A Critical Analysis of Mahatma Gandhi National Rural Employment Guarantee Act, 2005

A Critical Analysis of Mahatma Gandhi National Rural Employment Guarantee Act, 2005

The structure of India’s social and economic condition is not a result of recent times but has its roots stepped in history from the times India was under colonial rule which lasted for almost two centuries before it attained its independence on 15 August 1947. Under the colonial rule, economic infrastructures in the transportation of raw materials did develop through the introduction of railways, and water transports, but the main objective was not to provide a basic employment opportunity to the people of India but to subserve various colonial interests. Throughout colonial times and until today, the Indian economy remains known to be fundamentally agrarian in nature. Rural Development as an integrated concept of growth and poverty elimination has been a paramount concern throughout every five-year plan since independence.

Today, India is among the fastest-growing economies which have demonstrated a remarkable spirit in recovering from being colonized for almost two centuries. Nonetheless, the human development progress in India remains a big loophole. As far as the United Nations Human Development Report of 2020 is concerned, India stands at 131 among 189 countries which highlight that even though the rapid economic growth of this country is significantly worthy of appreciation, but the challenge of unemployment and poverty remains a major area of concern. The policymakers of this country have continually focused upon formulating varied schemes and policies for employment formation to eradicate poverty and meet the basic needs of the vulnerable class of society. One among the varied policies adopted is the Mahatma Gandhi National Rural Employment Guarantee Act which was adopted by the Ministry of Rural Development which targets to achieve enhancing the livelihoods security of the people in rural zones by assuring hundred days of wage employment in a financial year to a rural household whose adult members volunteer to do unskilled manual work.

Mahatma Gandhi National Rural Employment Guarantee Act, 2005 - At a Glance

The Mahatma Gandhi National Rural Employment Guarantee Act was passed in 2005 under the UPA Government which ensured the legal right of basic livelihood security to whoever is willing to work at a stipulated minimum wage rate in the rural areas for a period of hundred days in a financial year. This economic safety step for the rural poor by the UPA Government under Dr. Manmohan Singh was a paradigm shift from all other programmes enacted for uplifting the economic condition of the rural poor since this employment guaranteed scheme was backed up by a legal framework in order to give effect to the fundamental right of “right to work” and “right to earn a livelihood” recognized as a part and parcel of Article 21 of the Constitution of India. In Olga Tellis v. Bombay Municipal Corporation which is considered to be one of the pioneering cases, the Supreme Court brought socio-economic rights within the sweep of PART-III of the Constitution. Further emphasizing on this case to understand the critical matter of topic in our hand, we find that the Supreme Court went on to the extent of stating that-

If the right to livelihood is not treated as a part of the constitutional right to life, the easiest way of depriving a person of his right to life would be to deprive one of their means of livelihood to the point of abrogation. [1]

Backed up by legislation itself, this social security programme of ensuring hundred days of wage employment had the primary objective of ensuring that if there is surplus labor in the economy, this act works as a means to absorb that surplus labor of the rural poor an option to participate even at a low rate with the wage serving as an additional household income to increase the basic amenities of rural poor household members so that they can earn additional livelihood to sustain themselves and their family during uncertain agricultural phenomenon period. Following are a few of the objectives of the Act that has been highlighted in the document of the Act –

  • To provide an alternative source of income employment to the rural vulnerable people so that their social security can be secured both socially and economically.
  • To enhance the right to livelihood as a security of the rural poor households of India by providing hundred days of guaranteed wage employment.
  • To empower and encourage the socially disadvantaged more particularly the womenfolk, the Scheduled Tribes, and Scheduled Castes through the process of upholding the basic fundamental rights of them which are backed up by the formulation of legislation.
  • To create additional employment on productive works which would be of sustained benefit to the poor which shall further contribute to the creation of rural infrastructure.
  • To deepen democracy at the grassroots level by strengthening the Panchayati Raj Institutions which shall be responsible for the effective implementation of this programme.

