National Rural Employment Guarantee Act (NREGA)

National Rural Employment Guarantee Act (NREGA), later renamed the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) in 2009, represents a landmark social welfare legislation enacted by the Government of India in 2005. Designed as a legal assurance for livelihood security, it guarantees at least 100 days of wage employment in a financial year to every rural household whose adult members volunteer to undertake unskilled manual work. This act marked a transformative shift from welfare-based schemes to a rights-based approach to rural employment and development.

Background and Genesis

The roots of NREGA lie in India’s long-standing efforts to address rural poverty and underemployment through public works programmes. Initiatives such as the Rural Manpower Programme (RMP), Crash Scheme for Rural Employment (CSRE), Food for Work Programme, and Employment Assurance Scheme (EAS) of the 1970s and 1990s served as precursors. However, these earlier programmes were temporary, budget-dependent, and lacked a statutory guarantee.
The NREGA Act, passed by Parliament on 23 August 2005 and implemented on 2 February 2006, institutionalised employment as a legal right. Initially launched in 200 districts, it was expanded in phases to cover the entire country by 1 April 2008. The Act’s implementation is overseen by the Ministry of Rural Development (MoRD), Government of India, in collaboration with state governments.

Objectives and Key Provisions

The primary objectives of NREGA are to:

• Enhance livelihood security in rural areas by providing guaranteed wage employment.
• Create durable community assets such as roads, ponds, canals, and water conservation structures.
• Strengthen the rural natural resource base through sustainable works.
• Promote social inclusion by providing work opportunities for women, Scheduled Castes (SCs), and Scheduled Tribes (STs).

Key features include:

• Legal Guarantee of Employment: Every rural household is entitled to 100 days of employment per year on demand.
• Time-bound Employment: If employment is not provided within 15 days of demand, workers are entitled to an unemployment allowance.
• Wage Payment: Wages must be paid according to statutory minimum wages notified for agricultural labourers, typically through bank or post office accounts to ensure transparency.
• Gender Equality: At least one-third of the beneficiaries must be women, and equal wages are mandated for both men and women.
• Decentralised Implementation: The Gram Panchayat (village council) is the principal authority for planning, executing, and monitoring projects.
• Transparency and Accountability: The Act mandates social audits, public disclosure of information, and the use of Information Technology (IT) in record keeping and wage payments.

Funding and Administrative Mechanism

The financing pattern under NREGA is shared between the Central and State Governments:

• The Central Government bears 100% of the unskilled labour cost and 75% of the material cost.
• The State Governments bear 25% of the material cost, administrative expenses, and the unemployment allowance when applicable.

At the administrative level, the District Programme Coordinator (DPC)—usually the District Collector—is responsible for overall supervision. Implementation takes place through a three-tier structure involving the Zila Parishad (district council), Intermediate Panchayat, and Gram Panchayat, ensuring local participation and accountability.

Types of Permissible Works

The Act prescribes a list of permissible works that emphasise natural resource management and infrastructure creation. Common categories include:

• Water conservation and harvesting, such as ponds, check dams, and canals.
• Drought proofing, including afforestation and tree plantation.
• Irrigation canals and land development, particularly for small and marginal farmers.
• Rural connectivity, mainly through all-weather roads.
• Flood control and drainage works, including renovation of traditional water bodies.
• Livestock-related infrastructure, compost pits, and fisheries.
• Works related to sanitation, solid waste management, and renewable energy in rural areas.

Impact and Achievements

Since its inception, NREGA has emerged as one of the largest public employment programmes in the world, providing a critical safety net for millions of rural households.

• The scheme has generated over 30 billion person-days of employment since 2006.
• It has significantly contributed to poverty reduction, income stabilisation, and rural infrastructure development.
• Women’s participation has consistently exceeded 50%, enhancing gender empowerment and financial inclusion.
• The programme has helped arrest distress migration from rural to urban areas in several states.
• It has also promoted environmental conservation through soil and water management projects.

Examples of states with exemplary performance include Andhra Pradesh, Tamil Nadu, and Rajasthan, known for effective implementation and innovation in social auditing and wage disbursement systems.

Challenges and Criticism

Despite its achievements, NREGA has faced several operational and institutional challenges:

• Delayed wage payments due to administrative bottlenecks and fund flow issues.
• Corruption and ghost beneficiaries, despite efforts toward transparency through digital records and Aadhaar linkage.
• Underutilisation of potential in some regions where work demand is high but project execution is poor.
• Insufficient awareness among rural households regarding their entitlements under the Act.
• Inadequate monitoring and social auditing, particularly in remote and conflict-prone areas.
• Politicisation of implementation and variations in efficiency across states.

Critics also argue that while NREGA provides short-term employment, it does not necessarily lead to sustainable livelihoods unless integrated with broader agricultural and rural development strategies.

Reforms and Recent Developments

Over time, several reforms have been introduced to strengthen implementation:

• Introduction of Direct Benefit Transfer (DBT) and Aadhaar-based payment systems to reduce leakages.
• Use of geo-tagging and mobile monitoring systems for better transparency.
• Integration with climate-resilient agriculture and natural resource management projects.
• Emphasis on convergence with other rural schemes, such as Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) and Swachh Bharat Mission.
• Increased focus on asset quality and durability to ensure long-term rural benefits.

During crises such as the COVID-19 pandemic (2020–2021), NREGA served as a crucial employment buffer, absorbing millions of returning migrant workers and mitigating the economic impact of lockdowns.