Low Disbursal of MGNREGA Unemployment Allowance

General Studies Paper-3

Context: Recently, only ₹90,000 was released as ‘unemployment allowance’ in 2023-24 under Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).

About

• The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), enacted in 2005, aims to enhance the livelihood security of households in rural areas.
• It is one of the largest public workfare programs in the world and has been instrumental in addressing the issue of rural poverty and unemployment in India.
• One of its key objectives is to ensure that work is provided promptly to those who demand it.

Key Provisions

• Guaranteed Employment: MGNREGA guarantees at least 100 days of unskilled work per year for every rural household that seeks it. This work can include projects related to water conservation, land development, construction, agriculture, and allied activities.
• Decentralised planning: The program is implemented through Gram Panchayats, which are local self-governance institutions, ensuring decentralised planning and implementation.
• Demand-Driven Approach: Unlike top-down programs, MGNREGA is demand-driven.
  • As per the Section 7(1) of MGNREGA, if a household requests work, it must be provided within 15 days. If not, the worker is entitled to a daily unemployment allowance.
  • It is meant to provide relief to workers when work is not provided despite their demand.
• Wage Payments: Unskilled workers must receive their wages within 15 days. In case of delays, the central government compensates them.
• Coverage: MGNREGA covers all rural districts in India except those with a 100% urban population. It’s a lifeline for rural households, especially during challenging times.
• Statutory Limit: Wages must be paid according to thewages specified for agricultural labourers in the state under the Minimum Wages Act, 1948.
• Social Security Measures: The program provides for a number of social security measures such as unemployment allowances and pension schemes for the aged and widows.
• Transparency and Accountability: MGNREG Aprovides for transparency and accountability through the use of biometric tools and a transparent complaint redressal mechanism.

Unemployment Allowance (Figures)

• In the financial year 2023-24, various states released a mere ₹90,000 as unemployment allowance. To put this in perspective, the corresponding figure in the previous year (2022-23) was ₹8 lakh.
• Clearly, there has been a significant drop in disbursals, raising concerns about the effectiveness of MGNREGA in addressing rural unemployment.

State-Level Disbursals

• In the last two financial years (2022-23 and 2023-24), only six states disbursed the unemployment allowance.
• In the preceding years (2021-22 and 2020-21), the numbers were even lower—only three and four states, respectively, paid the allowance.

Underlying Issues

• Unavailability of Work: Work is often unavailable for beneficiaries. Despite their demand, suitable employment opportunities are scarce. This situation exacerbates rural economic distress.
• Delayed Registration of Demand: Block-level functionaries responsible for registering work demand may not do so in real time. Consequently, formal data on MGNREGA work demand may not accurately reflect the true demand.
• Flawed Reporting System: The reporting system for MGNREGA has its flaws. Work demanded is only reported on the portal when actual employment is provided.
  • It may be driven by a desire to reduce the state government’s liability towards unemployment allowance.

Other Challenges

• Funding: Adequate funding is crucial to sustain the program. Budget allocations need to keep pace with demand.
• Effective Implementation: Ensuring timely work provision and wage payments remains a challenge. The recent release of only ₹90,000 as “unemployment allowance” in FY 2023-24 highlights this issue.
• Monitoring and Accountability: Strengthening monitoring mechanisms and social audits can enhance transparency and accountability.

Conclusion

• The low disbursal of unemployment allowance undermines the very purpose of MGNREGA. As we strive for inclusive growth and rural development, addressing this chronic issue should be a priority.
• States must take proactive measures to ensure timely employment and fair compensation for workers who rely on this vital safety net.