MGNREGA Design and Implementation analysis and suggestions. Based on CAG report and Government of India official Documents.

1. MGNREGA Design & Implementation 1
INTRODUCTION
Diganta Roy, Devendra Dave
MICA

2. MGNREGA DESIGN & IMPLEMENTATION 2
Sr. No Topics Page Number
1 Introduction 3
2 MGNREGA Until Now 4
3 Problems with the scheme 5
4 What are the main causes for the problem 7
5 key approaches to resolve the problem 8
6 Conclusion 9
7 Annexure-I 10
8 Annexure-II 11
9 Annexure-III 12
10 References 13

3. MGNREGA DESIGN & IMPLEMENTATION 3
INTRODUCTION
Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) came into existence
in the year 2006. It is a scheme that is sponsored by the Central Government and its major
objective is to provide livelihood security to the poor people living in rural areas. MGNREGA
aims at providing minimum 100 days of wage employment to the rural poor. The work provided
is primarily unskilled manual work.
The Act broad objectives are as follows:
1. Improve the livelihood security of the poor by providing him with manual unskilled work
that builds the infrastructure of the beneficiary area.
2. Aim at harnessing the natural resources of the area along with making the population a
more productive population
3. Empower women by providing 1/3 of reservation from all the beneficiaries.
During the five year period from 2008-2013, a total amount of Rs 36420 crore was invested
under the MGNREGA program. The major purpose of studying MGNREGA is to understand the
overall impact of the scheme. A huge amount of resource was invested in program
implementation and it is essential for the Government as well the policy makers to understand
the overall impact of the program after 9 years.
MGNREGA scheme has been a partial success. As per the data shared by Jayati Ghosh-Professor
of Economics Jawaharlal Nehru University stated that over 50 million household have been
covered under the scheme at quite a low government expenditure that comes to 0.3% of total
GDP. Majority of the beneficiaries are women with about close to Half are either Dalits or
Adivasis. The reason for its partial success is that the program has been plagued by corruption ,
less number of poor districts covered and lower budget allocation to the program.
The structure of the paper is as follows
1. Introduction of MGNREGA explaining when it came into existence, the purpose behind
its existence
2. In introduction, briefly explaining about the success of the program.
3. Analyze the 10-year impact of the program.
4. Analyze the reasons for the partial success of the MGNREGA scheme.
5. Recommendations on the future implementation of the scheme

4. MGNREGA DESIGN & IMPLEMENTATION 4
The paper will not only help us understand the current impact of the scheme but will also help us
analyze where the scheme can be improved to have a long term economic benefit.
MGNREGA Until Now
The Eleventh Five year plan had estimated that India would have nearly 30 Crore people living
below poverty line, and that the number of people below poverty line had in fact increased in
most states of India. As of today, MGNREGA covers all of rural India.
Performance Parameters:
The brief expenditure report and some performance parameters are presented at ANNEXURE-I.
The amounts spent and the correlation between Number of households covered and the number
of poor people in that particular state. Out of the total release form the government of
Rs.23579.18 crores, out of that only Rs.18270.14 had been spent on wages, ANNEXURE-II..
This gives an idea of the scale at which MGNREGA operates. In the financial year 2012-13, a
total of 4.16 Crore households were given employment and 141 crore persondays of employment
were generated
.

5. MGNREGA DESIGN & IMPLEMENTATION 5
Problems with the Scheme:
Looking Closely at the data we see that:
We can see that the actual spend on the scheme has not increased rather it declined in the last
year. Also looking at the graph below we see that apart from states like UP, Bihar, Maharashtra
and Odisha, all other states show positive correlation between the No. of households covered and
No. of poor.

6. MGNREGA DESIGN & IMPLEMENTATION 6
There is also the issue of mismanagement of funds, as funds were released by the center without
adjusting the unspent balance.
and excess release of funds by the government:

7. MGNREGA DESIGN & IMPLEMENTATION 7
What are the main causes for the problem (long term and short term)?
The main problem facing MGNREGA is the effective implementation of the program at ground
level. Some of the long term and short term problem classification are as follows.
Short term problems:
1. Inadequate Awareness
One of the major challenges is that a rural poor gets the right to demand for work for a
period of 100 days but the average number of workdays generated under this scheme is
less than 50. The main problems is that government has failed to generate enough demand
under this scheme. During the period of 2009-2010 a severe drought year only 54 days of
work per household was generated. People have no awareness about the basic facilities
under MGNREGA such as job cards, minimum wage account, and unemployment
allowance. One of the plausible solution to the problem is training the government officials
so that they can create awareness among the rural population.
2. Discrimination
“This scheme has facilitated people to earn their income without any gender bias or
discrimination. But a large number of cases have been reported of discrimination from
backward regions of the country. Woman are told that work meant under the scheme is not
meant for them since it involves hard labour. Thus Government needs to work at the
grassroot level to solve the problem of discrimination.”
Long term Problems:
1. Unplanned implementation of the scheme: Other than the Karnataka and West
Bengal panchayat the other panchayats in the country have no experience in
implementing such a large level scheme such as MGNREGA. Central and State
government representatives stated that the entire budget of Rs 40000 crore spent on the
program can be better used with a proper structural implementation to the program.
2. Difficulty in financing the scheme: The budget set aside for financing MGNREGA
started with a total allocation of Rs 11300 crore in the year 2006-2007 as is currently

