing power of the

rural people, primarily semi or un-skilled work to people living in rural India,

whether or not they are below the poverty line. Around one-third of the

stipulated work force is women. The government is planning to open a call

center, which upon becoming operational can be approached on the toll-free

number, 1800-345-22-44. It was initially called the National Rural Employment

Guarantee Act (NREGA) but was renamed on 2nd October, 2009.



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RESEARCH OBJECTIVE

To do an in-depth analysis of NREGA and its relevance in present context..

The study will aim to study:

To study the genesis and need for NREGA in India.

To enlist the distribution model adopted by NREGA

To evaluate the financial performance of NREGA for the last three years

across all major states.

To evaluate the effectiveness of NREGA in selected location in NCR

region (Suburbs).

To reveal using real time case studies on the usefulness on NREGA.



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SCOPE OF THE STUDY

The study may reveal some aspects of usefulness of NREGA in Indian

Context.



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ESEARCH METHODOLOGY

Research work will be done from two sources: -

(1) Primary data

(2) Secondary data

Primary data will be collected by onsite interview of the Officials of NREGA.

The interview will be structured and open-ended questions based on literature

survey, will be asked.

Secondary data will be collected by reviewing different literatures, from

published books, management journals, articles published by the other

researchers. Other sources will include Ministry of Rural Development and

Website of NREGA.The information gathered would be tabulated and

presented in the final report.



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JUSTIFICATION FOR CHOOSING THE RESEARCH PROPOSAL

The National Rural Employment Guarantee Act (NREGA) has been a subject

of lively debate during the last two years or so. Unfortunately, the factual

basis of this debate has been, so far, rather thin. This has made it possible

for extremist positions to flourish, without being put to the test of careful

evidence. Thus I have taken up this study on NREGA.

DETAILS OF THE EXTERNAL GUIDE

Name: Ravi Ranjan

Qualification: MBA

Designation: Relationship Manager



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TABLE OF CONTENTS

EXISTING CONTENTS IN THIS FILE

Preface

Contents

Background

The Study Area- Socio Economic Profiles

of Nuapada and Sidhi

Methodology

Survey Findings- Nuapada

Survey Findings- Sidhi

Comparative Analysis

Conclusion



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Chapter-1

Introduction

It has been over two years since the National Employment Guarantee Act

(NREGA) was implemented in 200 of the most backward districts of India and

over one year since it began in another 130 districts. Further, it has been

more than three years since the National Food for Work Programme

(NFFWP), the pilot scheme launched by the government as a precursor to the

NREGA, was implemented in 200 districts. The debate began then and

continues till date about the feasibility and utility of the NREGA. The topic

spurs an interest in everybody from all walks of life largely because of the

enormity of scale. The scheme is the largest of its kind anywhere in the world

and thus involves a proportionate amount of resources. However, what is truly

large about the scheme that more or less dwarfs the quantum of resources

being put into the scheme is the number of lives that it intends to touch and

the way in which it intends to touch them. .



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The NREGA’s coverage has been expanded from 330 districts to all 604

districts of India beginning April, 2008. As the scheme is implemented

throughout the country and as works begin everywhere, the magnitude of

lives that will be touched by it will inevitably be massive. However, what is

uncertain is the actual impact of the Act on the lives and livelihoods of people.

Whether the Act actually makes a lasting impact on these millions of people it

proposes to touch will depend on the extent to which the nation is able to

extract the developmental potential of the Act. In this regard, as we move on

the path towards nationwide implementation of NREGA it becomes imperative

that we take stock of the experience so far in order to learn from the

successes as well as failures.

This paper attempts to do just that. There have been a number of studies that

look at the implementation of the act in terms of employment created as well

as issues of wages, processes of implementation, feedback mechanisms, etc.

However, with the NREGA just emerging out of its infancy, few studies have

actually focused on an assessment of the impact of the NREGA in terms of



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the realization of its development potential. With the overwhelming

considerations of ideology and corruption at the forefront, rarely any of the

studies have attempted to look into the actual assets being created and their

contribution towards long term development and sustained employment

generation in the villages. This paper tries to bridge this lacuna by attempting

to study the effectiveness of the assets created under the act.

At a time when the world is facing one of the worst food crises ever

witnessed, it becomes extremely pertinent to look at the effectiveness of the

NREGA in providing both short and long term food security through work on

improvement of agriculture and provision of water. Even the origins of the

NREGA lie in the drought relief programmes of the 19 th century which helped

provide purchasing power to agricultural workers in drought stricken areas.

Such a scheme would help curb starvation and hunger since the problem was

localized and a shortage in a drought stricken area simply needed to be met

by surpluses from elsewhere. A Food-for-Work scheme would then solve both

problems of selection and transfer of purchasing power to the needy. The



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problem today is much different. The shortage is no longer localized and

therefore a mere transfer of purchasing power would not lead to a solution.

Moreover, with an ever increasing strain on our meager resources, we need

to take measures that will empower people to take care of their own needs

rather than depend on external agencies. NREGA has the potential to do just

that by providing people what they most need/desire at the village level. In

such a situation, it becomes extremely crucial to assess the impact of the

NREGA, both in providing short and long term relief.