Salient Features of the Act

  • The Right to Work: The Act strengthens the right to work and livelihood of rural poor by providing adult members of the rural household willing to voluntarily undertake casual, or unskilled manual work. This shall provide a minimum of hundred days guaranteed days of employment which shall cease labor exploitation. This primary objective of the Act was formulated keeping in mind Article 21 which is a Fundamental Right of Right to life sweeping within its ambit right to work and earn livelihood and further upholding the directive principle of Article 41 of the Constitution which directs the state to secure to all citizens ‘right to work’. Through the enactment of this legislation, the government is trying to balance both fundamental rights and directive principles of state policy since both are complementary and supplementary to each other. [2] The Act provides for certain conditions that are to be considered while allocating work such as works are to be provided within 5km radius of the village and if it is beyond that, an extra 10% are to be paid.
  • The effective target of encouraging disadvantaged Groups: This Act is designed in a way that it reaches almost all socially disadvantaged groups which also includes the equity of participation of women in both access to work and payment of wages which further ensures equal wages between men and women. This Act has witnessed the active participation of women working in many small-scale industries in their respective villages which further has reduced the trouble of migration. The increase in access to paid work with the effective implementation of this Act has a positive mark on women’s socio-economic status and wellbeing. There are stances wherein now women have a substantial say in the way the money they earned is to be spent. Priority is given to the women so that one-third of the beneficiaries under the scheme are women.
  • Effective Wage and Less Labour Exploitation: The wages that are promised under this scheme shall meet the basic wage scale. MGNREGA mandates that wage payment should be made available to the beneficiary within 15 days of competition of work. Delay in wage dilutes the very crux of this Act which works as an instrument for social security for the poor.
  • Transparency and Accountability: This feature of this Act is ensured by providing the means of establishing social audits and grievance redressal mechanisms. The act provides, more specifically mandates every information to be actively made available in the public domain, and any information if sought should be provided. The wage payments are made through Mahatma Gandhi NREGA worker’s institution accounts mandatory. There is also an establishment of a Central Employment Council which monitors the effective implementation of the law and reviews processes such as social audits and grievance redressal.
  • Legal Authority Backing: Given that this programme has legal backing makes it more effective compared to all other wage employment programmes since there is a law that shall work as a protective shield in case there is a violation of any mandatory responsibility of any respective department or member in case they don’t comply with the same.

Critical Analysis

The Mahatma Gandhi National Rural Employment Guarantee Act is considered as welfare legislation that seeks to meet three distinct objectives – Promotive, Protective, and Preventive. It protects the vulnerable rural poor by providing them with demand-driven jobs. It reduces the risk of agricultural investment and rural impoverished people being compelled to migrate. It indirectly fosters and boosts the development of rural economies by raising employment opportunities which further improvises living standards and infrastructure availability in rural areas. As a result of its influence on livelihood security, social protection, and democratic empowerment, the Mahatma Gandhi National Rural Employment Guarantee Act is a powerful tool for fostering equitable growth in rural India. A rights-based law, such as the Mahatma Gandhi National Rural Employment Guarantee Act, advocates for a shift in the way government systems work by minimizing demand-supply dualities, indicating the maturation of democracy in which the term "state" refers to both people and government. MGNREGA workers' rights include, among others, on-demand employment, minimum wages, wage equality between men and women, and payment of wages within 15 days, as well as providing essential worksite facilities. A registered household is legally guaranteed 100 days of employment every fiscal year. Under the Act, each state must develop a State Rural Employment Guarantee Scheme (SREGS), which must meet the Act's minimal requirements.

The policy concept of MGNREGA's may be classified into two categories: socioeconomic background and political context. As far as the socio-economic background is concerned, the years leading up to the inception of MGNREGA were characterized by high rates of economic growth with little impact from poverty and unemployment, implying that growth was not accompanied by the distribution of resources in the economy. Poverty and inequality were addressed through policies that emphasized inclusive growth. The MGNREGA was designed as a means for distributing resources to the rural poor while also providing them with a minimal level of livelihood security. By maintaining a minimal degree of dignity for the rural poor, this policy was seen as a step towards a rights-based policy. Second, the political environment aided the Act's passage, with inclusive growth being a top priority for the Congress-led UPA government. Because of the focus on rural areas, the Act guaranteeing a right to work to all rural households was enacted.

