The National Rural Employment Guarantee Scheme (NREGS) is a significant program in India. Recently, its role in the country’s economic landscape has been brought into focus, with an increase in households using the service in May 2022. Here’s a detailed look at how NREGS operates, its challenges, and potential solutions to these challenges.
Recent Activity in NREGS
In May 2022, NREGS saw participation from 2.61 crore households. This was a notable increase of 17.39% from the same period the previous year. Following a dip in demand in April 2022, when the number of availing families dropped by 12.27% from the corresponding month in the previous year, May witnessed a resurgence. However, it’s still lower than May 2020 figures when the demand dramatically increased due to migrant workers returning to villages amid the Covid-19 lockdown.
State-wise, Uttar Pradesh experienced the largest increase in households utilizing NREGS, followed by Tamil Nadu. In contrast, Chhattisgarh and Jharkhand saw a decline in usage.
Understanding the Role of NREGS
Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), or NREGS, is legislation initiated on August 25, 2005. It legally guarantees a hundred days of employment in each financial year to adult members of any rural household willing to do publicly related unskilled manual work for the statutory minimum wage.
The Ministry of Rural Development oversees the scheme with the assistance of state governments. The primary purpose of NREGS is to improve the purchasing power of rural dwellers, particularly those living below the poverty line. It facilitates semi or unskilled work, striving to close the wealth gap in the country.
Around one-third of the workforce under this law should be women. Any registered individual can request continuous work for at least fourteen days, to be provided within a 5 km radius. If the distance is more than 5 km, an extra wage compensates for it.
Most tasks under NREGS relate to agriculture and rural sanitation projects. As a demand-driven wage employment program, resources from the Centre to the States depend on employment demand in each state.
Outcomes of NREGS Over the Years
In its 15 years of functioning, NREGS has created over 31 billion person-days of employment. The government has invested more than Rs 6.4 lakh crore in this demand-driven program. It has also resulted in developing more than 30 million water conservation-related assets in the rural sections since 2006.
Challenges Faced by NREGS
Despite its accomplishments, NREGS faces several challenges. Firstly, the wages, currently around Rs. 180 per day, are significantly below the market rate. For nearly ten years, the rates have only been adjusted for inflation, ignoring rising wage rates elsewhere. In 23 states, NREGS wages have fallen below the minimum wage rate.
Another issue is late payments. Despite a rule ensuring payment within 15 days, often workers remain unpaid. As of October 2019, over 30% of wage requests remained pending. Corruption is another significant challenge, often related to middlemen in the system.
Lastly, much of the allocated work is seen as pointless and does not contribute value to the agricultural infrastructure, resulting in wasted effort and resources.
Way Forward for NREGS
To address these challenges, several measures could be implemented. Linking wages to a consumption-based index that is revised annually might ensure fair compensation based on consumption needs. Using technology could help tackle corruption and manage resources efficiently, decreasing late payments. With such tactics, NREGS can continue to be a vital support system for rural India.