There have been numerous success stories of economic and environmental

regeneration where year-round productive employment has been generated

as a result of community or NGO efforts. Such success has not been found in

the government employment guarantee schemes of the past. Yet, the

potential of NREGA in reaching the rural poor is unsurpassed as it is now

being implemented in all the districts of India. There is thus an urgent need to

study how such success stories can be made part of the employment



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guarantee schemes, what are the lacunae and drawbacks and how they can

be addressed.

Using primary data collected from two districts, Nuapada district in Orissa and

Sidhi district in Madhya Pradesh, we shall assess the potential of the NREGA

in providing food and livelihood security.



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BACKGROUND

NREGA is going through a crucial phase. It is a bit early to quantify its impacts

definitively given that people are still grappling with implementation hitches.

The institutional mechanism required for implementation of such a massive

scheme have still not been completely set up. In order to make sure the

NREGA does not become redundant at the hands of the existing structure, a

new design has been evolved which demands a shift of power and

responsibility downwards to village level institutions. Thus, new roles assigned

to each instrument in this setup need to be clearly understood and

internalised by all. What is most difficult and which will take time, is, the

delegation of power by those higher up on the beauracratic ladder.

This transition of power and the friction generated as a result thereof, have

generated incessant negative media coverage on the performance of the

NREGA. This had triggered some uncertainty among the ranks of the

government as well as those skeptical about the programme regarding the

implementation of the Act. From the current financial year the Act covers the



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entire country, giving the guarantee of 100 days employment to around 45

million rural households. As other public wage programmes like the SGRY

has been subsumed within NREGA, this will be the only operational wage

employment programme in the country. Being focused on regeneration of

village economy in the long term, the Act’s success or failure potentially

affects the entire rural development scenario in India. From the advocates of

the Act, the excessive focus on just employment creation has also narrowed

its larger objectives and potential. Without discounting the civil society’s

consistent monitoring of the implementation, programmes like NREGA cannot

be just examined on the basis of its short-term benefits.

Performance accord ing to off ic ia l sources

Going by the national level government data, the NREGA has started to make

an impact, both in its short-term and long-term objectives. To recap, it has

performed far better than other employment programmes: a NREGA district

has created 45 lakh person days of employment a year in comparison to other

districts creating 14 lakhs a year using other programmes. That is the short-



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term objective of NREGA: to create daily wage employment. On the long-term

objective of productive assets creation, each district under NREGA is creating

around 2000-4000 village assets a year. This is double of what has been

created under EAS and the SGRY earlier. Around a million assets have been

created in the last two years, a large number of them being water

conservation works.

However, the impact of some of these assets, such as check dams and ponds

can only be assessed after the rainy season. The monsoons should be the

period when these structures would be working to their potential, making an

impact on the rural economies. The survey, thus, would not be able to assess

the performance impact of these structures. However, as we shall see, there

are other structures which have an immediate visible impact, for instance,

wells and roads. These works in fact constitute the majority of the works being

undertaken in the study and their impact has been apparent during the

survey. We therefore, look mainly at the perceptions of the people about the



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long term impacts of the act on their livelihood. This gives us a fair idea as to

the potential long term development impacts of the programme.

Performance of the selected districts

Nuapada

The district in all has spent 21.77 crores on the implementation of the NREGA

in the last two years. It has provided 98% of the employment demanded so

far, generating a total of 18.62 person days. However, in the year 2007-08 the

district undertook water conservation works out of which only 4 were

completed and has rural connectivity works reported completion of 14 works.

Rural connectivity works clearly got a priority over water conservation works in

contrast to the year 2006-07 when the district undertook 44.68% work on

water conservation.

Sidhi

Sidhi spent 213.06 crores on the programme, providing almost 100%

employment against demand. It generated 264.2 lakh person days in the

process. Government data shows that in the year 2006-07, out of the total



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works undertaken in the district, 59% were on water conservation. This figure

reduced slightly to 55.9% in the year 2007-08.

The Study Area: Socio Economic Profiles of Nuapada and Sidhi

We chose two districts from two states representing two distinct agro-

ecological zones.

District Agro-ecological Zone State

Nuapada Eastern Highlands Orissa

Siddhi Central Highlands Madhya Pradesh

The selection of the districts was based on the following overarching

parameters:

1. Must be implementing NREGA since March 2006. This is to allow at

least one year of NREGA implementation for an objective assessment.

2. Must have agriculture as the primary source of livelihood.

3. Must have dominance of agricultural workers in the workforce.



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4. Must have been a district featuring in the Planning Commission’s 100

poorest districts ranking.

Socio-Economic Profiles

Nuapada: Nuapada was part of the Kalahandi District till early March, 1993,

but for administrative convenience, Kalahandi was divided into two parts i.e.

Kalahandi and Nuapada. Nuapada district now comprises one sub-division

(Nuapada), two tehsils (Nuapada and Khariar) and five Community

Development Blocks (Khariar, Sinapalli, Boden, Nuapada and Komna).

Nuapada is a drought prone district with a large number of marginal farmers

and agricultural labourers. The district is one of the poorest in Orissa with a

large tribal population. According to the district statistical handbook, 83% of

families live below the Government of India poverty line of Rs.15,000

(US$300) per annum. Of the families living below the poverty line over 50%

are ‘very poor’ with an income of only Rs.6000 (US$120) per annum. It

experiences high distress migration due to failure in agriculture.



