NREGA: Historical overview, Relevance and Challenges

Over the last few decades, several legislations like the Right to Education and National Food Security Act have enriched the constitutional rights of Indian citizens. Through the various judgements passed by the Supreme Court, Article 21, i.e, Right to Life has stated that Right to Life isn’t merely survival and includes within it’s gamut ‘right to live with dignity’ as well as ‘right to livelihood’. This meant “Right to Work” being within the scope of “Right to Life”. To give effect to this sentiment, National Rural Employment Guarantee Act(NREGA) became a landmark legislation to enable “Right to Work” as a justifiable right (Libtech,
2020) . At the inception of the act in 2005, at least 100 days of guaranteed work every year at minimum wages, to at least one able-bodied person in every household was to be provided (NREGA, 2005). After obtaining job cards from the local administration, they are assigned to specific projects, primarily decided by the Gram Sabha. The works predominantly require unskilled manual labour with no or limited use of machines (Narayanan, S., 2020). The provisions under the act which amounts to justiciable rights are: the right to work on demand, the right to unemployment allowance if not provided with work within 15 days, right to a delay compensation if wages are delayed beyond 15 days, right to minimum wage, essential worksite facilities, to name a few ( Libtech, 2020).

The purpose behind the adoption of NREGA, as stated by NREGA, 2005 was that due surplus agricultural labour mounting to disguised unemployment was prevalent in rural India, there was an urgent need to for productive absorption of under-employed and surplus labour in the rural sector (NREGA, 2005). However, this sentiment wasn’t new, it has antecedents within India and programmes across the world. In the 1960s, the Third Five Year Plan referred the need to provide 100 days of employment. In 1972, due to a serious drought, Maharashtra introduced an Employment Guarantee Scheme (EGS) which was the inspiration behind NREGA. Social protection programmes have included workfare programmes, without the guarantee, such as the Food for Work Programme. In fact, the introduction of NREGA merged the then schemes of Jawahar Gram Samridhi Yojana, Employment Assurance Scheme and Sampoorna Grameen Rojgar Yojana (SGRY) (Narayanan, S., 2020). This essay would explore at some of the historical underpinnings behind NREGA, its relevance and some of challenges present in todays’s scenario.


As elucidated by Jean Dreze, the introduction of Famine Codes in 1880 by the colonial government, which was the backbone of the famine relief strategy, introduced massive public works.The British admitted through the Famine Commission Reports, that “the Famines in India, are rather famines of work than food”. It was recognised the physical availability of food wasn’t the problem, the problem was in the access to food acutely faced by the poor. The primary objective of this strategy was to provide employment at subsistence wages, at a reasonable distance from their homes. Additionally, a ‘gratuitous relief’, in the form of doles and kitchens was to be provided to people who were unable to work (Dreze, 1990). While anxiety to prevent deaths being the sole objective behind the British adopting public works, however proper targeting was ensured that only the people in need would be the beneficiaries.

The post colonial public works programmes were of three types, i.e, drought driven (Drought Relief Manuals), supply driven, which is the yearly budgetary allocation by the Ministry of Rural Development and demand driven, which are the ‘guaranteed employment’ programmes such as the Employment Guarantee Scheme of Maharashtra. Post colonial continuities could be seen in the Droughts Relief Manuals provided by the post Independent government. As Harsh Mander argues that this could be seen as a reincarnation of the Colonial Famine Codes, the main objective of the colonial government was to save lives, at a minimal cost to the colonial exchequer. Ironically, revised versions of these colonial Famine Codes continue to be the principal guide of the government in times of natural disaster in Independent India (Mander, H., 2009). Stern “tests” were conducted in the colonial era to discourage most and only those persons were in drastic need to report for work (Mander, H., 2009). Evidences suggest that the work conditions were comparable with the concentration camps in the Holocaust. An improvement could be seen in this regard post Independence, where much better work conditions were implemented. However, the wages still remain fixed at subsistence levels, due to the strong agricultural lobby, the government had to fix the wages at bare minimum and just enough for survival.

