MGNREGA and the weight of change reignites debate over implementation

The proposal to rename the rural employment scheme, raise the number of guaranteed workdays and alter its cost-sharing structure has reignited debate over its implementation and intent

The Centre’s proposed move to rename its flagship rural employment programme, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), as the Pujya Bapu Grameen Rozgar Yojana, and to raise the number of mandatory workdays from 100 to 125, has triggered sharp reactions from the political class and civil society groups.

 

Beyond these, some experts say the Union government is also considering changes to the cost-sharing arrangement between the Centre and states for wages and material expenditure. Currently, the Centre bears 100 per cent of wage costs and 75 per cent of material expenses, with states contributing the remaining 25 per cent for materials, making the scheme an almost fully Centrally funded programme. According to sources, the proposed changes would restructure funding such that, of an estimated allocation of about ₹1.5 trillion, roughly ₹95,000 crore would come from the Centre, with the balance to be contributed by states. Experts say this would imply that states may be required to shoulder part of the wage burden under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), which covers MGNREGS. 

“If this is true and forms part of the final changes, it would be completely in violation of the spirit of MGNREGA and against the framework of the legislation,” said Nikhil Dey, founder member of the Mazdoor Kisan Shakti Sangathan and the National Campaign for People’s Right to Information. “NREGA was conceived as a Central law precisely because states were unwilling to bear the additional financial burden.” 

Dey, who has been associated with the programme since its inception, said increasing the mandatory guaranteed workdays to 125 holds little promise without adequate budgetary backing. “At present, in reality MGNREGA budgets are getting slashed and wages not paid in time in some areas even though, in theory, the Act provides for 100 days of guaranteed wage employment to every rural household,” he said. On the proposed name change, Dey said his only question was “why”. 

The Opposition Congress has criticised the move as another instance of the BJP seeking to appropriate UPA-era programmes. The ruling party has rejected the charge, highlighting what it describes as the transformational changes it has brought to the scheme. 

While there is broad agreement on MGNREGA’s role in developing rural markets and providing distress employment, particularly during the Covid-19 period, the programme has had its fair share of controversies since its launch in 2005. 

The Act was first notified on September 7, 2005, covering 200 districts in its initial phase from February 2, 2006. It was expanded to an additional 130 districts in 2007-08, with 113 districts notified from April 1, 2007, and 17 districts in Uttar Pradesh from May 15, 2007. The remaining districts were brought under the Act from April 1, 2008. Since then, MGNREGS has covered the entire country, excluding districts with a 100 per cent urban population. 

In 2013, a report by the Comptroller and Auditor General (CAG) found that only 20 per cent of funds allocated to Bihar, Maharashtra and Uttar Pradesh, states accounting for nearly 46 per cent of India’s rural poor, had been released between 2009-10 and 2011-12. Claims that MGNREGA led to a sharp rise in rural wages have also remained contested. Since the National Democratic Alliance (NDA) came to power at Centre in 2014 under Prime Minister Narendra Modi, the scheme’s fortunes have fluctuated. It has been described by the PM as a “living monument” to the UPA government’s failures, yet it has also seen record budgetary allocations during the Covid-19 period, a renewed focus on water conservation, and greater convergence with other schemes. At the same time, attempts to streamline attendance through the National Mobile Monitoring System (NMMS), the introduction of mandatory Aadhaar-based payments, caps on budgetary spending and the stoppage of work in West Bengal have meant that the scheme has seen both transformational changes and controversies over the past decade. 

Research by LibTech India has shown that technological interventions, including Aadhaar-based attendance, mandatory Aadhaar-linked bank accounts and GPS tracking of worksites, have discouraged workers from seeking employment under the scheme. The Economic Survey 2024–25, meanwhile, sought to debunk the link between MGNREGA work demand and rural distress. It argued that if such a link existed, data should show that states with higher poverty and unemployment rates would utilise more of the scheme’s funds and generate more employment person-days. 

The latest proposal to rename the scheme and expand guaranteed workdays appears set to become the newest flashpoint. Data show that, on average, only about 50 days of work have been provided under MGNREGA over nearly two decades, well below the statutory 100 days. 

While civil society groups argue that demand remains artificially suppressed, the government maintains that the scheme is demand-driven and that it does not play a role in lowering demand. However, Chakradhar Buddha, senior researcher at LibTech India, said the government’s own Economic Survey acknowledged that true demand is not fully captured in the Management Information System (MIS). “This is partly because officials often avoid acknowledging work demands to prevent delays and the subsequent unemployment allowance payments mandated by the Act. If actual demand is not captured, it goes against the very concept of a Right to Work Act,” Buddha told Business Standard. 

Rather than focusing solely on raising the mandatory number of workdays or wages, Buddha said priority should be given to accurately capturing demand, ensuring adequate budgetary support, strengthening administrative capacity, and guaranteeing timely and fair wage payments. 

 

He cited forest rights patta holders, who are entitled to up to 150 days of work under existing MGNREGA provisions, but said few states actually provide full employment to them. Similarly, in Odisha, households in backward blocks are eligible for up to 300 days of employment, yet average employment in these blocks has never exceeded 110 days. He said research shows that in the state’s Belpara block in Bolangir district, the maximum average employment provided was just around 114 days in 2023-24 against the mandatory 300 days while in Kaprakhol block it averaged 86 days. 

 “First, actual demand must be captured. This must be supplemented by adequate budgetary provisions, higher administrative expenditure, sufficient staffing on the ground and timely wage payments. All these elements need to work together to ensure meaningful worker participation, which so far has not happened,” Buddha added.