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In a population of 5,00,652 persons, 72% of the households fall into the

category of small and marginal farmers. The male literacy rate in Nuapada is

58% and among women it is 24%. Among children, only 25% of Scheduled

Caste and 19% of Scheduled Tribes are enrolled in schools.



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Statistical Profile of Nuapada: -

Geographical area (sq km) 3,852

Number of panchayats 109

Is it a DPAP 1 district Y

Is it a DDP 2 district .

Rural population 500,652

Rural population density per sq km 150

Average population per panchayat 4,593

Average area per panchayat (sq km) 35

Total rural workers 234,000

Agricultural labourers vs total rural workers 48%

Fifth schedule district .

Sixth schedule district .



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Rural ST 3 population (%) 36%

Source: Second Administrative Reforms Commission- Unlocking Human

Capital: Entitlements and Governance- a case study, 2005

1. Drought Prone Areas Programme

2. Desert Development Programme

3. Schedule Tribe

Agriculture in the district is mainly rain-fed. Because of a host of factors,

including variable and unpredictable rainfall, agricultural productivity in

Nuapada can be best characterized as low and uncertain. As a result, an

average non-irrigated farm produces about seven month’s worth of food

grains for the food and nutritional needs of an entire family of average family

size. For the remaining months, male members of the family mainly seek work

on the fields of bigger land owners or migrate in search of employment. In

some instances, especially among the tribal communities, entire families

forage for food in the forests. This adds to their existing problems of not being

able to access minimum benefits in relation to education, nutrition, health



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security. Instances of malnutrition, sometimes severe, are fairly common

among these groups. (source: Western Orissa Rural Livelihoods Project)

Despite the fact that average annual rainfall is as high as 1378 mm, Nuapada

is a highly drought prone area. It has suffered repeated droughts in the

eighties every alternate year and for 3 years consecutively from 1987 to 1989.

The nineties and the new millennium have fared better with reduced intensity

of droughts, only the year 2002 registering a severe drought. With an agrarian

economy and high incidence of poverty, poor rains disrupt the entire yearly

cycle in agriculture. A majority of the population in the district is landless

earning their livelihood as agricultural labourers. Accumulatively, including the

tillers who are unable to till land, droughts spell a decline in the employment

opportunities for nearly 85% of the population.

Further, the district is highly dependant on natural resources. 48% of the total

land area in the district comes under forest area and the local economy

thrives on major and minor forest products as agriculture cannot provide

employment for the major part of the year. Reducing forest cover, absence of



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pro-poor NTFP policies, and substitution of traditional craft items by cheaper

factory goods have resulted in a dramatic fall in non-agricultural employment

opportunities. All this has forced several families in Nuapada, especially in

rural areas, to migrate to urban areas in search of employment opportunities.

In such a situation, an act like the NREGA has the potential to transform the

face of the rural economy. The availability of such a large amount of

resources presents a massive opportunity for the creation of productive

assets such as water conservation structures. As the problem in Nuapada is

not one of less rainfall but irregular rainfall, creation of proper water

conservation structures through the NREGA would have immense potential to

boost agriculture and rural livelihoods.

Siddhi: The district of Sidhi forms the eastern border of Madhya Pradesh and

is known for six thermal power stations and has the second largest series of

eleven active coal mine groups in Asia (Zila Panchayat, Sidhi). It consists of 8

administrative blocks - Sidhi, Rampur, Majhauli, Kusmi, Sihawal, Devsor,

Chitrangi, Waidhan. Adjoining Chattisgarh, Sidhi hosts similar conditions of



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scarcity as Nuapada. It is a drought prone district with its economy largely

based on agriculture. Sharing 3% of Madhya Pradesh’s population, the district

comprises 1831152 persons. Out of its total population 11.9% are Scheduled

Caste and 29.9% Scheduled Tribe.

Siddhi district is dominantly hilly and has a significant forest cover at about

40% of the total area of the district. Out of this, 24 percent of the total area or

about 2400 Sq. Km. has dense canopied forest and about 16 percent or about

1600 Sq. Km. is open forest. Of the eight blocks of district, three: namely,

Kusmi, Devsar and Chitrangi have significant forest cover (mixed tropical

deciduous forests). The forests serve as a source for variety of N.T.F.Ps. like

mahua, chironji, tendu etc., which are an important source of livelihood for

people.A large number of villages are unreachable by road during the rains.

Additionally, a large number of villages in the hilly areas are sparsely

populated. Any project on ecological regeneration would thus have to take

these geographical features of the region into account in order to fully realize

its developmental potential.



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Percentage of cultivable area 63.53

Development Blocks 8

Number of panchayats 717

Is it a DPAP district Y

Is it a DDP district .

Rural population 1,570,121

Rural population density per sq km 149

Average population per panchayat 2,190

Average area per panchayat (sq km) 15

Total rural workers 681,769

Agricultutal labourers vs total rural

workers

34%

Fifth schedule district Y

Sixth schedule district .



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Rural ST population (%) 33%

Source: Second Administrative Reforms Commission- Unlocking Human

Capital: Entitlements and Governance- a case study, 2005

. = missing

The Female literacy rate at 13.6% stands very low in Sidhi and so does the

level of rural poverty, at 64.6%. The district, like Nuapada, is also covered by

the Drought Prone Area Programme. Sidhi has a total ST population of 33%.