The success of the Employment Guarantee Scheme (EGS) in Maharashtra, in late 1970s, became a motivation for the Central government to adopt NREGA at a national level. EGS was officially adopted in 1978, the chief architect being Mr V.S.Page. Before the adoption of EGS, a period of drought crisis had occurred in the late 1972 till early 1974 in Maharashtra. The Central government intervened due to the severity of the drought and introduced Central Government Crash Scheme for Rural Employment. The success of providing relief through rural public works during the crisis and also the rural poor demands, motivated Maharashtra Government to formally institutionalise EGS (Herring, R., J. & Edwards, H., 1983). The progressive thinking of leaders like Page and Dandekar in their conceptualisation of rights based approach of public works had genuine concern for social upliftment. To provide gainful employment EGS defined labour intensive works as the ratio of unskilled labour to skilled labour and material costs to be 60:40 (Bagchee, A., 2005). Despite some limitations, the far-reaching impact was of greater participation of women in labour force, equal wages for both men and women, security guarantee at work sites, safer environments for women to work, to name a few. The success was so widely appreciated that government officials from other states were sent to these districts to study the functioning of EGS, with an aim to replicate it in other places as well.

The Sampoorna Gramin Rojgar Yojana(SGRY), 2001, the predecessor of NREGA had certain limitations structurally with limited budgetary allocations, and had “operational guidelines” as to determine the eligible households/individuals. Hence, targeting a few who would benefit under SGRY which weren’t available for all to benefit and was a rights based approach, which was seen corrected by the introduction of NREGA.


NREGA departs from most of its predecessors in several key respects. NREGA aimed to create durable assets such as drought-proofing, flood management, and provide empowerment to the poor. It also aimed to strengthen decentralisation, participatory planning and panchayati raj institutions (PRIs), and provide transparency and accountability in governance. Along with a demand-driven approach with a guarantee, it included additional parts meant to strengthen entitlements, ensure transparency and promote a bottom-up approach (Narayanan, S., 2020). Gram Panchayats were given an active role. The kind of work was at the discretion of Gram Sabha according to the developmental priorities of the area. In terms of transparency, programme websites provided real time data on a large number of parameters associated with implementation. The involvement of the civil society and people in social audits, also allowed an important feedback mechanism and accountability (Narayanan, S., 2020).

Especially, today, in the midst of a pandemic, precarity of employment in India has been at an all time high, which has been a concern for a couple years now. On March 26th, 2020, Finance Minister announced a relief package of Rs 1.7 trillion under Pradhan Mantri Gareeb Kalyan Yojana(PMGKY). Under PMGKY, MNREGA wages was increased to Rs 20, leading to Rs 2000 benefit annually to a worker (Libtech, 2020). However, this claim is misleading due to the fact that Ministry of Rural Development had already issued an increase in wage rate and was due to the fact of adjustment of wage rate to the inflation. Due to the unemployment rates being at an all time high in 2019, according to the Periodic Labour Force Survey data. There is an increased need for enlargement of NREGA budget, due to it’s high propensity to consume would act as a means to stimulate demand and help revive the slowdown of the economy (Dreze, 2020).

Despite many scholars questioning the relevance of NREGA, it’s relevance and impacts have been well documented in various studies to favour it’s supporters. The importance of NREGA as elucidated by Sudha Narayanan, in today’s context is primarily due to the reasons such as

  1. The workfare being a primary element for social protection which provides a safety net for those who are most vulnerable.
  2. The answer to the question of whether NREGA has delivered on its promise is that depute its shortcomings, NREGA has significantly improved the rural sector especially addressing deprivation.
  3. The far reaching contribution of NREGA has been in implementation of the rights of rural workers. 

The impact especially on the women have been manifold. According to the NREGA survey 2008, the interviews conducted on women from the sample provided insights of the significance of NREGA and highlighted the ‘transformative’ potential of NREGA on social and economic security (Nayak,N. & Khera, R., 2009). Many admitted that, if not NREGA, they wouldn’t have looked for employment outside the agricultural fields and would remain in the confinements of their homes (Nayak,N. & Khera, R., 2009). The attractiveness which has led to a marginal increase in female labour force participation has been of being locally available, regularity and predictability of working hours because of being a government work, unlikely nature of work conditions being exploitative and being accepted as “dignified” work and being relatively better paid (Nayak,N. & Khera, R., 2009).

