THE SIGNIFICANCE AND LIMITATIONS
OF INDIA’S NATIONAL RURAL
EMPLOYMENT GUARANTEE ACT IN
ADDRESSING RURAL POVERTY
Smita Gupta
The post-1990s are marked by the pursuit of neo-liberal policies:
Deflationary macroeconomic policies and falling public
development expenditure as pc of GDP on public works,
employment generation, rural infrastructure, social services,
etc.
Trade liberalization with farmers loosing protection against
international price fluctuations
Structural Adjustment Policies resulting in higher input
costs and withdrawal of the state from credit, extension
services, procurement, price support and infrastructure.
An unparalleled and comprehensive crisis took firm root
in rural India, resulting in peasant suicides, starvation
deaths, impoverishment, and hunger.
RURAL CRISIS
Growing unemployment and underemployment
Falling purchasing power
Declining per capita availability of foodgrains
Reduced farm incomes and real wage growth
Indebtedness and land alienation, esp. for
small and marginal farmers.
Deceleration in agricultural growth, productivity
per worker and rural non-agricultural employment
growth
Slackening pace of poverty reduction and
worsening poverty amongst marginalized social
groups and ethnic minorities
The distress resulted in electoral defeat for the
NDA Government at the Centre, and the UPA
government promised to enact the National Rural
Employment Guarantee Act, which has the potential
of turning around the agrarian distress.
However, forces within the government itself
opposed a full-fledged employment guarantee and
produced various diluted and inadwquate versions
of the Draft Act
Interventions by Left parties and pressure from
mass organizations, social movements, and NGOs
resulted in the successful enactment of an improved
guarantee.
Broadly speaking, three different positions are taken
on NREGS:
1. Left-Keynesian: it is both desirable and feasible
for broad-based equitable growth to revive
agriculture and the rural economy by the creation
of productive assets and the multiplier effects of
demand expansion in a situation of excess
capacity, unemployment and idle resources.
2. Neo-liberal: It is neither desirable nor feasible on
the grounds of non-affordability, corruption, and
preference for human capital and infrastructureled growth models.
3. Liberal: it is the ‘human face’ of globalization, a
kind of ‘social safety net’ which is desirable but
feasible only under very restricted conditions of
fiscal discipline.
The Employment Guarantee Act is a
step towards the right to work, as
an aspect of the fundamental right
to live with dignity
It is a recognition that the state
cannot retreat from rural
development and is responsible to
ensure food and livelihood security
for the masses
The neo-liberal state had begun to intervene more and more aggressively against the poor and rural India. The NREGA is a recognition that the state
cannot retreat from pro-poor development and is responsible to ensure food and livelihood security
The National Rural Employment
Guarantee Act 2005 is a law whereby
any adult who is willing to do unskilled
manual work at the minimum wage is
entitled to being employed on local
public works within 15 days of
applying, with a guarantee of 100
days of unskilled manual work per
household per year
Currently it covers half of rural
India, to be extended to the rest
within 4 years
NREGS is a “demand driven”
programme and employment
is to be provided to eligible
workers on demand, within
15 days.
Step
Step
Step
Step
1
2
3
4
Registration
Verification
Issuing Job Cards
Application
Unemployment allowances
If Employment is not provided within 15 days of receipt of
application, the worker shall be entitled to a daily Unemployment
allowance(7(1))
Rates
(7(2))

For First 30 days

For the remaining period of
the Financial year

Employment wage +
Unemployment
allowance

One fourth of the wage
rate.

Not less than one half of
the wage rate

Equal to the wages for
100 days of work in a
financial year (7(3d))
Minimum Wage




A person working for 7 hours would normally earn a
wage equal to the wage rate(SchI(8))
Minimum wage fixed by the state Government under
the minimum wage Act,1948;
Centre may fix wages, at not less than Sixty rupees
per day (6(1))
The Act permits productivitylinked wages under piece
rate, with due protection
Mandatory Worksite Facilities for laborers

Safe drinking water

Shade for children and periods of rest

First-aid Box for emergency treatment and minor
injuries

Depute one woman worker to look after five or more
children below the age of six years of women
laborers at the wage rate
Permissible works in order of priority(SchI(1))









water conservation;
drought proofing ;
irrigation canals including micro and minor irrigation
works;
provision of irrigation facility to land owned by
households belonging to the SCs and STs or to land of
land reforms and Indira Awas Yojana beneficiaries;
renovation of traditional water bodies;
land development;
flood control and protection works;
rural connectivity to provide all-weather access; and
any other work which may be notified by the Central
Government in consultation with the State Government.
OUTCOMES [field reports]