In terms of occupation 34% of the rural population in the district consists of

agricultural labourers. Given the extent and scale of rural population and

dependence on agriculture and natural resources, the development potential

of the NREGA has a good scope for realization in the area.

It is a water scarce district that has done impressive works in water

conservation. It has large number of marginal farmers and going by

preliminary reports has taken up extensive water conservation works on

SC/ST lands as well as village common lands. A large part of this investment

has been in wells on private land. This is due to the fact that the status of



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ground water is relatively comfortable as compared to other parts of the

country. The depth of ground water varies from 60 to 150 feet in Rampur and

Sidhi blocks and about 30 to 50 feet in Kusmi, Devsar and Chitrangi blocks. It

is a problem of managing water resources properly that forms the basis of the

scarcity of water in the area. This is coupled with the lack of opportunity for

the poor to access under ground water sources. It is here that the NREGA

can and has really helped people.

There are three perennial rivers that flow through the district, the Son, the

Gopad and the Banas but irrigation facilities are poorly developed across the

district. There are very few ponds and tanks in the area but the NREGA is set

to change all that.



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3. Assess creation of employment potential for the rural poor and

marginalized, particularly for women, tribals, fisherfolk;

4. Assess the creation of institutional systems created that can ensure

long-term sustainability and people’s participation.

The collection of related secondary data has been an ongoing process

starting in January and lasting till the closure of the field survey.

The Survey Team

Secondary data was collected by CSE staff along with our partners in the

field. For the purpose of the same as well as to carry out the primary data

collection we formed two field research teams in the respective districts. The

team in Orissa was headed by Prof. Simanchal Mishra, teaching at Kesinga

Mahavidhyala; and in Sidhi by Shri J.N. Pandey, head of a non-profit

organisation called Gurukul. Under the able leadership of both, 12 students

and young NGO professionals were recruited to conduct the survey in the

villages. The team at CSE trained the local survey teams in conducting the

survey and brushed up the nuances of the NREGA act. Local examples were



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taken up in the survey and people already engaged with the NREGA were

called at the district training to impart a better understanding of the act and its

implementation. Possible scenarios in the field came up during the training

and a lot of confusion on wage rates, documentation aspects, kind of assets

created etc. were cleared in the process. The survey instrument itself was

translated in parts to suit the locales and to forge a better understanding

about what was being asked in the particular question. The survey instrument

for Sidhi was translated into Hindi to facilitate the process.

The survey instrument

The survey instrument that we developed contains detailed village and

household level questionnaires called the Productive Asset Creation and

Assessment Survey Tool (PACAST) to collect information on various aspects

related to the implementation of NREGA. The survey has been fine tuned

further with help from peer group reviews. It gathers information along the

following set of broad parameters- An assessment of the impact of NREGA



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1. On the increment of local natural resources like water, forests and land

improvements;

2. On the local rural economy;

3. On the creation of sustainable and diversified rural employment

opportunities;

4. On improvements in lifestyle such as changes in pattern of economy,

purchasing power, housing, gender roles and responsibilities, school

attendance;

5. On the nature of institutional structures created;

6. On the manner of implementation including patterns of decision-

making;

7. On the impact on marginalized and the landless poor.

Sampling :

The sample frame was developed using random sampling. Two blocks were

chosen per district. Within these two blocks a random sample of four villages



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was chosen per block. A random sample of 30 households per village was

chosen from these villages for the household survey.

District Block Villages

Nuapada Khariar Badamulla, Chanabeda, Khasbahal and Thakpali

Sinapalli Boto Pali, Hatibandha, Kokpadar and Mahagaon

Sidhi Sidhi Bagohar, Barhai, Barmani and Mata

Kusmi Dadri, Khaira, Kanchanpur and Umriha

Analysis of Data:

The data has been entered once at the district level by the students who

conducted the survey. It was reentered in Delhi to check for data entry errors

and check for inconsistencies.

Data analysis was carried out centrally at CSE. The software used for

analysis of data was STATA. Analysis involved establishment of causal



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networks i.e. building a logical chain of events/evidence in order to chart out

the important indicators that explain the process of asset creation and

distribution of benefits. The general strategy has been to build descriptive

display formats designed to answer the research questions- charts and tables.

We have used statistical analysis along with qualitative data collected from

field visits and reports from the field to derive trends and cross check data.

This has been repeated for both the district cases to draw cross-case

conclusions.

We strive to monitor and assess the potential impact of NREGA on the

creation of natural resource asset base and the resultant impact of rural

livelihood, food security, lifestyle changes, economic regeneration and impact

on rural-urban migration. Institutional aspects such as the process of decision-

making, capacity building, building long-term institutional structures have also

been assessed as also its impact on women and marginalized groups. The

final objective has been to draw comparisons between the performances of

NREGA in the two districts. This will help us learn what steps need to be



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taken in order to move towards the final objective of ensuring short term and

long term food and livelihood security of the rural poor.



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Chapter-

CONCLUSION

The paper attempts to gauge the prospective impacts of the act in providing

sustained relief to communities by looking at the kind of works being

undertaken at the village level under the act along with its associated realms

like wages. Just to reassert our strategy and the lens through which we look

at NREGA, we strive to answer the question “Why monitor the impacts of

NREGA on rural assets?”