Some of the studies, which has been documented in a report by Mehtabul Azam, have recorded far reaching impacts are:

  • Ravi and Englar (2009) found that NREGA significantly increased expenditure on food by 40 percent and non food consumables by 69 percent. They also find that the program improves the probability of holding saving by 9 percent.
  • Liu and Deininger (2010) found significant increase in calorie and protein consumption.
  • Pankaj and Tankha (2010) found that women gained significantly due to the fact of becoming independent wage earners, because of the paid employment opportunity.


Given the wide literature available of the far reaching impacts of NREGA on rural population, which gives relevance to the NREGA. It has yet to fully utilise it’s potential due to various loopholes present in it’s implementation. Some of the challenges elucidated by scholars such as Dreze and Ankita Aggarwal are delayed payments, low budgetary allocations, flawed financial institutions, problems with linkages to Aadhar, weak grievance redressal, over dependence on technology and misappropriation of funds by the government.

While all these challenges compound to the crisis of the relevance of NREGA and each deserves special attention. This essay has highlighted one challenge prevalent which is caused due to the introduction of National Electronic Funds Management System (NeFMS) introduced in 2017. Through NeFMS wages get transferred directly into the bank accounts of workers. However, they have been given no scope to challenge violations of their rights either by the state or the centre (Bedi, N., 2019). The delayed wage payments along with little to no information has exacerbated the vulnerability of these workers, through which misappropriation of funds become quite easy for the middlemen. The weak of norms for accountability further worsens the situation.

Over dependence on technology, denying payments who don’t hold Aadhar cards, as well as slowness in administration in transferring funds has led to a distressing situation for the workers and the NeFMS in this regard isn’t a step in the right direction.

However as seen in the case of Jharkhand, political will, sustained pressure from the public, accountability and administrative efficiency can help utilise the potential of NREGA. A collaboration of government with civil society to conduct social audits to understand the efficiency of the implementation of NREGA would be lessons that all the states can incorporate.


To summarise, in essence, NREGA is a pertinent legislation which has proved to transform rural livelihoods, despite the constraints and challenges inherent in the system. The recent announcement of Tamil Nadu introducing an urban employment scheme like the NREGA only further supports the essay’s argument of it’s relevance. As seen in the case of Maharashtra, a positive government intervention can help alleviate poverty and hunger, and have a significant impact overall. The way forward for the government is to to accept the importance of NREGA, give it due budgetary allocations along with addressing the challenges as has been highlighted through this essay.


  1. Azam, M.(2012), The Impact of Indian Job Guarantee Scheme on Labor Market Outcomes: Evidence from a Natural Experiment. IZA Discussion Paper, abstract=2062747
  2. Bedi, N.(2019), MGNREGA in a digital trap, Civil Society Online, https://
  3. Mander, H.(2009), Barefoot: Colonial legacy of famine codes, The Hindu, https:// codes/ article16123444.ece

  5. NREGA Bare Act, 2005,
  6. Dreze, J.(1990), Famine Prevention in India, pp 19-35.
  7. Dreze, J.(2020), Budget 2020: Giving NREGA Workers Their Due, The Quint, https:// by- jean-dreze
  8. J. Dreze and R. Khera, 2009, The Battle for Employment Guarantee, Frontline 26(1) – http://
  9. Narayanan, S(2020), The Continuing Relevance of MGNREGA, The India Forum, https://
  10. Shankar, S., Gaiha, R. & Jha, R.(2011): Information, Access and Targeting: The National Rural Employment Guarantee Scheme in India, Oxford Development Studies, pp 69-95
  11. Herring, R., J. & Edwards, H.(1983), Guaranteeing Employment to the Rural Poor: Social Functions and Class Interests in the Employment Guarantee Scheme in Western India, World Development, pp 578-589.
  12. Bagchee, A(2005), Political and Administrative Realities of Employment Guarantee Scheme, Economic and Political Weekly.
  13. Aggarwal, A.(2016), The MGNREGA Crisis: Insights from Jharkhand , Economic and Political Weekly.
  14. Libtech India(2020), Length of the Last Mile: Challenges and Hurdles in NREGA wage payments, pp. 17-114.
  15. Nayak, N. & Khera, R.(2009), Women Workers and perceptions of the National rural employment Guarantee act , Economic and Political Weekly.

The views expressed in this article are the author's own.

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