Reduction in distress out-migration due to
availability of additional income and work
creation and repair of rural infrastructure like
roads and water bodies
Retention of children in school and purchase of
books for them
Greater interest in local area development due
to flow of funds and village meetings
Changing local dynamics in many places with
the recognition by workers that they are right
holders
Expansion in membership and activities of
workers’ and peasant organizations
NREGA and Poverty Reduction
Potential: NREGA holds a huge promise for poverty reduction
with a supplementary average annual household income of Rs
6000. for this, wages, work days and aggregate expenditure on
the Scheme should be high if the Programme has to make any
significant dent on poverty. Creation of social and economic
infrastructure too would go a long way in reducing poverty.
Experience: The poverty reducing potential is severely
undermined through:
non-recognition of eligible persons as right holders;
inability to make claims due to imposition of a host of arbitrary
and discretionary eligibility conditions;
non-fulfilment of entitlements guaranteed under the Act, in
particular days of work and wages;
restrictions on the nature of permissible works;
absence of work in the most food-deficit rainy season due to
focus on manual labour and earth works
CURTAILMENT OF ENTITLEMENTS
A. Definition of Household
On the basis of common kitchen not nuclear family,
number of eligible workers per household >3
This reduces per capita entitlements
Disenfranchises female headed households and
widowed/separated/estranged married daughters in
natal and marital homes
B. Exclusion of Eligible Persons
Elderly
Migrants
Lack of documentary evidence not required by the law
Divorced/widowed/separated women in natal/marital
homes as separate nuclear households
States
All India
West Bengal
Uttaranchal
Uttar Pradesh
Tripura
Tamil Nadu
Sikkim
Rajasthan
Punjab
Orissa
Nagaland
Mizoram
Meghalaya
Manipur
Maharashtra
Madhya Pradesh
Kerala
Karnataka
Jharkhand
Jammu & Kashmir
Himachal Pradesh
Haryana
Gujarat
Chhattisgarh
Bihar
Assam
Arunachal Pradesh
Andhra Pradesh
Percentage
Percentage Rural Households Issued Job cards
60.00
50.00
40.00
30.00
20.00
10.00
0.00
C. Non-payment Of Minimum Wages
Workers are earning no more than 40 to 60 per cent
of minimum wage, ranging from Rs 16 to Rs 40 per
day
Due to unrealistically high work norms under
productivity linked piece rates;
Inadequate identification of the component tasks;
No differentiation for the elderly, women and ecology;
Administrative inadequacies in task specification, soil
identification, lift and lead provision, measurement,
both in terms of procedures and adequacy of staff
D. INADEQUATE WORK
GENERATION DUE TO
RIGIDITIES IN PERMISSIBLE
WORKS AND
ADMINISTRATIVE
INADEQUACIES
States
All India
West Bengal
Uttaranchal
Uttar Pradesh
Tripura
Tamil Nadu
Sikkim
Rajasthan
Punjab
Orissa
Nagaland
Mizoram
Meghalaya
Manipur
Maharashtra
Madhya Pradesh
Kerala
Karnataka
Jharkhand
Jammu & Kashmir
Himachal Pradesh
Haryana
Gujarat
Chhattisgarh
Bihar
Assam
Arunachal Pradesh
Andhra Pradesh
Work Days
Work Days Per Registered Household
70.00
60.00
50.00
40.00
30.00
20.00
10.00
0.00
E. INADEQUATE WORKSITE FACILITIES
F. NON-PAYMENT OF UNEMPLOYMENT
ALLOWANCE OR COMPENSATION
All these combine to result in
G. UNDERUTILIZATION OF FUNDS AND
LOW EXPENDITURE
States
All India
West Bengal
Uttaranchal
Uttar Pradesh
Tripura
Tamil Nadu
Sikkim
Rajasthan
Punjab
Orissa
Nagaland
Mizoram
Meghalaya
Manipur
Maharashtra
Madhya Pradesh
Kerala
Karnataka
Jharkhand
Jammu & Kashmir
Himachal Pradesh
Haryana
Gujarat
Chhattisgarh
Bihar
Assam
Arunachal Pradesh
Andhra Pradesh
Percentage Expenditure against Total Available Funds
Financial Performance During 2006-07
120
100
80
60
40
20
0
CONCLUSION
• Teething trouble apart, the same forces of
fiscal conservatism that earlier tried to
dilute the Act are now trying to curtail
entitlements and minimize expenditure
• However, the NREGA offers an
unprecedented opportunity to initiate
broad-based growth through poverty
reducing employment generation and
consequent demand expansion
• Therefore, the recent reports of
mobilization and struggles by rural workers
for the full and proper implementation of
the NREGA is good news!