From an environmental standpoint, rural employment programmes can play a

key role in improving the rural natural resource base and increasing overall

rural production. Environmental regeneration demands heavy labour inputs --

whether it is reforestation, construction of water harvesting structures or soil

conservation. But since the economic returns are not immediately apparent,

impoverished people are likely to neglect these tasks. Rural employment

programmes can help villagers solve this problem, because they have the



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capacity to mobilise impoverished labour in order to regenerate the

environment.

In this scenario, employment schemes such as the NREGA can play a key

role since the bulk of unemployment (nearly 80%) is in rural India. In

economic terms, this would be an investment in building up rural natural

capital, which will result in creation of water harvesting structures to irrigate

farmlands and increase crop production and well-stocked forests and

grasslands to support dairy development and a variety of artisanal crafts.

Rural environment's sustainable, employment-supporting capacity can thus go

up substantially.

Looking within the environmental systems in rural India, we see an increasing

problem of land degradation and depletion of natural resources like

grasslands and forests, etc. Though the entire system in itself is important

when it come to focusing on re-generation, time and again it has been shown

that wasteland development begins with water and not trees. Once a water-

harvesting system is built and equitable sharing of the water evolved, the local



MGNREGA

46

community becomes involved in protecting and re-greening the catchment of

its water system. But this is possible only if the villagers are empowered to

plan and decide their future.

We began from talking about the development potential of act in terms of

employment generation through the creation of productive assets. This has

been proved to a large extent through the findings of the survey specially in

Sidhi district. If the structures created under the act work to their full potential

they will create additional employment for people in the village and benefit the

people on a sustained basis. Nuapada has treated the NREGA more like any

other employment scheme. Sidhi, on the other hand realized the potential of

the NREGA and used it as an opportunity to reinvigorate its traditional

ecological balance through the creation of productive assets. Thus, while the

programme has had a nominal impact on the lives and livelihoods of people in

Nuapada, it has had a huge impact on the rural economic structure of Sidhi. In

Sidhi, the NREGA can actually be seen moving towards its short term and



MGNREGA

47

long term objective of food and livelihood security and long term sustainable

development through ecological regeneration.

Keeping in mind the immense potential of the act and the findings from our

study, below are mentioned some suggestions that could help improve the

functioning of the NREGP

Need to reframe evaluation parameters: NREGA must aim at creation of

productive employment. To make this happen it has to focus more on the

creation of productive assets at the village level.

From the point of view of gauging the development effectiveness of the act

the first area that comes to the fore is the evaluation and monitoring of the act.

Instead of the simple calculations on jobs demanded and provided, the

NREGA needs to be evaluated and monitored on its impact on livelihood

security. Currently, the act is monitored by the majority on the number of jobs

created and number of assets created under preferred works category. The

real effectiveness of the scheme though may be measured using three

parameters:



MGNREGA

48

1. Increase in average annual income of households

2. Increase in the productivity of small and marginal land holdings

3. Quality and contribution of productive assets like water tanks

By changing the evaluation parameters, the scheme will assume the

character of a rural development scheme in the true sense, instead of a run-

of-the-mill wage-earning programme. This will also help the government to

ensure that most of the works taken up remain within the preferred works

category, that is, productive assets.

Works taken up should improve to ta l v i l lage ecology

Under the NREGA, as our experience shows, water conservation works are

being taken up as stand-alone activities. Village ecology is a fragile

combination of soil, water and forests. A water harvesting structure, for

instance, is rendered useless if its catchments areas are left unprotected.

Works under the scheme need to be planned in totality — to succeed, water

conservation needs to take into account plantation works and drought

proofing. Even the Second Administrative Reforms Commission has



MGNREGA

49

recommended that all works under the Act must be undertaken keeping in

mind the overall improvement in total ecology. This needs to be implemented

thoroughly.

Use of a p erspect ive p lan prepared b y v i l lage panchayats

Village-level resource planning and designing ought to be strengthened

further. As our data shows, there is a strong co-relation between people

planning their works and the success of these works. With two years behind

the act planning is yet to reach a large number of villages and gram sabhas.

Without a village plan, developed by the villagers themselves the

development impact of the NREGA will be poor.

To make local planning integrated, NREGA works must be allowed in all lands

i.e. private, forest and revenue based on Gram Sabha approval. This requires

administrative order from the forest department. This is crucial as catchments

of water structures are invariably in forest areas.

Setting up institutional mechanism for maintenance of assets



MGNREGA

50

Setting up of strong institutional mechanisms to manage and distribute the

resources generated must follow the creation of assets. Poor maintenance

and weak institutions are already rendering productive assets useless. Under

the current implementation regime, maintenance is not covered. While assets

are created in large number, the Panchayats are being told o maintain it. The

problem is that Panchayats don’t have the money to undertake such large-

scale maintenance works. Our studies pointed out that due to this most of the

assets are going to be put into disuse.

Also, there should be a binding work completion plan for each asset created.

This must also include the maintenance plan. Further, given the unequal

priority given to productive assets amongst states, NREGA should make

provision to fix percentage of works in sector like water conservation. This

should be done changing the NREGA.