In the case of Swaraj Abhiyan v. Union of India, the Supreme Court issued directions while dealing with the implementation of the Mahatma Gandhi National Rural Employment Guarantee Act, 2005 and the Mahatma Gandhi National Rural Employment Guarantee Scheme framed under the provisions of Section 4 of the said Act -

  • State governments should propose a realistic budget, which the Empowered Committee should assess pragmatically in order to avoid any disagreements between state governments and the Indian government over the allocation of funds under the Scheme.
  • The Government of India has been directed to release sufficient funds under the Scheme to the State Governments in a timely manner so that the ‘workforce' gets paid on time.
  • The Government of India has been asked to ensure that workers who have had their paychecks delayed for more than 15 days receive compensation.
  • Both state governments and the central government have indeed been ordered to make every effort to encourage poor people to apply for the scheme.
  • Within 60 days of the date of the ruling, the Central Employment Guarantee Council will be established under Section 10 of the NREG Act.
  • Within 45 days after the date of the order, the State Employment Guarantee Council must act under Section 12 of the Act.[3]

The Court further laid emphasis on the fact that the Government of India must guarantee that the NREG Act's requirements are faithfully executed by all parties involved because it is social welfare and social justice legislation.

The Covid-19 pandemic disturbed almost every facet of human existence. It appeared to have galvanized the Central government to reconsider necessary alterations to meet the very core objective of this enacted legislation securing livelihoods of infinite rural lives during such an uncertain time where the workers were forced to confine themselves in order to curb the spread of the virus. In 2020, Union finance minister Nirmala Sitharaman increased the total budgetary support for Mahatma Gandhi Rural Employment Guarantee Act to more than one lakh thousand crores, making it the highest budgetary support since the launch of the historic right to work actively in 2006. Workers covered by the Mahatma Gandhi Employment Guarantee Act 2005 were left in the lurch by the nationwide lockdown imposed by the Central Government to combat the spread of the novel coronavirus disease. Faced with such an uncertain economic crisis, the Mahatma Gandhi Employment Guarantee Act Sangharsh Morcha during Covid-19 demanded at least two hundred days of employment guarantee per person from hundred days and increase wages up to Rs.600 a day. Nobel Laureate Abhijit Banerjee highlighted the need of increasing the number of workdays under the government’s flagship job scheme as one of the most effective ways to help poor migrant workers to recover from the clutches imposed by the nationwide lockdown. This welfare policy protected some of the unfavorable effects of the pandemic thereby providing employment opportunities and incomes to migrant workers and other vulnerable sections of the rural region. Recently in January 2021, the Uttarakhand government stated that the MGNREGA's working days would be raised from 100 to 150 days.[4]

Further in April 2020, Activists Aruna Roy and Nikhil Dey filed a petition before the Supreme Court of India to issue consistent instructions to all States/Union Territories to guarantee that all active and registered job cardholders under the MGNREGA Act are regarded to be at work and are given full salaries as soon as possible. Advocate Prashant Bhushan filed the petition on behalf of the activists, requesting that the Mahatma Gandhi National Rural Employment Guarantee Act, 2005, protect the fundamental rights to health and livelihood guaranteed under Article 14 and Article 21 of the Indian Constitution for over 7.6 crore active job cardholders (MGNREGA Act).[5]

The general loopholes of this legislation can be pointed as follows –

  • Insufficient Budget – The budget allocation for effective implementation of the programme is not sufficient enough to meet the growing increasing need of this scheme especially during uncertain times like the covid virus. The Union Finance Minster allocated Rs.73,000 Crore for MGNREGA which is 34.52% below the revised estimate of Rs.111, 500 crores for FY- 2021-22. The pandemic highlighted how heavily the rural poor folks depend upon this welfare scheme for employment purposes and given the massive insufficient budget allocation shall have an adverse effect upon the proper implementation of the core objective of the act.
  • Ineffective poor wage rate and unwanted delays: The tussle between the wage rate affected under the minimum wages act and MGNREGA is never-ending. MGNREGA mandates the payment must be made within 15 days of the end of a certain work. Nonetheless, wages could not be provided within the allotted timeframe. Workers are frequently needed to make multiple trips to the post office or bank only to discover that their salaries have not been deposited into their accounts. Payments are withheld when labor is done without authorized authorization, causing wage delays. MGNREGA is no longer linked to the Minimum Wages Act and as a result, for a number of instances MGNREGA wage is lower than the state's minimum agricultural wage. [6]Delayed wages through warrant compensation under the Payment of Wages Act,  however, due to an ineffective grievance mechanism the problem has not been addressed. In an attempt to reduce corruption, the wages are paid through bank accounts and post office deposits to ensure that the entire amount goes to the laborers. However, the banking system is finding it difficult to handle the volume of transactions which is leading to delays in wage payments. It is also creating hardship for the laborers that live in remote areas and have to travel long distances to access banks.
  • Varied issues with Job-cards: There are stances wherein the job-card issuing authority fails to meet the deadline to issue job cards on time. There are also circumstances wherein, there are several issues pertaining to the fabrication of job cards, inclusion of fabricated names, and delays in making entries in job cards.


