The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), one of India’s most ambitious social security programmes, has returned to the centre of public debate after a group of globally renowned economists and social scientists urged the Union government to reconsider its proposed rollback. In an open letter, they warned that dismantling the scheme would amount to a “historic error”, with long-term consequences for rural livelihoods, federal balance, and social justice.
Why International Scholars Are Alarmed
The intervention by leading economists is significant because it comes from diverse intellectual traditions, ranging from inequality studies to employment guarantee frameworks. Their shared concern is that MGNREGA represents a rare example of a law that converts the abstract idea of economic dignity into a concrete, enforceable right. Unlike conventional welfare schemes, it does not rely on administrative discretion but obligates the state to provide employment on demand.
For these scholars, the potential dilution of MGNREGA is not just an Indian policy issue but a setback for global debates on how democracies can guarantee minimum economic security in an era of inequality and precarious work.
What the Scheme Has Achieved So Far
MGNREGA was designed as a demand-driven employment programme guaranteeing up to 100 days of wage work to rural households. Evidence from its early years shows that it coincided with strong rural wage growth and improved bargaining power for agricultural labourers. Studies also indicate positive effects on local economic activity, challenging the assumption that public employment programmes are inherently inefficient.
Beyond wages, the scheme has contributed to the creation of productive rural assets such as water harvesting structures, roads, and soil conservation works. These assets have supported agriculture, enhanced water security, and strengthened local resilience against climate stress.
The New Funding Pattern and Federal Tensions
The core of the current controversy lies in a proposed shift in the funding architecture of MGNREGA. While the legal obligation to provide employment remains with the States, the Centre’s financial commitment is proposed to be reduced. States may now be required to bear the full cost of materials, compared to a much smaller share earlier.
This creates a structural contradiction. States are legally accountable to citizens for providing work, yet their fiscal capacity varies widely. Poorer States, already under financial stress, may be compelled to restrict project approvals or delay work, effectively undermining the demand-driven nature of the scheme.
Underfunding, Delays, and Administrative Discretion
Even before the proposed changes, MGNREGA has been affected by chronic underfunding and delays in wage payments. Such delays weaken the credibility of the employment guarantee and discourage workers from demanding work. Instead of addressing these administrative shortcomings, critics argue that the new framework risks hollowing out the programme.
Concerns have also been raised about provisions that allow discretionary suspension or defunding of the scheme. When financial flows are interrupted without transparent justification, the legal guarantee risks becoming symbolic rather than real.
Why This Debate Goes Beyond Rural Employment
MGNREGA is often seen as a test case for rights-based welfare in India. It links employment, asset creation, social justice, and environmental care within a single institutional framework. Weakening it would signal a shift away from the idea that employment itself can be a policy tool for inclusive growth and poverty reduction.
At a time when rural distress, climate vulnerability, and informal employment remain persistent challenges, the future of MGNREGA raises larger questions about the role of the state in safeguarding economic dignity.
What to Note for Prelims?
- MGNREGA provides a statutory right to employment, not a discretionary benefit.
- Employment must be provided within a stipulated time after demand is raised.
- The scheme combines wage employment with rural asset creation.
- It operates as a centrally sponsored programme with shared funding.
What to Note for Mains?
- MGNREGA as a rights-based approach to social security and employment.
- Implications of shifting financial responsibility from Centre to States.
- Economic rationale for public employment programmes in rural India.
- Governance challenges such as wage delays and underfunding.
- Broader relevance for poverty alleviation, inequality reduction, and environmental sustainability.
