Mahatma Gandhi National Rural Employment Guarantee Act: A Namesake Guarantee

The Bhartiya Janata Party (BJP) government at the centre has been making tall claims about expanding the budget allocation for the Mahatma Gandhi National Rural Employment Guarantee Scheme (Act) (MGNREGA), in order to provide relief to the rural poor during the covid pandemic. The situation is full of irony. Modi (in)famously mocked MGNREGA as a mark of the failure of previous governments to provide stable and quality employment. Previous governments compensated for their failure by paying people for filling empty pits with sand, he had said.

It didn’t even take a single term for him to bite his own words. Faced with the harsh reality of highest unemployment in 45 years, he had to fall back upon MGNREGA. This happened even before the pandemic hit. In the wake of the pandemic, the finance minister fell back upon this scheme to provide relief to the rural poor, agricultural labourers, and migrant labourers.

The pandemic induced economic distress pushed up the demand for jobs under the MGNREGA. The government mathematically increased the NREGA budget allocation to meet the rural distress but that has been quite inadequate. Besides, much of it has remained on paper and the scheme has failed to meet the rural employment demands.

Pre-Pandemic MGNREGA Allocations

Despite the fall back upon this scheme during the pre-pandemic employment crisis, the budget allocation for MGNREGA was quite low. We have here the relevant data for three years prior to the pandemic:






MNREGA Expenditure by Central Govt. (Rs in Crore)




Work days per Worker (No of days per year in comparison to guaranteed 100 days per year)




Average Wage Rate





Thus, the budget allocation was poor, and the wage rates paid were far lower than the prevailing market rate for unskilled manual work. Only half of the stipulated 100 days could be given to a worker on average.

For broad comparison, the figures of total allocation to MGNREGA during the United Progressive Alliance (UPA) government are useful. From 2008 to 2014, this was Rs 1.91 lakh crore, as compared to Rs 2.95 lakh crore under the BJP led government from 2014 to 2020. The number suggests a mathematical increase but taking into consideration the inflation and lagging growth rate of the economy, this small increase was insufficient to address the question of rural employment. By 2019-20, only 40.60 lakh workers in the country were allocated a full quota of guaranteed 100 days’ work. The situation worsened with the pandemic.


Minor Budget Increase, Major Shortfalls

In the Union Budget of 2020-21, the government had originally allocated Rs 61,500 crore for the MGNREGA scheme, which was lower than 2019-20 revised estimates of Rs 71,001 crore by 13.4 per cent. In May 2020, after the lockdown in March 2020, as part of the celebrated 20 lakh Covid relief package, the Union finance minister Nirmala Sitharaman allocated an additional Rs 40,000 crore. But as an estimated 8 crore migrant workers marched back to their native villages, it pushed up the demand for work under the scheme. The workers required work and cash for their survival.

This additional allocation of Rs 40,000 crore failed to address the acute unemployment in rural areas during the pandemic. In 2020-21, the demand for work under the NREGA increased by 43% to 13.3 crore, as compared to 2019-20. Even these figures do not fully reflect the reality. The full demand for work often does not get reflected in the official data, as the Panchayat Secretary and the Sarpanch (Pradhan) are unwilling to issue receipts of application to the NREGA workers. Their preferences, in the allocation of work, often depend on political and social considerations. This practice, one can surmise, would have increased in the pandemic year due to the extent of the distress. 

The government data reflects both the increase in demand for work and the shortfall in opportunities. Only 71.99 lakh workers were able to get the guaranteed 100 days of work in 2020-21 – the first year of covid pandemic – despite the increased budget allocation. The average work-days allocated for 2020-21 remained at a paltry 51.52 days per worker. The effective wage rate increased marginally to Rs 200.72/day in 2020-21 from Rs 182.09/day in 2019-20.

Because migrant workers earn an average wage of Rs 400-600 for unskilled manual work in metro cities, this was only a token increase. It barely compensated for their loss of earnings due to the lockdown induced forced migration, for which they are not responsible in any way. The meagre 50 days of work, on an average, available in the whole year for 2020-21, only pushed them further to a corner. Only a small proportion of the migrant workers were able to resume their normal work in the then prevailing situation.


Continued Shortfalls During the Second Wave

During the second wave, the government failed to meaningfully expand the NREGA budget allocation. As stated earlier, the allocation for 2020-21 was Rs 61,500 crores. It was expanded to Rs 1,11,500 crore after additional allocation following the lockdown. In the 2021-22, this allocation was pegged at only Rs 73,000 Crore. This is 34% less than the revised estimates of 2020-21, and this reduction happened amidst the second wave.

With the budget allocation running out fast by the middle of the year, and many state government balances for the scheme running in red, the government has raised a supplementary allocation of Rs 47,039 crore. The revised estimate for 2021-22 for MGNREGA can be liberally estimated to be around Rs 1,20,000 crore. With this central allocation, and even after making an exaggerated and unrealistic assumption that all this allocation would be paid as labour expenses, per worker allocation for 15 crore active workers shown on the website comes to be around Rs. 8000 per worker.

At the central government announced wage rate of Rs 202 per day, only 39 days of average work can be granted per worker for the year with this allocation. This is once again assuming that all the allocation would be utilized as labour expenses, which is far away from the reality. The reality is that only two-thirds of the allocation will count towards labour expenses.

It is no surprise that the state governments are complaining that the share of the central government in supposedly central sponsored schemes is regularly coming down, and it is they who must foot the bill to keep the schemes afloat. Under the pandemic situation, when the state government finances are already stretched, this becomes even more difficult, and it is the schemes that suffer.


It is no surprise that there are multiple complaints at the ground level regarding the operation of the MGNREGA. Non acceptance of applications for work, non-allocation of work, non-payment of wages, and so on, are quite commonplace. It boils down to a great extent to faulty allocation. As per Reetika Khera, economist and associate professor, Indian Institute of Technology, Delhi, an allocation of at least 3 lakh crores is needed to guarantee 100 days of work in meaningful way.

Guaranteeing work is clearly not one of the priorities of the government. It is busy pursuing privatization, pushing anti-worker labour codes, and farm bills which had to be taken back due to the sustained farmers’ movement. NREGA workers continue to earn a pittance. Just to add to the irony of the situation, the Minimum Wages Act, 1948, is being thrown to the dustbin of history with the new labour codes.

The covid pandemic has only exposed the limited budget allocation and structural deficiency of MGNREGA. Exaggerated claims of BJP government about providing relief through it during the pandemic are rather far-fetched and quite distant from factual and ground realities.