Capacity Building of the elected Panchayat Members

Right capacity building of the elected Panchayat members must follow

devolution. Training of government officials on the NREGA should be



MGNREGA

51

accorded priority. At the same time, Panchayat members must be included in

the process so that they know the scheme well and can exercise rights

effectively. Local experiences point at government officials dictating

Panchayat members on the nature of works, citing vague government orders.

This takes away the Panchayats’ powers under the Act, and has to be

rectified immediately.

Devolution of functions, funds and functionaries to Panchayats must be a

condition for states to implement the NREGA. Though it is difficult given that

the programme is demand driven, but Union government can offer fiscal

incentive to states with such devolutions. As in other rural development

programmes like BRGF preparation of district plan has been made

compulsory, the NREGA must also be made conditional.

The National Rural Employment Guarantee Act (NREGA) 2005 is landmark

legislation in Indian history of social security legislation after independence.

Enacted after a successful struggle for an employment guarantee legislation,



MGNREGA

52

this legislation is a partial victory towards a full -fledged right to employment in

any developing country context. The essential feature of this legislation which

separates it from any other public service provisioning scheme is its

enactment through the parliament of India. Read with the Right to Information

Act, this legislation has been bringing about a silent revolution in rural areas of

the country.

In brief, this Act provides for 100 days of employment for all households in

rural areas in manual work, if demanded. Read with various transparency and

accountability measures and provisions for social audits, this Act for the first

time brings the role of the state as provider of livelihood within the reach of the

participants/beneficiaries themselves. By design it is different from any

employment generation scheme that has been previously implemented. It

requires a different approach towards employment generation schemes and

towards overall involvement of the State in providing the right to employment

to its masses (even though it is still far from being a full right).



MGNREGA

53

The real challenge as well as the strength of the Act comes from it being

given the legitimacy as well as authority from the Indian Parliament, which

puts the onus of its implementation in the hand of the recipient as well as that

of the implementing authorities. The recipients have a greater role, at least by

design, not only in demanding the employment but also in deciding on how

the Act will be implemented. Such a situation is unique in terms of posing

challenges of implementation where the existing system has one of being a

dole to be handed to the recipients at the mercy of the ‘babus’ of the state. It

also drastically alters the power equations which the agents of the state and

the powerful groups within the local society have become used to enjoying.

Moreover, for the first time, it provides for mechanisms for penalising the

government if it fails to provide employment on time.

Precisely because of these, despite the well -intentioned nature of the Act, it

poses necessarily new challenges and enables new ways of exploitation as

well as new ways of fighting such exploitation.



MGNREGA

54

Needless to mention, a legislation of this nature is bound to have

repercussions at different levels, right from altering the socio -economic

conditions of the affected districts, more particularly for the disadvantaged and

the poor, to altering the social dynamics which are currently very heavily

weighted against the disadvantaged and the poor in these backward districts.

To a certain extent, the extent and nature of impact of NREGA on overall

economic and social conditions is influenced by the overall political economy

and nature of change in the social and political structures of power in these

districts. Although well intentioned in spirit, this Act has found limited support

from the states as well as central government in implementation of the Act.

Arguments and excuses have been manufactured to make it as toothless as

possible. However, despite these, the Act has become a rallying point for

smaller struggles on field as well as in larger public policy arenas to highlight

the success of a democratic state in ensuring right to well being for its

members. These experiences vary from state to state with relatively large



MGNREGA

55

successes in states like Rajasthan to almost negligible success in states like

Jharkhand, Uttar Pradesh and Bihar.

At the same time, a programme of such a large scale has drawn both

criticisms and accolades. The critics, mainly from the ‘minimalist state’

perspective have argued against the efficacy of such a programme in

providing either income support or employment support to rural poor. This has

also taken the form of questioning the logistics of transferring such large sums

of money to poor in a state where the track record of public service delivery

has been acknowledged to be dismal. On the other hand, the success of the

programme has emboldened the government to introduce the Act to all the

districts of the states in 2008 itself. Nevertheless, the debate is far from

settled on this controversial issue.

It is in this context that an urgent need is felt to do a stock -taking of the

implementation of the NREGA in the last three years. Although a programme

of this magnitude will take time to settle down and be of any relevance in

changing the landscape of rural India in such a short span of time, initial



MGNREGA

56

reports of the evaluation studies of NREGA by various institutions and

individuals has documented the processes of revival and resurgence largely

driven by the NREGA as an axis of struggle by the rural poor. It has neither

been claimed nor was envisaged that NREGA is the key to successful

rejuvenation of rural areas of the country that have remained marginalised in

the growth process of the country. This requires many such efforts particularly

towards ensuring the broken linkages of the growth process to include the

rural areas as engines of growth. Nonetheless, it does offer an opportunity for

the rural poor to stake claim to the fruits of the growth. Moreover, success

stories of NREGA provide opportunities for mainstreaming and legitimising the

struggle for other social security legislations. Above all, they re -enforce the

faith in the state in being able to do something for the poor and marginalised

of the country in being included in the growth process.

Therefore, the success of NREGA is as much a hope for those civil society

activists fighting for the rights for the poor as it is a critique of the

developmentalist state in case it fails to deliver.



