Doubts about the NDA’s commitment to NREGA have been laid to rest: The prime minister wants it, seeing wisdom in a scheme which aims to alleviate rural unemployment and distress. By SWATI DEB

Do you think, I will put an end to the scheme? My political wisdom does not allow me to do it. This (NREGA) is a living monument of your failure to tackle poverty in 60 years. With song and dance and drum beat, I will continue with the scheme. - Prime Minister Narendra Modi in the Lok Sabha.

And so, 10 years after it was conceived, the UPA’s (and Sonia Gandhi’s) flagship scheme to address economic distress in rural India, is being taken forward and “transformed” ironically, by the NDA.

Here’s how Chaudhary Birendra Singh, Minister for Rural Development & Panchayati Raj, envisaged it in a recent interview: “We believe we can give the NREGA a new dimension in the coming years by using it extensively for the creation of quality assets in villages. We are working towards a convergence of the NREGA with departments of state governments and central schemes.”

The plans are nothing less than ambitious: Any job seeker under NREGA should be provided work within 15 days of his or her request. If not the state government has to provide them an unemployment allowance. Plans include to train 1.8 million NREGA workers in the next two to three years. Those who have completed 100 days of unskilled labour under the scheme will be eligible for skill development training. The effort is also to help them with the banking system.

One could be forgiven for asking, why and what happened? By all accounts, NREGA was floundering in the last years of the UPA as the funding crunch bit deep. There followed further cuts by the NDA Finance Minister Arun Jaitley in his interim 2014 Budget (all of which underscored what little respect either governments had for the legal guarantees enshrined in the NREGA Act).

In October 2014, the Congress noted with mounting anxiety what it claimed were the Modi government’s moves to derail the much hyped rural jobs scheme. Party spokesman RS Surjewala said: “Wages have been frozen in real terms, and long delays in wage payments have further reduced their real value. The NREGS Act’s initial provisions for compensation in the event of delayed payments have been removed.”

In fact, Nitin Gadkari, then heading rural development, planned to limit the scheme to just 100 days of employment, reduce the area covered under NREGA from 6,500 blocks to 2,500 and bring parity in wages vis-à-vis cost of material. He had good reason: There were instances, as in Nagaland, where funds meant for NREGA were kept aside as a “Convergence Fund” to be utilized by the MLAs. Twelve states (Andhra Pradesh, Assam, Chhattisgarh, Haryana, Himachal Pradesh, Kerala, Meghalaya, Nagaland, Odisha, Punjab, Sikkim and Uttar Pradesh) had exhausted their funds by Dec 2015, meaning there would be no money to pay workers registered under NREGA until April 2016.

Loopholes and gaps in implementation resulted in some states being able to deliver 40-45 days of work, others like UP and West Bengal could manage only 38 days last year, the lowest ever. It left the beneficiaries feeling cheated,add to that delays in payment which confirmed the impression of widespread corruption and maladministration in the handling of the project.

In fact, a study by the National Institute of Public Finance & Policy last year, said that 50% of NREGA beneficiaries had to pay bribes to get their wages. Although the government said the study would need to be validated by research studies based on primary data, the perception of mismanagement stayed. For the Congress, however, all those issues were secondary to what it saw as the main point: The NDA was deliberately neglecting the scheme.

BirendraSingh who had by then stepped into Gadkari’s shoes, was predictably dismissive of Congress accusations. “This (fund shortage) actually started during 2012-13 under UPA regime. There’s a vicious cycle of fund rationing leading to the choking of the programme ultimately. But we studied the lapses and intervened timely.”

The NDA U-turn was also driven by other factors including the public outcry from a section of economists, rights activists and of course

regional political parties, some of whom were allies.


Then there was the RBI monetary policy statement which said: “Despite reasonable levels of water storage in major reservoirs, the rabi crop is unlikely to compensate for the decline in kharif production earlier in the year and consequently, agricultural growth in 2014-15 is likely to be muted. This, along with a slowdown in rural wage growth, is weighing on rural consumption demand.”

The slowdown in rural growth was impacting corporate bottom lines as well. It didn’t take long for the “business friendly” NDA to realize that the rise in rural incomes and wages due to NREGA, had boosted demand for manufactured goods. Add to that RBI Governor Raghuram Rajan publicly stating that NREGA had spiked rural wages by only 10%, the balance was driven by the rise in minimum support prices.

What of the future? There’s little doubt NREGA will move forward but it needs to be managed more efficiently. There should be provision for social audit, grievance redressal mechanisms, state quality monitors and national level monitors. Technology could play a big role in reducing scope for corruption, such as direct benefit transfer to rural households.

This would require some work given that in places like Chattisgarh, there are difficulties in implementing electronic transfer of wages. State government statistics said of the 146 blocks in the state, 86 were in Naxal-dominated areas where the banking network was poor and implementing electronic transfers difficult.

The same situation could be the case in other Naxal-affected states. Remote parts of J&K such as Ladakh or Arunachal Pradesh would present other problems. The NDA will find that implementing NREGA will involve time, effort and a lot of imagination to get it right.


  • Sikkim has pioneered a ‘G5P Approach’ to make NREGA more result oriented. The G5P Approach essentially meant – Gram Panchayat Pro-poor Perspective Plan (G5P)
  • In 2012-13, a performance evaluation by the Centre ranked Tripura as a “topper” in the NREGA implementation
  • NREGA has been a torchbearer for women’s empowerment with 55% women workers
  • Among negatives, an estimated 70% of poor households did not receive any NREGA work between 2004 and 2012, says the India Human Development Survey.
  • Unemployment allowance has also rarely been paid by the states
  • NREGA failed as a drought-relief measure as only 4% of employed households hit the 100-day mark last year
  • Finance Ministry instructions mandating the Union RD Ministry bear the cost of banking and postal payment for NREGA workers has meant additional expenditure
  • In states like Kerala, Andhra Pradesh and Karnataka, NREGA wages are lower than the minimum wages for unskilled agricultural work
  • Summary

  • NREGA full steam ahead as the NDA government works to resolve what it says are serious management and implementation issues
  • The decision to go ahead reflects not only the government’s concern over rural distress but its positive impact on corporate bottom lines
  • Technology could be crucial to overcoming complaints of corruption and leakage of funds, and ensuring the rural worker directly benefits
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