  • The provision for providing 100 days of employment to all the beneficiaries should be made mandatory and strict in nature which shall give effect to strict action against the panchayats who might fail in fulfilling the core target of this enactment.
  • Involvement of corporate sector or civil society organizations in bringing in project management skills in terms of promptly mobilizing, skilling, and maintaining a pool of sanitation and hygiene workers for GP level work, as well as matching people to work outside of MGNREGA projects. In the following sections of the note, we will refer to these Project Management Consultants as PMCs.
  • Despite the fact that the Government of India increased the daily MGNREGA rate, it should be increased even more to equal the minimum wage rate in each state. In 17 states throughout the country, the salaries received under the programme are still less than the minimum wage. To do so, the government should boost the program's budget allotment. The country appears to be on the right track since the allocation for this plan increased by 19 percent in the Union Budget for 2021-22 compared to the allocation for 2020-21.


The Mahatma Gandhi National Rural Employment Guarantee Act was the first attempt to legally codify development rights. It is an opportunity for the rural poor who live on the fringes to make a tiny claim in the development process, even if it is not the key to the regeneration of rural regions or the elimination of poverty in India. The Covid-19 pandemic has increased the importance/value of how necessary it is for the Government to strengthen the Mahatma Gandhi National Rural Employment Guarantee Act in today’s times. Given the plights of migratory workers and the long-term repercussions of the covid pandemic on the rural economy, it's time to rethink MGNREGA as a universal basic income guarantee system. This combination of workfare benefits and direct cash transfers has the potential to alleviate the economic hardships of landless workers, small-scale farmers, and other low-income people. There is strong evidence that even a small amount of universal basic income helps poor women and children in rural India (targeted groups) secure their livelihoods and health. MGNREGA will eliminate the need for numerous conflicting income support systems for farmers in rural India by providing a monthly basic income support combination with 100 days of constitutionally guaranteed rural work.

[1]Olga Tellis v. Bombay Municipal Corporation, AIR 1986 SC 180.

[2] Chandra Bhawan Boarding & Lodging v. State of Mysore, AIR 1970 SC 2042; Minerva Mills v. Union of India, AIR 1980 SC 1789; State of Kerala v. NM Thomas, AIR 1976 SC 490; Patthumma v. State of Kerala, (1973) 4 SCC 225; Kesavananda Bharati v. State of Kerala, (1973) 4 SCC 225; State of Karnataka v. Rangantha Reddy, AIR 1978 SC 215; Sanjeev Coke Mfg.Co. v. Bharat Coal Ltd., AIR 1983 SC 239; State of Madras v. Champakam Dorairajan, AIR 1951 SC 226; Mohd. Hanif Qurareshi v. State of Bihar, AIR 1958 SC 731.

[3]Swaraj Abhiyan v. Union of India, 2016 SCC OnLine SC 549.

[4] COVID-19 impact | Increasing work days under MGNREGA to 150 best way to help poor: Abhijit Banerjee, (https://www.moneycontrol.com/news/business/economy/covid-19-impact-increasing-work-days-under-mgnrega-to-150-best-way-to-help-poor-abhijit-banerjee-7017811.html, 8:05 AM, June 21, 2021).

[5]Aruna Roy And Nikhil Dey Move SC For Payment of Wages to MNREGA Workers, Temporary Job Cards To Migrants, (https://www.livelaw.in/top-stories/aruna-roy-and-nikhil-day-move-sc-for-payment-of-wages-to-mnrega-workers-temporary-job-cards-to-migrants-154776?infinitescroll=1, 02:04 PM, APRIL 4, 2020).

[6] MGNREGA payments lower than minimum agricultural wages in some states: Report, (https://economictimes.indiatimes.com/news/economy/policy/mgnrega-payments-lower-than-minimum-agricultural-wages-in-some-states-report/articleshow/76307773.cms?from=mdr, 09:59 PM, JUNE 10, 2020).