MGNREGA

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MGNREGA

58

CASE STUDY - IMPLEMENTATION OF NREGA - EXPERIENCE

OF KERALA

Kerala has one of the highest unemployment rates in the country. But most of

the unemployed are educated. Thus NREGA has only limited application in

tackling the problem of unemployment among the poor of Kerala. Yet it has a

niche ideal for about 4 to 5 lakh people who are willing to do physical labour

and for whom an addtitional annual income of Rs.12,500/- obtained from the

Employment Guarantee Scheme would be a substantial boost in income and

purchasing power. Therefore right at the beginning a political decision was

taken to target the eligible families, visualising NREGS as the nucleus of a

concerted and convergent anti-poverty initiative.

Innovative features.

The following are the innovative features in the organization of the

Employment Guarantee Programme.



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59

1) The agriculture workers of Kerala are fairly well organized into trade

unions. Therefore primacy is given for the organization of meetings of

registered workers. This enables proper assessment of demand and in

inculcating the workers perspective in the design of the programme - in

choice of the works in preference of locations and in deciding the

schedule.

2) Kerala uses trained facilitators in the workers meetings as well as in

subsequent Grama Sabhas. This ensures that these fora are used

effectively to convey the principles and features of NREGA to the lay

citizen. These facilitators help in the conduct of these meetings in a

semi-structured and orderly manner.

3) Panchayati Raj Institutions are in the central place in the planning and

implementation of NREGA. They are the sole agencies responsible for

this. Since Kerala has a very strong decentralization experience,

Panchayati Raj Institutions have considerable capacity in the planning

and implementation of local development works. They have used this



MGNREGA

61

an academic institution. This has introduced transparency in the issue

of Technical Sanction.

6) Since disputes are common regarding measurements, an appellate

system has been put in place at the district level. This has facilitated

speedy sorting out of disputes.

7) In order to mobilize the workers and the public and to assist the

panchayat in carrying out its duties, Village Panchayats have been

given the freedom to identify one public servant of their choice having

the time and inclination to do social work from any government

department and such persons are posted on working arrangement as

NREGA co-ordinators.

8) The most radical feature of implementation of NREGA in Kerala is the

central place given to Kudumbasree in the implementation of the

programme. Under Kudumbasree every family below poverty line is

organzied into a Neighbourhood Group (NHG) at the local level

consisting of 15 to 40 families with each family being represented only



MGNREGA

62

by a woman. The NHGs are federated into an Area Development

Society (ADS) at the level of the Ward of the Village Panchayat (a

Village Panchayat Ward in Kerala has a population of around 1500 to

2000). The ADSs in a Village Panchayat are federated into a

registered body called the Community Development Society (CDS).

Each NHG, ADS and CDS has five volunteers carrying out different

functional roles.

The ADS has been entrusted with the task of organizing public works

under NREGS. Muster Rolls and other records are maintained by the

ADS, implements are provided to labourers by them and the

transparency and monitoring requirements are also carried out by

them. Welfare amenities to the workers are also provided by the ADS.

Since ADS is an organization of the poor and is basically a woman's

group, there has been greater sensitivity and community participation

in the implementation process.



MGNREGA

63

9) In order to promote transparency, it is mandatory that the estimates are

summarized in the local idiom as understood by ordinary people. At

the beginning of every work, the nature of work, expected out turn and

the likely wages are explained to the workers' groups.

10)Since Kerala has limited public land, it has been decided to take up

eco-restoration works in degraded forest lands. It is significant to note

that Village Panchayats would implement the programme in forest

areas with the technical supervision being done by field level officials of

the Forest Department representing a new kind of relationship between

a Panchayat Raj Institution and a government department.

11)A conscious decision has been taken by Government in keeping with

the spirit of NREG Act to limit road works to 10% of the total

expenditure and to give special priority to integrated watershed

development works.

12)Another unique feature of implementation of NREGS in Kerala is that

there is total financial inclusion of each and every worker; that is, the



MGNREGA

64

wages are paid only into the individual bank accounts of workers, and

no exception has been made till date.

Achievements

Compared to the earlier wage employment programmes there have been

significant achievements under NREGS. They are:

1. So far through a combination of transparent processes and procedures,

local action and constant vigilance it can be proudly be claimed that

implementation of NREGA has been totally corruption free. The factors

contributing to this situation include: -

a) A clear political decision was conveyed to the Panchayats that the

scheme has to be implemented strictly according to the letter and spirit

of the Act. There were several pragmatists arguing for an asset

focused programme ignoring the processes and conforming to the

procedures on paper, and it was argued that Kerala would lose out as

the demand for unskilled labour is very limited and as the wages are

much higher than the statutory minimum wages in more than 90% of



MGNREGA

65

the State, it would be better to go for public works. But this opinion was

firmly rejected.

b) The work is organized through the Kudumbashree system and the poor

have a stake in the work right at the beginning.

c) The technocratic power to accord Technical Sanction, measure works

and recommend payments has been made more spread out and

accountable through the Committee system and in case of difference of

opinion the appellate system.

d) A lot of social activists have been motivated to keep constant vigil as a

kind of continuous concurrent social audit.

e) Special emphasis have been given to the rights of workers and they

have been made fully aware of their entitlements. In a state where

workers are fairly well organized this has resulted in their jealous

guarding of their privileges.

f) All the payments are made only through the individual bank accounts

of workers. This is the ultimate preventer of corruption.