8. MGNREGA DESIGN & IMPLEMENTATION 8
estimated at about Rs 35000 crore. But the decrease in tax-GDP ratio over the years
has proved to be major roadblock in financing the scheme.
Tax-GDP Ratio
2007-2008- 0.12
2010-2011- 0.10
2015-2016- 0.09
3. High Level of Corruption
“It has been clearly revealed by statistics that due to high level corruption a very
minimal amount reaches the worker. Bribes as high as Rs 50 are paid in order to
procure a job card.”
Other cases of corruption are fake muster roll entries, over writing, false name etc.
key approaches to resolve the problem (such as policies and programs)
1. To avoid payment delay- To ensure that the payment to the rural area is given on time,
an SMS alert is being setup . This will allow to constantly keep a check on the muster as
to whose payment is made and whose is remaining. This idea has already been
implemented in the year 2014 and has shown significant results. For instance Timely
payment increased from 28% in 2014 to 70% in 2015. [Reference Link -
http://nrega.nic.in/Netnrega/WriteReaddata/Circulars/1048MGNREGA_round_up14_15.
pdf]
2. Protection of the entitlements of rural workers:
Government is looking to regularly contact Rozgar Diwas atleast once in a month to
address the grievances of the workers such as Job card,minimum employment allowance
etc. Structured Planning- According to the government report of MGNREGA round up of
2014-2015 and way ahead of 2015 new work areas have been identified for execution
during 2015-2016

9. MGNREGA DESIGN & IMPLEMENTATION 9
Source for the table
http://nrega.nic.in/Netnrega/WriteReaddata/Circulars/1048MGNREGA_round_up14_15.pdf
Conclusion:
We see that massive amount of funds have been pumped into MGNREGA over the past
few years, and due to a multitude of factors like ineffective delivery of funds, inefficient training
of manpower managing the operations, release of excess funds from the central government and
corruption among the contractors, the efficiency of the scheme has been severely affected.
Inspite of pumping in nearly 156000 crores the improvement in the number of poor has not been
improved to a desirable extent.
It is our suggestion that, instead of concentrating entirely on temporary employment of
100 days per family, the huge amount of investment going into the scheme can be used to plan
out some modifications where there is development of a skill building center in the villages and
thereafter some assistance in setting up their own cottage industries. This will not only prove to
provide them employment in the short run, but would make them self sufficient in the long run as
well. But the implementation and planning of such an elaborate plan needs commitment and
extensive planning and coordination among the Village Panchayats, State governments and the
Center, but it is beneficial in the long term to develop permanent capabilities for the rural poor
then try to feed them on a daily basis by spending lakhs of crores as per the current plan of
implementation.

10. MGNREGA DESIGN & IMPLEMENTATION 10
ANNEXURE - I

11. MGNREGA DESIGN & IMPLEMENTATION 11
ANNEXURE - II

12. MGNREGA DESIGN & IMPLEMENTATION 12
ANNEXURE-III

13. MGNREGA DESIGN & IMPLEMENTATION 13
References
1. Aggarwal, H. (2010, February 9). National Rural Employment Guarantee Act - A review.
Retrieved November 25, 2015, from http:/www.policyproposalfor
india.com/article.php?article-id=169&languageid=1
2. LJ, C., & J.M, V. (2012, June 1). MAHATMA GANDHI NATIONAL RURAL
EMPLOYMENT GURANTEE ACT, 2005 (MGNREGA): ISSUES AND
CHALLENGES. Retrieved November 25, 2015, from http://www.ijmra.us/project
doc/IJPSS_JUNE2012/IJMRA-PSS1123.pdf
3. CAG Report no-6 of 2013. (2013, April 23). Retrieved November 25, 2015, from
http://saiindia.gov.in/english/home/Our_Products/audit_report/Government_Wise/union_
audit/recent_reports/union_performance/2013/Civil/Report_6/Report_6.html
4. MNREGA Report to the People. (2013, February 2). Retrieved November 25, 2015, from
http://nrega.nic.in/netnrega/WriteReaddata/circulars/Report_to_the_people_English2013.
pdf