MGNREGA

66

Yet there are apprehensions that once material purchase starts, corruption

would come in, in some form or the other. The state is earnestly trying to

put in a system which deters corruption and the details are being worked

out. Till then the focus would be on labour-intensive works.

2. Implementation of NREGA has contributed to very high levels of women

empowerment, particularly in the following aspects.

i) As the work is organized by women’s groups, the gender

perspective gets built in automatically.

ii) As women are comfortable working along with their neighbors,

nearly 80% of the workers have been women.

iii) For the first time equal wages are really paid and this has boosted

the earnings of women.

iv) As the wages are paid into Bank accounts the habit of thrift which

was already inculcated through the Kudumbashree experiment has

further been strengthened.



MGNREGA

67

v) As the Bank deposits are increasing, the intra-household status of

the woman has also been improving commensurately as she

controls substantial cash resources and withdrawal can be only on

her decision.

3. NREGS has given rise to a new work culture. Hitherto workers were

controlled by contractors and their middlemen who knew how to extract

work. When NREGS began the out-turn was very poor as the workers

could not be supervised properly. But soon the workers themselves

realized that they would be losing collectively and a new internal dynamics

evolved with peer pressure forcing workers to put in their maximum effort.

At the same time a kind of social responsibility also became evident as

more capable workers became more than willing to put in extra effort to

make up for those who genuinely could not do hard work beyond a point,

like the women and the elderly.

4. Public works have gained respectability. Hitherto they were seen as

highjacked either by a contractor or a local leader. Now the workers see it



MGNREGA

69

Now that a working model for operationalization of NREGA has stabilized

certain new initiatives have been started. They are:

(1) A National Rural Employment Guarantee Mission has been approved

and a Mission Director posted.

(2) A convergent Anti-Poverty Sub-Plan is to be prepared using the

Kudumbashree network. The components of the Anti-Poverty Sub-

Plan would include:

NREGS - for wage employment

SGSY and Kudumbashree programmes – for skill development

and self employment

SSA

NRHM for Human Development

ICDS

o Including nutrition for children in the age group 0 – 3 and

adolescent girls



MGNREGA

70

Annapoorna and Anthyodaya Anna Yojana for food security

IGNOAPS

Asraya of Kudumbashree Social Security

Health Insurance

IAY Minimum needs infrastructure

People’s Plan

The detailed methodology has been developed and firmed up in

about 100 Village Panchayats whereby at the local level

Neighbourhood Groups of the poor prepare micro plans focusing on

individual and family needs and at the level of the ADS these are

consolidated and components relating to community assets added

and thereafter the plans are integrated by the CDS at the level of the

Village Panchayat by bringing in elements related to human

development and economic development. The plan prepared by the

poor is negotiated with the Panchayat and approved.



MGNREGA

71

(3) A strong natural resource management focus has been given to

NREGS. One of the topmost environmentalists in the country has

been recruited as a consultant and agricultural graduates are being

taken as young professionals. It has also been decided to take up a

mega scheme for Bharathapuzha River rejuvenation with action plans

emanating from the Village Panchayat as building blocks.

(4) A methodology is being developed to integrate NREGS and People’s

Plan. Village Panchayats get more than Rs.1 crore on an average

under People’s Plan. If intelligently dovetailed it is expected that

substantial improvement in quality of assets can be attained.

(5) In order to meet the problems due to shortage of technical staff it has

been decided to rope in voluntary services of reputed non-

government organizations. Already in one district a firm offer has

been received and in principle clearance given. The details are being

worked out.



MGNREGA

72

(6) Using the excellent network of Kudumbashree it has been decided in

the State Employment Guarantee Council to develop a cadre of bare-

foot technical volunteers from among the poor women.

(7) In order to develop the skills of the workers it has been decided to set

up Labour Banks. A pilot has been launched in one Village

Panchayat. The Labour Banks would be supported under People’s

Plan to take up other public works and even private works.

(8) It is well-nigh impossible to identify works in the plantation areas as

well as in the coastal areas. It has been decided to seek the expert

support from Government of India to come out with a shelf of projects

which can be taken up in such geographical areas.

(9) An innovative form of training has been developed by KILA where

there is a shift from the cascading model to a “ripple” model,

according to which outstanding Panchayats become the master

trainers and the neighbouring Panchayats formally learn from the

experience of the best performers.



MGNREGA

73

(10) Monitoring has been strengthened with the decision of the State

Employment Guarantee Council to put in a system of State level and

District level quality Monitors by identifying persons with reputation for

integrity and competence. The State level Monitors would be of two

categories – outstanding individuals whose views are widely

respected by society and senior Technical Experts capable of giving

authoritative feed back on the quality of implementation. Further the

State Employment Guarantee Council has decided to request a team

consisting of eminent experts like Smt. Aruna Roy, Prof. Jean Dreze,

Shri P. Sainath and Shri Nikil De to conduct an independent

assessment of Kerala’s performance and offer suggestions for

improvement.



MGNREGA

74

CONCLUSION

Though there were several teething problems it is clear that the policy focus

on natural resource management and corruption-free implementation and the

administrative measures introduced to operationalise the policy especially the

involvement of the Kudumbasree network have resulted in a strong foundation

being laid and opened up space for pro-poor innovations.



MGNREGA

75

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